Jason Hartman goes through a number of public statistics about housing, the US dollar, and the looming pension crisis. He asks a very important question as he analyzes these numbers, “compared to what?” He explains that when people approach investing they should be asking this question. Later he explains the concept of price discovery and details how interest rates impact them. At the end of the show, he looks at the top economies in Europe.
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This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
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Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on now. here’s your host, Jason Hartman with the company leet solution for real estate investors.
Jason Hartman 1:03
Welcome to the creating wealth show. This is your host Jason Hartman with episode number 885 885. Thank you so much for joining me today. And greetings from Miami, Florida. Yes, Miami, Florida. I know. I know what you’re thinking. Am I in knee deep water? No, I’m not. Hurricane Irma rolled through and I’m kind of been surveying informally. What’s been going on here. I’ve been talking to people since I arrived earlier today and it seems pretty normal over here. I’m in Coral Gables, which is a swanky little area. I got to say though, Miami is definitely not my favorite city. It never has been every every time I come here. I wonder why I came back. I’m just not a big fan of Miami. I’m not a big fan of New Orleans, not a big fan of Portland. I know all of those cities have their virtues and and they have their nice areas. In their bad areas, like any city, hey look, I live in Las Vegas. I’m not a big fan of Las Vegas. So, so they’re just to be fair, and I’m from the Socialist Republic of California, and I’m definitely not a big fan of California. So just call me a grumpy old pessimist. I’m not a fan of anything. Nothing pleases me anymore. Now, I’m just kidding. I think it’s an amazing time to be alive. I am a total optimist, but I like to be realistic, and a little snarky. And I gotta tell you, I’m excited today because yesterday, I just found out that those disgusting criminal scumbags at Wells Fargo settled the class action lawsuit against them or one of the class action lawsuits against them. I’m not sure how many there are. Maybe it’s the only one. But I’m assuming there’s more than one. I think it’s a fairly safe assumption. I could be wrong on that. But yeah, they settled it for 140 $2 million for ripping off America. Now if you ask me, I can see why they settled that they probably thought that was a pretty good deal. If you can rip off a whole country and screw everybody with these duplicate accounts and a bunch of other overfeeding disgusting, crooked activities, you know, 140 $2 million is pretty cheap. You get off pretty easy for 142 million bucks. And hey, most of the lawyers get most of the money anyway, I’m sure. It’s just unbelievable. It is unbelievable the times in which we live. It really is. Yeah, here’s a theory I’m working on. Okay. Maybe I’m crazy. But the last couple times I went to Europe and I both times I went to France. I’ve been to France many, many times. And the very first time I was in France, I was maybe 22 years old. And I’ve just noticed over the years, that the French people, the good old French in France, have gotten a little nicer. They’re a little more pleasant. And here’s my theory. You’re ready for this. Here’s the theory. And it ties into what I was just about to tell you. My theory is that the French have become nicer. Because of TripAdvisor. And Yelp. I don’t know, do they? Have you open France? Well, even if they don’t they have reviews. I think they have Yelp. They have Google reviews. And I think they’ve become more pleasant, due to the fact that people can go online and talk about their rudeness. The rudeness that they were famous for, right? I mean, it’s like, it’s a cliche, rude French people, right? It’s it’s almost charming, in a way. It’s, it’s like when Kathleen paracord was on my my jetsetter show, and we were talking about different countries around the world to think about investing in and so forth. And, and when we came to Argentina, I said Kathleen What about Argentina? And she says, Argentina is so corrupt. It’s part of its charm. I know you can’t make this stuff up. It’s pretty funny, huh? But yeah, you know what I was going to say? It is a shame that we live in a time when, the way you have to get the attention of these big disgusting criminal companies that just roll over people is you have to take to you have to take to the internet. Be careful doing that, because you can get sued. I’ve been sued for it twice, you know, on my podcast, outing these, these various crooks and so forth. Well, I use that word very loosely. I don’t know that they’re actually criminals, but I think they