 The US economy and particularly the stock market have had quite a run. The reality is that when the market and when the economy collapsed in 2008, that is 15 years ago, it really did look like we were in for a long period of stagnation, of lack of economic growth, of declining standard of living quality of life and potentially even and of course of a stock market that was challenged to recover. What actually happened was that the United States economy did do well but it did okay. The stock market did phenomenally well and you know this is at a large extent the consequence of what many would argue is massive injections of money into the economy through QE or liquidity into the economy. It's not clear there was money really but liquidity into the economy during QE and at the time what I said the consequence would be stagnation and that's indeed what we had. We had very low economic growth even during the Trump years the economy grew at 2%. It was unimpressive to say the least. What we also experienced was something completely unprecedented in really in certainly in modern history but maybe in all of human history and that is we experienced for a long period of time of a negative to zero interest rates that is the cost of borrowing was sometimes negative. You were being paid to borrow money certainly in Europe for long periods of time on certain government bonds interest rates were negative in Switzerland in in in Denmark in other countries. You had negative interest rates really unprecedented in human history and goes against flies counter to all of financial and economic theory that such a thing would exist. So you had money being created and you know flooded the economy. You had interest rates at zero or sometimes even negative and in the United States you had interest rates of basically zero maybe 1% maybe 2% but but nothing above that and then of course COVID happened so on top of these very very low interest rates which was already trying starting to create real distortions and perversions in the economy and and where there was already angst about how long this could survive. We then got a you know a COVID boost the government spending a massive stimulus you know really unprecedented in size both under Bush Bush where did Bush come from both under Trump and then under Biden. We got too massive stimulus packages and the result was what you would expect that is the result of helicopter money the result of just sending people checks in the mail the result of just flooding the market with money directly to consumers has been inflation and with inflation interest rates have risen and in spite of the fact that everybody thought inflation would peak inflation does not seem to have peaked it seems to have stabilized it seems to be going sideways for now and on top of that interest rates are high and they seem to be there seems to be an acknowledgement at least among many that interest rates are going to stay high. Now in state right now the the the tinnier bond yesterday peaked at 4.5 something I mean it's kind of funny sad funny to think that people think that this is a that this is somehow high interest rates in 1981 I think it was the tinnier bond was in the mid teens indeed for 40 years from the end of World War II basically until the early 1980s interest rates only went up and in the 1970s they spiked up with inflation and they continue to do so in the 80s and only only from 82 have we had a period of 40 years as it turns out cycles of 40 years something um another 40 years where interest rates have only gone down so they've gone out so much to zero negative that suddenly an interest rate of four and a half percent seems high I mean four and a half percent is not high but if you build into your assumptions if you build into your plans if you build into your cash flow estimates if you build into the affordability of housing the affordability of building plants buying equipment of doing business an interest rate that is zero then four and a half percent suddenly is really really high so we are in a situation right now where a lot of people who thought interest rates would be zero or close to zero forever suddenly encountering high interest rates we have companies all over the place that are going to have to refinance their debt instead of at three four five percent they're going to have to refinance the debt at seven eight nine percent where people would like to buy homes but are used to mortgages of two three four five percent are now looking at mortgages seven eight nine percent people don't want to sell their homes because they don't have to go and buy they they're sitting on three percent mortgages they don't want to give that up that's cheap money they don't want to give that up I don't want to sell my home because the mortgage is too valuable the US government raised money at zero to two percent interest rates for years all short-term money now is facing a situation where those interest rates are four or five percent and the US government is running massive deficits and all of this has to ultimately be reflected in less economic activity in a real slowdown of growth and in substantial bankruptcies and in companies going bust and to that the fact that the US government is running deficits higher than it ever has higher than during as high as it's been during the wars it is a it is running deficits it is running debt at the highest levels ever deficits continue forever so there's no prospects no prospects of those deficits shrinking nobody can nobody has any plan to bring about the shrinkage of those deficits you've got so security medicare out of control it's just hard to paint a picture of a positive economic outcome on top of that china on number one on number two trading partner trade is win-win is going through a massive