Bannon’s War Room: Episode 2043/2044 Steve Cortes Explains the Economic Crisis Coming to China: ‘2008 Will Seem Tame’ August 01, 2022.
Topic: Economy. Guest Steve Cortes. August 01, 2022
Bannon’s War Room Transcripts on Rumble: Steve Cortes Explains The Economic Crisis Coming To China: ‘2008 Will Seem Tame’
Published August 1, 2022.
Steve Bannon:
Steve Cortes, China Nancy Pelosi's heading over there and the Chinese Communist Party doesn't like it but more importantly, and I said this on John Frederick’s Show this morning. The biggest events in your economic life right now are not taking place in nine states America. They're taking place in mainland China. The bottom’s falling out of the real estate market. The Ponzi scheme is over. Evergrande was supposed to put forward their plan for restructuring the three hundred billion dollars in debt, didn't happen, right? They don’t have any cash. You got the CCP and a 150-billion-dollar bailout to try to keep the wolves at the door because they knew Evergrande wasn't going to put forward a plan. Actually, in the Financial Times, Ben Harnwell sent me the Financial Times of London today, not in the paper, but online, it said from the reporters in Beijing, that Chinese Communist Party officials are leaking to them that they are very nervous about social unrest because Lao Beijing can't get to their cash. Steve Cortes.
Steve Cortes:
Yes, listen, a torrent of news, all of it negative economically out of China over the weekend. You know we had prepared the War Room Posse this last week talking about the precarious state of the Chinese economy using FXI as an example. That's an American traded ETF and exchange-traded fund where you basically buy the country of China in one ticker at got absolutely smashed last week. Just today as we speak, Steve, it's down over one percent. It's a pretty quiet day in the American Market but anything, but quiet for China, why? Because they got that Evergrande news out over the weekend that they do not have a plan to restructure. They don't have a plan because there is no plan, because they're insolvent. But nonetheless, it's very upsetting for Global markets. In addition, they also released their PMI report.
And this is actually the official PMI report from the government of China, and they even admit that they are now in contraction mode on the Purchasing Managers Index. We talk about these a lot. These are great apples-to-apples comparison to look view Global economies. Unfortunately, the United States has the lowest PMI, before we get cocky about it, the lowest PMI in the entire G20. We're at 47.5 for our composite below 50 means contraction, because we're in a recession, but guess what? China, now, admits that they are in recession territory. It went down on manufacturing 249. So, they're an incredibly precarious economic situation and it's mostly because of housing. And what's going on there right now, I think what is building in terms of the bubble popping in China is going to make what we had here in the United States in 2008 look like it was actually tame.
And let me show you a chart, so I can show you what the year-over-year growth looks like in housing prices in China. And this is going back one year. Now, that's not the right one. Chart #3 is the one we want to show please. If we can show chart #3, where it shows Chinese year over, there we go. Newly built housing prices year-over-year.
That is, as you can see, almost a perfect upper left to lower right downward slide into negative territory two months in a row. Now, they have not been in negative territory for housing price appreciation since 2014. So, the bottom is falling out economically in China. We see it through social unrest, through riots, which right now are on a relatively small scale, but likely to get bigger. So, we have to view when we look at the national security scene in terms of what is going on with Taiwan. We must view it through the lens that the Chinese Communist Party views it. And that is they are starting to lose legitimacy economically with their own people because of this economic implosion in China.
Steve Bannon:
Which is the deal they have. They're going to, they're going to pivot to hyper nationalism with the kids and say foreign devils in Taiwan must go. But here's what you need to do for me Cortes.
And the reason why I'm so proud of the show and bringing people, we got Harnwell. When we're bringing people all over the world to show the interconnectivity. We're nationalist, doesn't mean we're stupid about how the world works. We actually understand how the world works. Ladies and gentlemen, if you think a virus that was cooked up in a military lab in Wuhan came and changed your life and changed the direction of this country, you wait to the contagion that's coming out from the capital markets in China. We are not. In fact, not only not cordoned off from that, we're in the middle of it thanks to Larry Fink, and Steve Schwarzman, and Ray Dalio, and all these guys have your pension funds and banks, everybody is up to their neck with this thing. Steve Cortes.
Steve Cortes:
Steve, if we had never given them two things. Number one, we gave them unbelievably generous trade terms and they're not even just trade terms. We offered them the opportunity on a silver platter to ravage the United States in Trade, okay. And that was bipartisan. It was as much the fault of Bill Clinton as it was of George Bush as it was Barack Obama. So, number one, we allowed them to ravage us in trade and that allowed them to get some of the revenue to build these bubbles. But secondly, and maybe even more importantly, we allowed them full access to American capital markets, which again also allowed them to finance these bubbles that they are now facing. Bubbles that they'd simply refuse to reckon with back in 2008.