ripped me off and, hey, in my eyes, that’s a crime. But that’s the only way you can get their attention nowadays. I’ll give you an example. Had a less than normally miserable flight over here to Miami on American Airlines. My cousin works for American Airlines, I think they suck. I can’t stand American Airlines. But you know, sometimes you just gotta fly them because that’s the flight that works out. And the last time I was going to come to again, Miami on American Airlines, of course, they screwed up the whole thing canceled flight didn’t do anything for me. They have left me stranded repeatedly, just a pathetic company. But the last time I got some justice, because I went on Twitter and I shamed them. And their PR department saw my shaming, and they gave me a refund. Now, I should have gotten a lot more than a refund. But hey, I’ll settle for that. Okay. So yeah, that’s, that’s the world in which we live but at least nowadays, the little guy can speak out. And if if someone is taking advantage of you, you have some leverage. Be careful using it. Okay, be very careful using it. But there is some leverage the other level bridge, since we’re going down the negative road here to start to show, by the way, I got some other stuff to talk about, of course. But the other point of leverage you have, you know, say for example, a property manager wrongs you in some way, you know, the easy thing you have is you have the government. Now, they may or may not pay attention, you know, the old rule is what the squeaky wheel gets the grease, right, that’s the old saying the squeaky wheel gets the grease. So, if you if you cause enough of a fuss, and enough people are complaining, hey, they might pay attention at the good old government. So, in every state and also at the federal level, you have some various regulatory agencies that you can complain to, and they all have complaint forms. And you can go online and just fill out a little complaint form and, you know, it’ll take you 20 minutes, 15 minutes, maybe 10 minutes, just write what happened and usually click the mouse and it goes in. It’s free. You You don’t have to hire a lawyer. The problem with lawyers, and this has been my experience with good old legal system is that first, you get wronged by the party that took advantage of you. And then you go hire a lawyer to go pursue justice. And then your lawyer screws you to. Yeah, that’s about the state of affairs we live in, right? Most of the time, it seems like where you get wronged by the bad guy. And then you try and get justice from the lawyer helping you you hire a lawyer, you spend a fortune they overbill you and they take advantage of you and they usually just end up selling you down the river. That’s usually not a good alternative. Okay, home sales. I don’t know see, I get off on these little tangents. I want to talk to you about the three types of markets today. I want to talk to you about home sales demographics, pensions, because we talked recently with Nick Jr. Bruno about the pension crisis. And you think it’s bad in the United States? Just wait. That’s what I’ve been telling you for years now. The US may be ugly and it may have tons of problems. But compared to what? Compared to what? I love it when that left wing hypocrite asshole Oh, did I just say that? Yeah, I guess I did. Ted Danson years ago, came out and he said, and Dennis Prager put him right in his place. I love Dennis Prager, by the way. He’s awesome. Prager, you check out their videos. They’re great. In fact, if you have millennial age kids, make sure your kids subscribe to the Prager, you YouTube channel. It is fantastic. short little videos. very concise. done by lots of famous celebrities Adam Carolla is one of them. And they explain various issues and topics and fiscal policy and monetary policy and socialism. shoes and all kinds of interesting things. So Prager, you I’d highly recommend it. I have no stake in that recommendation except the fact that I donate money to them. And I think they’re doing a great job. Yeah. Ted Danson he in the 90s. You know, he said, Oh, America is a racist nation. Dennis Prager says, okay, Ted, compared to what? Compared to what compared to what other country? Is America, so racist? Right. And I mean, it’s a good question. That’s the question we always have to ask ourselves. When I talk about real estate investing, and I talk about how to analyze a real estate deal. You know, I talk about the ratios and these numbers, and it always is a compared to what question, I absolutely hate it when someone cites statistics. And they’ll say, Well, you know, 30 million people this and that. They don’t say something based on a per capita, right? They don’t say, based on a percentage or a ratio or a comparison, maybe a year over year comparison, when you’re looking at a real estate deal, you know, it’s all about ratios. I