economic restructuring its real estate sector is crashing collapsing going bankrupt but so many of its other businesses much of the chinese economy has been propped up with by the real estate sector the artificiality of that real estate sector and it really does look like the the chinese economy is going to slow maybe even start shrinking we know about the demographic collapse in china and and that is not completely sunk in yet into chinese psyche or into the rest of the world's psyche but it is happening it's happening faster than anybody expected so you've got an economic collapse happening in china just as china is of course moving in the wrong direction instead of freeing up it's going to be there's a funny quote of the of the chinese premiere of qi the other day he was on a tour somewhere and he was he was kind of demanding he was demanding more innovation was demanding more technological progress he was demanding a i mean there are ways to get more innovation more economic progress but the ways to do that are through liberty and freedom and free markets and not by penalizing your top entrepreneurs not by making them disappear not by putting them in jail or house arrest or whatever they put them not by breaking them up so china is in decline and let's be clear i know many of you might be celebrating the decline of china and there's a there's an element of of good that comes from china declining but there's also a lot of bad chinese economic activity was a real driver of economic growth in the united states it was a real driver of rising standard of livings in the united states counted to the story about job losses to china job were not lost to china the jobs were gained because of china because of trade with china and quality of life standard of living actually increased because of trade with china so to see china decline economically is another force another negative force driving economic growth in the united states downward putting pressure on the united on the us economy so china is in real trouble with no path out just like the united states has no path out nobody nobody literally nobody has a plan for how to deal with the challenges that the us economy faces today europe is in recession certainly germany is in recession parts of other europe is in recession and you know the the the prospects for european manufacturing germany bucked the trend for a long time of being in a manufacturing powerhouse and exporting in spite of high labor cost exporting out of germany to a large extent exporting to china well with china's decline german exports are down germany's also losing its manufacturing edge automobiles for example coming out of germany are not the right politically correct automobiles and electric the electric car industry is dominated at least for now by tesla and by the chinese germany seems to be in decline the rest of europe is in trouble as it tries to fund the ukrainian war tries to keep their own economies going try to go green or carbon neutral at the same time and somehow produce electricity for the coming winter as gas prices or oil prices are now approaching a hundred dollars a barrel which will raise the cost of energy significantly all over the world so real dramatic headwinds real dramatic clouds look at uk where inflation is persistent interest rates are high the economy probably shrinking and at the same time at the same time every single part of the world there is not a single part of the world where you can say economies are thriving over there i mean south america latin america is struggling in spite of the fact that they are mineral rich economies they're struggling they're struggling primarily because they're dominated by socialist and fascist economies africa is struggling it's always struggled it continues to struggle you know maybe india is doing a little bit better but india has all kinds of other problems that constrain its ability to grow economically and to replace china as a motor of economic growth mexico is doing okay but again struggling under a socialist president and probably another socialist president next year when elections are held canada struggling in spite of the fact that it has massive quantities of natural resources the world economies there's not a single region in the world right now that you can say is healthy is growth oriented and has the potential to really help avert a true economic slowdown we've got the united states is is not only in the process of spending you know and deficits and all of that but there's very little energy around getting rid of regulations getting rid of constraints on business they expand quite the country there is bipartisan efforts to go after american big business primarily to go after the key drivers at least of the stock market performance of the last 15 years and that's big tech i mean what has allowed the u.s economy to be successful over the last 20 years what has allowed the u.s economy to lead the world and and and what is what has made the u.s economy so resilient to economic forces it's the tech industry and who are the most successful of the companies in the tech industry that employ more people that that pay higher wages it's big tech and what is our politician's response to that is it to encourage more is it to congratulate them is it to thank them is it to promote more great tech companies in the united states not the politicians need to do that but no is it to cut their taxes is it to reduce the regulations they face reduce the trade barriers they face overseas no it's a drag them into court to fight antitrust lawsuits so we're taking the most successful companies in america the ones that are responsible for much of the economic growth over the last 20 years and we're going to penalize we're going to try to destroy them