One thing we did here in the United States very well because it's part of the American character. Once we realized what a massive problem, we had at least there was transparency about the problem and we did many things wrong, but that is a uniquely positive American attribute has, transparency about the problem. The exact opposite in China, right? Save face, paper it over borrow, kick the can down the road and unfortunately, because of how intertwined we are in capital markets in a trade with China, this is not their problem only. This is the world's problem, and this is America's problem to put a number on it, Steve $7.7 trillion dollars, that is the total exposure of Chinese Banks to the property markets of China, which are starting to implode. So, this again makes as bad as the 08-09 housing crisis was in the United States, this actually makes that look tame by comparison and that is the reality unfortunately. That reality made by the globalists including Americans like Larry Fink.
Steve Bannon:
We might have had a kind of transparency of the problem. We certainly have any transparency on the solution. All they had was that all I did was add liquidity to the balance sheet of the fed and bail out the elites. Okay? Cortes, you're going to hang with me.
Video from CNN: Brian Steler interviews Paul Krugman
Brian Stelter:
So, what do you want the press to be doing differently on its day by day coverage of the economy?
Paul Krugman:
Well, I think that the big problem has been that the coverage has tended you know it kind of bleeds it bleeds, but this time in economic data, the negatives, get all of the attention and there's a lot of polling that indicates that people, you know, it's one thing for people to say, look the inflation matters to me more than the job gains. But a plurality of voters appear not to be aware that we've been gaining jobs you know. People just don't know. The people say they've heard more news items reporting - news on employment than positive and employment is, of course, the economy is good point. So, I think that what's happening now is that there's been a kind of negativity bias in coverage and just you know the Press should be giving people….
END of VIDEO
Steve Bannon:
I can, I can, I can only take so much of that. Cortes the also on I think we're Stelter. He also said we're not in a recession. Recessions are not two quarters of row. This spinning. They're spinning as hard as they can sir. Tell us what's reality?
Steve Cortes:
Yeah, he also said Krugman did, that it didn't matter whether or not we’re in a recession. Well, it matters to regular people. It might not matter to smug and New York media mavens like Stelter and Krugman, but believe me, it really matters to regular working-class citizens. He also said that when he talks to people that they tell him that things are fine. And I put this on my social media. I said, who is he talking to? Only people in the private aviation terminal at Teterboro Airport? He's not talking to regular Americans if he believes that regular folks think things are fine out there. Now, let's talk with some actual data because Krugman despite the fact by the way, talk about failure of credentialism. Despite the fact that he has a Nobel Prize when it comes to the economy, he is a moron. So don't listen to him. Instead, look at the numbers, look at the data, make your own decisions. So, let's get to some actual data about what's going on out there. And let's use thousands and thousands of data points that are incredibly important. And let's go to chart #1.
(Source: From Trading Economics)
This is the Small Business Optimism Index. That index is crashing. That chart goes back one year. The NFIB the national Federation of Independent Business is the largest organization by far in the country representing entrepreneurs and small business owners. As you can see from that chart, their confidence is absolutely tanking. Okay. That is the on the ground reality. And it's not tanking because they get negative news reports as Krugman tries to say on the economy. It's tanking because they know they can't pay their bills. We know that from a separate reliable survey that 35% of them in June, we don't have July numbers yet, 35 percent of them said they didn't make rent in June. Okay, that's not a media narrative. That's not bad messaging. That is a terrible economy that they can't handle.
If we go to the next chart, chart #2. Also, from the NFIB, this is, I think, in some ways even worse, because this is the forward-looking index from small business owners and it is a net, negative 61 positive versus negative.
This is the lowest this index has been Steve for a survey that goes back four decades. Small business owners have never been more pessimistic about their future prospects when they look down the road and what is in front of them. And yet, Paul Krugman wants us to believe, oh no the economy's fine, and it doesn't matter if we're in a recession. Oh, and I talked to somebody in the Hamptons or a couple people at some high-priced coffee shop who told me that things are fine in their life. They are totally disconnected from reality willfully so.
But again, always opportunity in calamity. There's opportunity for us as a movement for the America First Movement. We've got a lot of work to do tomorrow at the key states Kent up in Washington State, Masters and Lake in Arizona, Joe Gibbs and Tudor Dixon, excuse me John Gibson Tutor Dixon in Michigan. We have work to do to elect these America First Champions who are going to start the really hard work of fixing this Biden, Pelosi, McConnell mess of digging us out of this economic morass, and the American people know damn well that were in one no matter what Stelter tries to spin with Paul Krugman.