mean, the simplest part of it the first metric we use as real estate investors, the rent to value ratio, right? It is so simple, yet you will get people sophisticated people, it blows my mind. They’ve got they’ve got a bachelor’s degree from a great school. They’ve got an MBA from another great school, maybe Wharton, and they can’t get their head around the idea that you know, because you get $4,000 a month on your home in Los Angeles, California, that’s worth $900,000 or a million dollars and you only get $1,000 A month on that house in Indianapolis and another 1000 on the house in Memphis that you own. And there you got 2000 and you only invested 200,000 versus investing 800,000 or 900,000 or a million dollars in the other one that only yields 4000. It’s all about the ratio, the ratio, that’s the thing, that ratio is key. Okay. So let’s look at a year over year. Okay, now, there are some predictions coming out here from the Mortgage Bankers Association. And from our friends, our government subsidized lenders, thank you very much at Fannie Mae and Freddie Mac, and they are year over year comparison home sales this year versus next year 2018 prediction. Now, here is the interesting thing before I tell you these numbers I want you to consider number one. There are three types of markets. No one I’m not going to say cyclical, linear and hybrid, if that’s what you thought I was going to say, No, this is different when it comes to home sales. I’m going to tell you that there these are the three types of markets. buyers market seller’s market, and they brokers market. Yes, think about us brokers. Basically, we basically we are a broker, although a non traditional one, we are a referral network. But we do, of course, maintain a broker’s license in my home state, the Socialist Republic of California. And in so doing, I have noticed over the years that the typical market that everybody calls a quote unquote, good market is a seller’s market. And what everybody calls a bad market is a buyers market. So of course, when it’s a seller’s market, what we mean by that is Typically, is that sellers are in control, they are able to command high prices, and they are able to dictate the terms of the transaction. And that’s a market where inventory is low, but affordability is high. Now here’s the thing we have to overcome. Well, there are many things we have to overcome. But one of the things we have to overcome as real estate investors is we have to overcome our own ego. And in a seller’s market when you’re trying to buy your ego will get bruised. Okay, get ready for your ego to be bruised. shocked me many years ago, a friend of mine Rob, who was really involved, by the way with you know, helping me get investors and so forth for a while, and he was a mortgage mortgage broker. And Rob was a real exotic car aficionado. He used to buy and sell Ferraris and Lamborghinis and All these crazy exotic cars that pay I wouldn’t touch those things if I were you. But anyway, he was really into them. Now listen, I would be into cars like that, too, if you can actually use them the way they were designed to be used, but you can’t without going to jail or at least getting a million traffic tickets, and paying exorbitant insurance rates. I like a thrill just as much as the next person. You know, going fast can be fun, no question about it. And if you have a lemon Tesla, like I do a piece of junk, like my Tesla Model X, then you can still go fast. But the question is, will the doors actually open? They probably won’t. Anyway, that’s another topic. So Rob surprised me with something he taught me about the exotic car business and it applies to real estate. Here it is You ready? It is very difficult. No matter how much money you have to buy a Ferrari, from Ferrari. Now you can buy one on the second day. remarketing and buy used Ferrari that’s not so hard. But if you want to buy one of their cars, they’re not just gonna easily sell you one. They’re pretty picky and snobby, at least they used to be when Rob was engaged in, you know, buying and selling Ferraris all the time. And that kind of surprised me because as consumers, especially American consumers, in America service is pretty good. Well, unless you’re in Miami, then it’s not so good. But you know, compared to say, Europe or most many other places around the world, and Listen, I’ve been to 81 countries and some of them I’ve been to many times, I’m going back to Jamaica, for the second time tomorrow. I’ll be in Jamaica for four days. By the way, do you remember this is my second trip to Jamaica? Do you remember that? Remember the podcast I did in Jamaica before? Yes, I did live from Jamaica. And I had My Butler, our Butler, we had a big house with a whole bunch of us. And I put the butler on the podcast. And I asked him, Why is everybody here so happy? And he says, Wow, man, you know, I think