Okay, so we have to talk about the looming debt crisis And believe me, this is not clickbait. In fact, I wish it was, but it's actually much more serious than this. We have a consumer problem as far as that, and we have a governmental problem. As far as that both are about to implode and do some serious harm.

And trust me, you want to hear about this. now. Look, the one thing that happened last week was very interesting is the fact that Banks reported great results. Now if you look at results on the bank, everybody made money.

Woohoo! Great, right? Well, there's one thing I like to pay attention to as far as Bank earnings that most people don't look at I Look at the balance sheet and that balance sheet is very, very important because in that balance sheet, I get to see a huge predictive element. Now mind you, that a normal balance sheet which does not excite most of you like it excites me. And I get it. But a normal balance sheet would give you zero predictive value in any company.

How much cash? How much debt? You know it's just a snapshot, but in the case of a bank, there's actual predictive value there and that's what I want to look at. And trust me, what happened in Q4 with all U.S banks is a big huge warning sign you don't want to miss. Now look, the one thing that banks have to report in the balance sheet is the provision for credit losses. How much the bank considers it will have to give up as far as uncollectible debt.

Now, there's no incentive for the bank to increase this unless they absolutely have to, because it makes them look much in a shitty situation than they are now. The past quarter, that number have increased by 30 percent. across all U.S Banks 30 in a single quarter? That's no laughing matter. 6.2 billion, which all major U.S Banks consider to be bad debt.

that which will probably not be collectible. The banks are basically bracing for a recessionary year now. Look, it's not just about the banks. there's other data points which we can look at to confirm what the banks are telling us.

Now, the rate of delinquencies right now on credit guarded in the U.S is on the rise for the first time since 2008. Now granted, we're only two percent, which is a far cry from the seven percent we had in 2008, but it's still a horrible sign. We haven't gone up in over 13 14 15 years depends on how much you measure it. now.

Look, it's not just that credit card balances in the US are now up 15 year over year. That's the highest we had in 20 years now. There's a lot more warning signs there. I Want to share with you before we go to the government side: I Want to talk about the total household that right now in the US it's at 16.5 trillion dollars.

That's a massive number, but you need some context to understand how bad it really is. Now look in Q4 of 2008, that's a long time ago we had 13 trillion dollars of household debt. And here's the kicker from that point: Q4 2008 we increased household debt in the US by one trillion dollars all the way to 2020.. So for 12 years we increased the increase and we got to 1 trillion dollars of aggregate increases now from 2020 until now.

Which means the past two years we increased it by 2.5 trillion dollars, which is two and a half times then the previous 12 years before that. and the main component of that household debt in the US has always been and always will be mortgages. That's just natural, right? That's people's biggest purchase of their life, most likely right. But here's the problem.

Mortgages are super sensitive to interest rates. When interest rates go up, your payment for mortgage goes up. more people default. prices come down because it's now not as lucrative to buy a property.

So this is exactly what's going on right now. There is. interest. Prices go up.

We just had data that 35 less existing home sales in 2022 versus 2021. we just had data that's 75 of home builders are now offering purchases a mortgage buy down, essentially offering potential buyers to subsidize their mortgage for three four years just to get them to buy in-house that they probably can't afford. And it's not like I'm going to be sitting here saying that 2008 is going to replay itself I Don't know, Nobody knows I Don't have that kind of predictive power, but look at what I'm saying. the banks are increasing their Provisions.

The credit in the US on the consumer side is actually getting bigger and bigger. Getting to that. Boiling Point Now how it's going to play out I Don't know. but if you think the consumer side is a problem, wait until you hear what's going on on the government side because there we have much bigger problems.

We have now gotten to 31 1.4 trillion dollars of government debt that's literally our ceiling. Now that ceiling expires on Thursday Yes in three days And this is the first time we actually heard Janet Yellen come out on Friday just five days before to let everybody know. hey, we might need to fix this problem before it gets too late. That's one thing when you forget to pay your gas bill and it's literally the last day and you're kind of rushing to the phone to do it.

It's a whole different thing when your government actually forgets to do it until it's five days before the expiration of our debt limit. Just insane. Rap through your head around. This is absolutely crazy.

I Mean, are we really having this conversation? It's It's not like we haven't done this a hundred times. Literally, a hundred times the past 70 years the US government has been living in debt more than anybody. I Know we have criticism of people that are way into debt credit cards spending, but our government can't stop spending. They have increased their credit card limit a hundred times in 70 years.

I Don't know any consumer that got 100 100 increases on the limit any. So our government is probably the biggest offender that needs to slow down and the craziest thing about it is we actually gave our government 2.5 more trillion dollars to spend just a year ago and now it's gone. Poof. It's like sending your irresponsible kid to college, finding out that he burned all his money instead of paying for tuition, paying for video games and partying and whatnot.

I mean but this is literally your government. So let's talk about the implications if this political Hot Potato isn't fixed by Thursday and obviously there's a lot of politics around it. I'm not going to talk about it I Just don't understand enough about it. but if they can't figure it out by Thursday this is what's going to happen.

So first of all, the stock market is going to have a meltdown of Epic Proportions How do I know this? Because this happened in 2011. We actually had the ceiling expire and the stock market took a noise dive faster than my grandpa after Christmas party. That was pretty epic. Now I'm not saying that this will happen, but if the debt ceiling isn't raised on Thursday the stock market will react very violently and I think a lot of people will be factoring these risks into their portfolios in the coming week.

If we can't actually raise the debt ceiling, it means the U.S government cannot borrow money anymore. Now imagine the U.S government that cannot borrow money. I mean this is literally the American way of life. So how much money do we have before? We are actually out of money and have to default on our debt? Well about four to five months.

And even though we actually had a debt ceiling expiration happen in 2011, we've never actually defaulted on our debt. A default under debt is an economic collapse of Epic Proportions That's something the US has never seen before. It's going to be worse than anything that people have ever seen before. If it actually goes through the motions of letting expire and not figuring out within four to five months running out of money and defaulting on their debt, that's pretty much game over for the US economy.

Not saying that this is what's going to happen, but I'm saying this is the outcome. and as you would expect, this next week is going to have a lot of hoo-ha politically over this. McCarthy and crew was going to ask for demands to actually approve the debt ceiling increase something like spend less. The government's gonna say no.

You know we're not giving up to Blackmail and they're going to fight it out and hopefully you're hoping they'll figure it out.