Steve Bannon:
They keep saying about the jobs and all the jobs that came back because people went back to work after COVID, and the relief stopped. But the small business, which is the engine of job growth is cratering before our eyes and the statistics are all out there. So, it's not like, oh, they can't see a month down, the downrange. The jobs in the retail sector and the jobs across the board by small businesses because hey, if you ain't paying rent, that means you can barely make payroll, right? And the landlords are going to take so much of not paying rent before things get serious.
Steve Cortes:
I care more about small business, for sure, then big business because I think big business abuses American people so much, but we're seeing this at the big end as well. The same kind of weak as we've talked quite a bit in recent weeks about Walmart, which has had two massive gaps down in its stock price in just the last three months. So, even some of the most skilled executives in the entire world of retailing and really just business, they can't manage it.
We got another data point, though, just on Friday that we haven't mentioned yet, Procter & Gamble, another very well Behemoth. And again, I'm not fans of these companies because I think they engage in corporate cultural Marxism. So, I'm not praising P&G as a company that I like, but the point is, it's very representative of what's going on with the consumer because they're so ubiquitous all over the country. Procter & Gamble fell six percent, its stock in a single day. For a company that's normally pretty boring, a stock that is normally pretty predictable, 6% had fell on Friday. That shows you that the bottom is falling out regarding the consumer and that this inflation explosion is not just unmanageable for small businesses, even unmanageable for big business. It's unfortunately totally broad and is the reality that Americans face every day even if CNN wants to pretend it doesn't exist.
Steve Bannon:
No, those companies have steady Eddies, so when they come with those kind of surprises. You know that this is nothing but instability and tectonic plates shift underneath. Steve Cortes before we let you go when the one the FT’s (Financial Times) got, ‘The West Eases Russian Oil Curves’. Right? When all you here on MSNBC is oh they're winning and we're going to triple down, as a street guy, sir about where trades are going to go. What does that tell you sir?
Steve Cortes:
Right, well, yes to connect us to financial markets as a street guy. Look at the euro currency. So that the dollar has been getting crushed relatively to real assets, right? Things like commodities and real estate, but the euro currency is getting crushed even more. Hence, the Euro against the dollar has been going decidedly for an entire year against the euro currency. A year ago, I believe it was right about 117. It's gotten all the way down to parody now, or just above right now, but it got even below parody, a little bit 1 to 1. Something that people thought was impossible just months ago. And the main reason is Ukraine and the dependence of Western Europe on Russian energy.
So as bad as this Ukraine escalation situation is for us and it's quite bad for the United States. It is massively worse, legions worse for Western Europeans and I think by the way to connect us to what Ben was saying, that's one of the reasons why the Continental European politicians actually seem to be somewhat reasonable when it comes to Russia at least compared to the US and UK. So, Macron, somebody who I don't agree with a much of anything, but Macron has actually several times argued in favor in de-escalation and said we cannot completely isolate Russia. We cannot act as though there's an existential threat there.
But then, when it comes to Boris Johnson and Joe Biden, we hear exactly the opposite. So, unfortunately there's this Anglo-American alliance that is pushing extremely hard for escalation. It's bad for us, but it's even worse for Europe because of their total dependency on Russian energy. Something which by the way Steve, is important to note, something which Donald Trump warned them about. He was mocked by the Europeans at the time. He was completely eviscerated by the US media for supposedly having no idea what he was talking about. Look like many of the statements of his, which may have the time seemed to be a bit aggressive or a bit outlandish he was very prescient, and he was exactly correct.
And here's the worst of it bringing it back home to the US you know, forgetting for a second about the Foreign Affairs aspect, thankfully the United States, we are in a position of natural resources bestowed on us by almighty God that we never have to be dependent. We have chosen to be dependent on foreign sources of energy only because of Joe Biden and his first major action and office of attacking American domestic energy production. It's an absolute dereliction of duty. It is a policy crime and we have been paying the price for literally, literally paying the price for a year-and-a-half. Part of fixing that though is what happens tomorrow, Steve. Let’s connect this back to the elections. Tomorrow is a huge day for MAGA and a huge day for our country for America First. It's really almost like a super Tuesday. Our candidates have to win.
Steve Bannon:
Cortes really quickly, your social media and Sub-Stack. Yeah, please find me at Steve and the Sub Stack on the closing argument for John Gibbs. And my Twitter @ Steve Cortes, Steve on Twitter.
END
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