it’s the marijuana. I couldn’t believe he said that on my show. Go back and listen to that old episode. It was pretty funny. I just about hit the floor when he said that, and we aired it, because hey, it was funny. Okay, so Ferrari doesn’t want to sell anybody a car No matter how much money they have. And not exactly, but you get the idea. They’re kind of picky about who buys their cars, in essence. And the same is true in a seller’s market. As consumers and especially as American consumers, we’re kind of spoiled because service is pretty good and capitalism works really well. I mean, better than anything else, that’s for sure. Even though there are some that want to go back To the old way, when people waited in line for 62 hours to get a pair of shoes, and by the time you got your pair of shoes, they didn’t have any more in your size. And this is exactly what my guide in Romania told me about how life used to be under communism, and many, many people because I’m quite morbidly fascinated with communism and the Eastern Bloc and Russia. I’ve been to many of those countries many times. And every time I have these conversations with people, I just, I get back to the USDA and I kiss the ground and I think how lucky I am. And guess what, there’s 320 million of you other people that are so lucky as well. Anyway, okay. And not just the US if you live in any westernized country, you get the idea, right? It’s just the US is just a proxy for the concept of capitalism. We’ve done it pretty well over here, but hey, there’s a lot of regression unfortunately. So nowadays, you know, You have money in your pocket, it’s burning a hole in your pocket, you’re ready to buy properties. And you go out there and it’s like, wow, just because I have a bunch of money doesn’t mean I can really buy a property. I gotta kind of earn it. Yeah, yeah, actually do a little bit. So that’s one of the things you know. And listen, if you want to overpay or you want to buy crappy properties, heck, you can do that all day with your money and make bad investments. But if you want to buy good quality properties at good prices, then you know, you might get your ego bruised a little bit. And I remember when I was in the traditional real estate business in Irvine in Newport Beach, California, and those areas around Orange County, California, when we were in seller’s markets. I mean, it was amazing the hoops people would jump through to try and buy a house. You couldn’t believe it. They would, they would like find a house they’d like and they would kind of stock for the city. And they would drop by with their family and say, please sell us your home and they’d write them letters and put a picture of their family in the mail with a letter and send it to the seller. And it was unbelievable. And that’s a little bit like what we have now. So it’s fair to ask the fair question to ask is, is this the sign of a bubble? fair question. In the cyclical markets, absolutely. It is the sign of a bubble. We are in bubble Ville, if you ask me now, I could be wrong, but I don’t think I’m wrong. The the massively overinflated markets are just way beyond any point of reason. But just like the US and other governments around the world, I mean, look at Japan, the highest debt level in the civilized world. How long can they kick the can down the road? Well, they can probably do it for a while. Maybe. I mean, you know, everybody says the US is going to crash, the dollar is going to collapse. I mean, I’m so sick of reading that stuff. I was immersed in some of these ideas for many, many years. And then one day I kind of woke up and I realized how mistaken these belief systems are. Why? Because of the question I opened the show with compared to what, hey, Ted Danson compared to what? Hey, you know, Peter Schiff, when you say the dollar is gonna collapse compared to what compared to what compared to what other country? Is the US doing so poorly? You know, that is the question. Now Trump, of course, gave his first speech to the UN today and I don’t know, you know, that’s a little. It’s getting pretty frothy over in North Korea, shall we say, but Maybe maybe love him or hate him. Maybe Trump is saying what needs to be said. And there’s kind of a business plan to the idea of war. And trust me when I say this, I hate or, or as hell, thank God. I’ve never actually been in a war. But I hate the whole idea of war. The idea that war stimulates the economy is the most absurd idea you ever. I mean, that’s just a completely absurd idea. Why is it absurd? Well, because it destroys things. It’s fake production. It’s fake productivity. It’s fake work. You know, it’s kind of like fake news. So war does not stimulate the economy or destroys things, and creates a lot of government debt or inflation to rebuild things. And of course, it has this terrible byproduct of killing people, which isn’t