we're going to try to break them up all in the name of consumer well-being a consumer will be a lot better off without big tech without big companies employing producing creating building delivering so if you add the fiscal responsibility of the u.s. government to the regulatory irresponsibility of the u.s. government to this antitrust environment which is trying to break up our best and most productive companies to the fact that productivity growth is down to the fact that in spite of the fact that we have maybe the record numbers of people crossing the border into the united states we have less immigration than ever of people to come and work in the united states people crossing the border right now the united states are not allowed to work we ban them from the workforce we give them welfare we ban them from work crazy policy insane yes let's import more welfare recipients let's increase the welfare roles so you've got a economic environment where basically all the forces are aligned against growth against prosperity against success where it's it's likely that we see more bankruptcies more failures it's hard to see what we're the we're the saving you know what industry is going to save us where the economic growth is going to come from you know who's going to pay down their debts one scenario i guess the scenario the market likes the best actually yeah the the scenario the market likes the best right now is a recession a quick recession a recession it's so bad that the fed the federal reserve panics and reduces interest rates back to zero again in order to get us out of that recession so the solution to our economic malay is not is not economic growth it's not production it's not building it's financial jiggering with low interest rates that can only come about because of an actual economic and slide recession and somehow markets think this is a good thing no it's terrible and a recession is going to be hard to come out of there's no easy way out of it there's no i mean yes the fed will pull money back into the economy but the federal we cautious because of inflation and the federal government will have a problem spending itself out of this because it has to be cautious because of inflation but also because of the massive deficits and who's going to buy that debt so well i should think the u.s has probably positioned best in the world economically to survive the storm that is coming nobody is going to be completely spared from the storm nobody is going to be spared the coming storm is could be really devastating really challenging some kind of a session that we haven't seen in a long time and a recession that hits main street in ways that i think the latest last few recessions have hit sectors the economy that haven't affected main street that much that calm bubble boosting was mainly a city can valley recession that the 2008 was to a large extent a banking and and and was due to a session we could see a a lot worse than that affecting a lot more people and all of this at the time not only of anti-just laws of of regulations not shrinking but also of labor unrest i mean the auto workers are asking for a 40 plus percent raise they're asking for the fine benefits pensions going backwards they're asking to raise the costs of producing automobile in the united states with labor union with labor wages an absurd amount they're asking to make detroit a lot less competitive a lot less competitive than they have been 32 hour work weeks they're asking basically for ford and craisler and gm to acquiesce to their own destruction and what options the auto companies have they could fire all the workers but that would be illegal that would be impossible to do i mean the president of the united states was on the picket lines so you know ultimately that comes from compromise i assume the compromise will still raise dramatically the cost of making a car you know has the cheapest cost of building a car in the united states whereas the cheapest cost of labor in the u.s it's not detroit it's tesla and after tesla it's nison and teyota and bmw and misades in the south the south it's unionized labor the highest cost of building a car in the united states is detroit and now they want to make it more expensive and how is that going to work exactly how is that going to work and how they're going to compete so add add dramatically to our lack of productivity and it's stunning because there's so many things that could be done there's so many ways to fix it and the solution that biden the democrats many republicans and many economists seem to adhere to right now is more central planning more industrial planning more government subsidized electric cars and batteries and government subsidized solar panels and government subsidized chip manufacturers and government subsidized everything now where exactly in the world does that work so again i think we're heading towards dark economic times i just don't see any upside now whether it happens with one big drop one big decline whether it happens through slow stagnation for many decades i don't know i don't know how it plays out i don't know and the reality is that it's going to be global because the world is very interconnected the the failure of the economies of china and europe affecting the us the slowdown in the us will affect china and europe and i know people have been talking about recession for a long time now but it really does seem like just as people are coming to the conclusion there won't be a recession that's probably the best time to be thinking there will be one but it does really look like starting next year we're going to be facing a real potential for recession a reality not just a potential a reality of a session it's in the election year and yet i'm not sure anybody can do anything about it