The Chinese economy is experiencing a near-complete collapse.

Nearly half a million customers have lost their deposits as the banks lent indiscriminately to housing developers who are now facing cascading defaults.

Here’s the story the Chinese Govt. doesn't want you to know 👇
All of this begins with one thing - Real Estate. Chinese are obsessed with Real Estate and 70% of China’s wealth is tied to real estate (twice as high as the US).

Reports are now emerging about real estate Ponzi schemes, Mortgage boycotts, and an unfolding banking crisis
Chinese citizens prefer to invest in Real Estate as the Chinese Stock Market is notoriously opaque and unreliable.
The Shanghai Composite (similar to our S&P 500) has not yet recovered from its 2008 peak, despite China's GDP growing by nearly 3 times since then!
For some context on how crazy the real estate market in China is, the median home price in New York is around 10 times the median annual income, but in Beijing, this can be as high as 25 times the median annual income!
The insatiable demand lead to Ponzi schemes where developers pre-sell homes (which are not even built), use the pre-sale money to start more projects, and then collect more pre-sales from new projects. Buyers started a mortgage boycott as the properties have not been completed.
The crisis spread to banks, as they had loaned out depositors’ money to developers who were now defaulting on payments.

As frozen deposits mounted and protests erupted all over China, investigations revealed critical systemic issues
For starters, during the covid crisis, the government had lowered the 10% limit on assets that banks had to keep in cash and investigations revealed corrupt practices in the banks, some of which were taken over by criminal gangs who transferred the deposits outside the country
With reports suggesting that over 400,000 customers have fallen victim to such activities, public trust in the banking system plummeted and the government stepped in to avoid bank runs and liquidity crunches. But their strategies seem, at best, questionable.
The government has agreed to pay up to $15,000 dollars for lost deposits, but only if the banks weren't involved in “non-compliant” transactions.

The government’s strategy for overleveraged properties is to lend more money to finish them and pretend that everything is fine.
Whether these strategies can revive investor confidence or is simply delaying the inevitable remains to be seen, but China is unlikely to meet its targeted 5.5% GDP growth rate, and right now, youth unemployment is at nearly 20%!
As the semiconductor shortages showed us, events across the world can have serious consequences back home. Chinese companies have substantial investments in US equities and might sell them during a crisis. This can tilt the investor sentiment to fear and trigger selloff
Short-term investors should keep an eye out for news from China. The events and its impacts are covered in more detail in my newsletter, so don’t forget to subscribe there!
A lot of research went into this as I usually don't cover events outside the U.S. If you found it insightful, please share it by retweeting the first tweet!

Follow me @GrahamStephan for more interesting insights into the world of personal finance, investing and stock market.
Well, this blew up! You can find all my deep dives like this👇

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More from @GrahamStephan

Aug 10
All of us have once been in a situation where we realized that we can't get a credit card without having a credit score...

But you can't get a credit score without having a credit card!

Fret not - I have evaluated 100s of options to find the 5 best credit cards for beginners👇
If you could just follow along with this thread, you will be able to get a perfect credit score as fast as possible, get a low-interest rate on your loans, and do all of this without spending a single dollar!
1. Discover it Secured Card - This one is considered the holy grail of credit cards for someone who is starting their credit journey.

I have recommended this card multiple times and it's because there is no other card that comes even close.
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A lot has changed from my first job to now - except for one habit.

This habit accelerated my journey towards building wealth.

It's not just me - Many people I know who built massive wealth all have this behavior in common.

Here's how you can use it to build wealth.👇
Here's the secret: Spend way lesser than you make.


No, this isn't about punishing yourself.

Saving $5 on a coffee isn't about waiting for a perfect day in the future when you can splurge

It's about preparing your mind to handle money. Let me tell you a crazy story.
Jack Whittaker won a lottery at 56 - for $314 Million!

Luckiest guy in the world? Not quite. Jack's marriage broke up, his granddaughter died of a drug overdose, and his house burned down.

Here's the kicker to the story - Jack was a millionaire even before the lottery!
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Jul 23
The auto industry collapse has just begun and this would be one of the worst times for you to buy a vehicle.

In a normal market (pre-2020), Auto Loan delinquencies hovered at 2 to 3%.

Today that number is exploding with nearly 1 in every 4 loans in default in Washington DC👇
The key issue that caused this is how Auto Loans are issued.

Currently, Americans owe more than $1.2 Trillion on auto loans (the highest in US history and a 75% increase from 2009).

Given the fact that more than 85% of cars are financed, we are looking at a massive problem.
I did some digging and found out that over the last 10 years, car dealerships have begun making more profits from the financing of cars rather than the car sales themselves.

Translating from auto sale to loan sale business has resulted in a loosely regulated grey market.
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Jul 6
Michael Burry @michaeljburry has once again issued an ominous warning about the Stock Market and is expecting it to crash more than 50%!

But, should we listen to him?

It's high time we put him to the test - to see if he is a broken clock or a genius ahead of his time!

A 🧵
@michaeljburry Michael Burry isn’t exactly the most “formal” when it comes to issuing his warnings. Rather than talking to a journalist or posting a video, he takes to Twitter where is posts his detailed research and then immediately deletes it.
@michaeljburry But fear not - We have an archive account @BurryArchive that captures all his tweets.

As for his prediction, he expects the Shiller PE to drop to 16 translating to the SP500 of 1800's which is more than a 50% drop from its current levels.
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I started Graham's Newsletter in March to go deeper into the topics I cover in my videos.

In just 4 months, we've crossed 10k readers on @SubstackInc ! 🥳

This wouldn't have been possible without y'all. Thanks a lot!

Here are 10 of my best posts on the road here 👇 🧵 Image
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Jul 1
The used car market is on the brink of an auto loan collapse that can shake the entire industry.

I am shocked that more people are not talking about this!

We are facing a 2008-ish scenario in the used car market and honestly, it's a disaster waiting to happen.

A 🧵
When buyers purchase a car, a vast majority (~85%) are financed. The problem is that, unlike real estate, auto loans are not subject to strict underwriting requirements allowing almost anyone to get one.

Buyers with lower credit scores were funnelled into loans with 2x interest!
You can see how crazy this is in the latest auto loan consumer reports.

- 25 to 50% of the loans were given to customers who might not be able to repay it

- Lenders only verified the source of income and employment only 4% of the time
Read 15 tweets

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