so good either. So yeah, I hate war. It seems like every president that gets in that office, as soon as they get in, they turn they somehow by the powers that be maybe someone you know from the Bilderberg Group on the first day in the Oval Office comes in there and says, we support the military industrial complex. We support globalism, and you’re gonna be involved in this war in the Middle East and maybe that one in North Korea, but, you know, it’s kind of a business plan. It’s kind of the reagan esque business plan of a lot of pain to not have a lot of pain in the future. And you know, what I mean by that is obviously bankrupt the Soviet Union by outspending them basically and talking tough, which reagan did. And I believe in hindsight, that was a very good business plan. I’m not so sure it’ll work out that way with Iran or North Korea or the Muslim radicals. I don’t know but We shall see we shall see. Okay, so a buyers market a seller’s market and a broker’s market, so we would be in a seller’s market now. But the thing you’ve got to ask is, could there be a bubble? Not in the linear markets? I really don’t think so. I mean, call me overly optimistic. If you’re a doom and gloom, er, all the doom and gloom are seem to be wrong all the time. But maybe you’re one of those listening and you think I’m just too optimistic? Well, fair enough. You can think that but the lending has been conservative. The banks are not out of control this time around. People have to really qualify for loans. They have to put real money down. Of course, there’s a small margin of fraud going on in the mortgage world, there always will be. But it’s nothing compared to what was going on. Before the Great Recession. It’s nothing and in the linear Markets prices aren’t even up that much. I mean, they’re not they’re not that high. Okay? That is another huge component of it. Okay. So if you are waiting for the crash in the linear conservative markets, you might be waiting a long, long time. And here’s the problem with waiting. See, you might think in a very simplistic fashion, that if you wait, and in two years, you just keep your powder dry and you keep your money in the bank where you are surely losing money. With taxes and inflation, you are definitely positively losing money in the bank. Right? You keep your money in the bank. And then in two years, you think the market will crash and that house that you could buy today for $120,000 will come down in value, and you’ll buy it for $20,000 discount, and you’ll only pay 100,000 for it. Or maybe the discount will even be bigger. Maybe the discount will be 30,000. So in two years, you know, if your prediction is there’ll be a crash next year, and then it will take another year for the prices to, you know, decline. And you can buy it for 30,000 less than you can today. Well, what would you have missed? Well, if you go to Jason Hartman calm, and you look on the Properties page, and you look at the performance on there, and you look at the largely realistic projections, but hey, if you don’t like our projections, then or I should say our local market specialists projections, then subscribe to property tracker and do your own projections that will make you a good investor and pay for $27 a month you can’t beat the price right? You can do that at property tracker comm or right through our website at Jason hartman.com right on the front page. And so you can subscribe and you can play with the numbers yourself. But look, the numbers will show you that you’re probably going to get somewhere in the ballpark of 20 to 35% annual return on investment, overall, all things considered. Now granted, the future ain’t what it used to be as good old Yogi Berra says, and everything subject to change, and nobody knows what will happen. But I know for sure that for the people out there who think their ego is bruised, and they want to wait, and they just think the sellers are too greedy, and there’s going to be a crash and they’re going to get there come up ends. And you know, at some point, they probably will. There are cycles in the economy. There’s no question about that. No question at all. I wouldn’t deny that for a new york minute. There will be cycles, but The problem is while you wait for the cycle number one, you could be wrong. And market timers are notoriously Wrong. Wrong Wrong. But let’s say you’re right. Let’s say you’re right, you’re going to lose the return on investment. In the meantime, while you wait. And if you’re right, are you going to be perfectly right? Are you going to time it exactly right? Or are you just going to get it? Partially right? Are you going to be are you going to buy right at the bottom? And if you buy right at the bottom, how did it get to the bottom? Did it get to the bottom because interest rates went up and the mortgage cost got a lot higher. Remember what I said when it’s a seller’s market, it means that affordability is high. That’s why it’s a seller’s market. See step back. Step. back from the canvas and look at the big picture, right? Don’t look at the brushstrokes, look at the big picture. Why did why did the prices get low? Well, they got low usually because the affordability was bad and they had to get low to make affordability better. See, you’ve heard of the concept and I remember my college biology class, the concept of what homeostasis right. That means that the body is always trying to adjust itself to find an equilibrium. Right. And certainly the market does that too. That’s how supply and demand and in free markets work. They are constantly trying to find an equilibrium. They’re constantly trying to find what is called price discovery, price discovery, very key phrase and price discovery now says the prices should be higher and when the interest rates are Higher, not low like they are now, then price discovery will probably say that the prices need to go lower. In fact, remember, what’s the equation for that? You remember, I’ve talked about it before. It’s 1% equals 10%. So approximately 1% in mortgage interest rate will make a 10% difference in price. So in that example, we just talked about, if that $120,000 house goes to 100,000, then that means the likelihood is the interest rate would be about 2%. Higher, and you’d still have the same payment. You see how that works. It’s interesting to look at all of this stuff. Now. Here’s what he that. Yeah, this is complicated. Everything’s complicated. So we’ll have to talk about this on another show, but we definitely talked about it on shows a long time ago, because see, when you look at the interest rate versus price equation, right, that does play out in a different way as you go forward in time. See, sometimes you can get really lucky. And I’m using the word lucky with a lot of intention, because I bet you’re not that good. I certainly know I’m not and I’m probably more experienced than most of you listening because I’ve been doing this a long, long time and thousands of deals and just lots of lots of experience right? And so what happens is as you go forward, if you get really lucky, you will buy at the bottom of the market and price. You will go in either take a high interest rate mortgage, which is probably why the price of are low, that’s usually the reason right? And then the market will turn around, and it will turn around, because they’re lowering interest rates and money supply eases up. And a lot of money flows into the market. And the rates go down and you refinance. And so guess what? You only tolerated that high interest rate mortgage for maybe a year or two, and then you got to refinance it later. And your rental property performs better and better. So going forward, it does change the dynamic and we can that’s a lot of analysis to really do that. to really delve into it understand that. But I got to finish on these couple of topics. First of all, see how long it takes me to get to the point sometimes Okay, I apologize. Total single family home sales. Remember our three friends at the Mortgage Bankers Association, Fannie Mae and Freddie Mac their predictions This year they predict we will have 6.2 million single family homes sold next year. Their prediction is and they’re different. Interestingly for each of them, Freddie Mac says we will have 6.3 million sales next year. And Fannie Mae says we have 6.5 million. So Freddie Mac says just 6.3. We’re going to move up a little bit. Fannie Mae says we’re going to move up to 6.5 million sales. But the Mortgage Bankers Association is the most optimistic, and they should know because they’re the ones pushing the loans through. They say that next year, we will do 6.8 million home sales. Now. One of the points I really wanted to make when I started rambling on and on about this is this point. Home Sales are not necessarily a sign of market. Help. Why? Why do I say that? Here’s why I say that sometimes in Now, remember, we have to make the assumption that health means seller’s market, which I don’t think it means that but that’s what everybody thinks. So I’m just going to go with the crowd, okay? And I’m going to assume that a seller’s market is a good market. And a seller’s market is a healthy market. Now, I don’t actually believe that. I think the healthiest market is the third choice, the brokers market. No, I’m not being self serving, even though I am not immune to serving thyself, and neither are you. None of us are and that’s why capitalism works so well. And when we all come to terms with the fact in life that we all have needs and wants, and we’re going to try and satisfy our own, you know, we’ll usually do not always but most of the time, we will work hard and we will produce value in the world. make the world a better place and create progress. And that’s a good thing. And that’s why capitalism is a good thing. So why is the brokers market in, in your host humble opinion the healthiest market? Because the brokers market is more even keel. Remember several episodes I said that I hope I didn’t regret saying this. I said that I wish the market would slow down. Wow, a startling thing for someone in my position to say. But the reason I said that is because it is, you know, it’s hard to operate in these low inventory markets. So what does that mean tie that into what I was just saying, why is home why the number of home sales? Why does that number not necessarily indicate market health? The reason it doesn’t necessarily indicate market health is because sometimes the market may be so you know, so powerfully moving, it may be such a powerful seller’s market, that inventory is reduced to such low levels, that home sales actually decline. Okay, so is a seller’s market, a so called healthy market does not necessarily mean more home sales. In all of the statistics, you have to tease out, you have to tease things out and really understand the dynamics. And this is something that people like Bernie Sanders just will never understand. Okay? Because they don’t know how things work in the real world. Okay, sorry, Bernie. I’m, I think you probably mean well, but you’re clueless. Okay. So you have to tease out what things really really mean. All things considered in here. So in the market dynamic, where you have a very strong seller’s market, it first you will have very strong home sales. And then you will have a point at which the inventory gets so gobbled up, and so picked over that home sales actually decline, but prices are pushed up even further to further and further heights. Certainly this the poster child for this would be drumroll please. The poster child would be that seven mile by seven mile little bit of a peninsula. Yes, the Socialist Republic of San Francisco. That would be a perfect example of this astronomical prices because of low low inventory. But that doesn’t mean it’s the place to invest. Okay, let me talk about pensions and demographics for a moment. So we’ve talked about these subjects many times over the years. But before We go I just want to kind of wrap up with this. And you know, before I do that, how about a little housekeeping? Meet the masters of income property coming up. We’ve got john burns, john Byrne’s real estate consulting, I quote his stuff all the time on the show. He is speaking mayor. We got a lot of other great speakers we are working on that we’ll be in La Jolla, California in January. Jason Hartman comm slash events, get your tickets, early bird prices, venture Alliance mastermind group in Palm Springs, California coming up in October, you can go to Jason Hartman calm talk to your investment counselor, or go to venture Alliance mastermind.com for more information on that, and you can always come as a guest to our venture lions mastermind events on a one time basis. And so check that out. And that’s just a great group. I love our venture Alliance retreat weekends. Those are awesome. once a quarter we do them and they are. They’re just they’re just one of my favorite things to do. Okay, demographics and pensions. So last time on the show, we talked about how messed up some of these states and municipalities are around the us with a pension crisis. And that is absolutely true. But the famous question is, compared to what? Compared to what? Well, in the US, overall pension liability is somewhere around 6% of GDP in Germany and France and don’t quote me exactly on these numbers because I was listening to them in an audio book by Mark Stein, brilliant guy. So I was listening to one of his audio books today. And he was talking about how in Germany and France and in Europe at large, a lot of the EU countries, the pension liabilities are about I mean, are you sitting down this is mind boggling 15 to 17%. And in Greece, the poster child for socialist over entitled lazy economic disaster. You ready for this? 120 4%. Now, here is where it ties in, obviously with demographics. You’ve got the woman in Portland who thinks she’s so enlightened. And she’s doing such a favor for the world by not having children, because who would want to bring kids into this ugly world we live in, she says, and it’s bad for the environment. Nevermind that Malthus has been wrong for like what two three centuries now? You know, this Malthusian stupidity. Okay, people are the resource people are not the problem. Admittedly. Some people are the problem, but most a lot of them are the resource to, you know, they solve the problems of pollution and environmental problems and so on and so forth. Right? So if you look at the birth rates, it is shockingly tragic. In Europe, in most of Europe, it’s somewhere around 1.3 Kids per women. Okay, per female 1.3, which is extinction. extinction is forever as the environmentalist and environmentalist like to say extinction is forever. Of course, you know, it’s a huge problem when it’s a lizard or you know, a bug or something like that. But when it’s a human, you know, who cares, right? In the US. I think we’re at about 2.1 per woman, okay, so much healthier birth rates in the US, and why is that important? Why does it matter? Okay. What matters Because who is going to support the older people? This pension problem? If you simply looked at the percentages, you would say, Oh, yeah, well, the US, you know, we got a bit of a problem. But Germany and France Oh, that’s really bad. And Greece, that’s a disaster. But you know, what makes it more of a disaster. There’s no kids to fix it. There’s no young people to work and pay into the system. I mean, and even if there are young people, the whole lazy over entitled European mentality and look, I was born in Europe, I get to, I get a little bit of latitude on complaining about my home continent, okay. In Spain, the youth unemployment rate under 30 years old is like 56%. Okay, I mean, the author Mark was joking in the book and I don’t know if he was joking. It’s not really a joke. He’s probably right on Maybe he was using a little artistic license here. But he talked about how the typical ideal is you live at home and with your parents and you hang around in and out of college until you’re about 38 years old. And then you know, you demand retirement at 47. You spend six weeks per year, on the French Riviera, you’re marching in riots to promote a 28 hour workweeks. Folks, at some point, someone has to actually create value in the in the world economy, and they got to go to work. And they got to pay into the system. So you know, when when, when when you take these pension numbers and you look at them, yeah, they’re bad, but they are tragic. Pathetic. That’s why I have said over and over and I hate to say it, Europe is over. It’s over. I mean, it’s all it takes, is a couple of decades. Then you’ll see how top heavy these economies get. Yeah, their pension burden as a percentage of high is high. But the biggest problem they have is they have no birth rate. They have Extinction Level birth rates, no one to pay into the system. And if if the young people don’t come in, and they don’t pay into the system to support the older people, it’s it’s just like we’ve got here. I mean, look at the demographics in the US, right? Not nearly as problematic, much, much better in the US. But still, you know, definitely some problems, right. So we have the baby boomers, and they were born between I can’t remember the years now but anyway, you get the idea. You know what a baby boomer is there are about typical baby boomers about what 55 years old is about the youngest baby boomer nowadays, and then they go up to about, I don’t know 68 or 70 or something like that. And then you’ve got Gen X You’ve got my generation, right? This tiny little demographic cohort, we’re really small generation. So I’m kind of my little tiny piddly generation is out there with 35 million people or some tiny amount baby boomers 76 million big, huge generation. I got to think how fun my life must have been for the baby boomers who sort of went through that like the 60s and there were so many young people around and for me, it wasn’t like that at all. It was like, I was in this last generation Gen X, which sort of was absent largely. And then the big generation behind them the millennial generation, we’ve talked about extensively, you’re probably sick of hearing about it on my show. Well, that’s about 80 million Americans. So that’s a huge demographic cohort. That’s why the US you can criticize it all you want and say it’s a mess. We spend too much money We’ve got too much debt, we’ve got a pension crisis. And you’re right. You’re absolutely right. But the question is, the right question is compared to what? Compared to what? That’s the right question for so many things in life, compared to what? You know, the next time someone posts some idiotic comment on one of your social media accounts, simply ask the question, compared to what compared to what? And see if that doesn’t like blow a circuit and they’re in their little brain and, and see what they say compared to what? So I guess that’s what I’ll leave you with today. We got flashback Friday coming up. And then a couple of great new episodes next week, and we’ll have some guests so you won’t have to hear me ramble all the time solo like this, but I just thought I had to talk to you about a few things. So pension crisis. buyers market seller’s market brokers, Mark And begging the question of the waiting concept. We covered all of that stuff. So I want to wish everybody happy investing, and we’ll talk to you on the next episode.
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