CW 1021 - Prepare for the Next Recession, Strategic Defaults, Leveraging Debt Properly with Kerry Lutz

Just invest. It's still a great thing to do. I know it can be scary to a lot of people. Jason's been doing this a long time. He's got a lot of knowledge. We're in an age of technology and everything's at our fingertips. You can do a lot of homework on your own, but in the end, make sure you're talking to professionals like Jason.

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 multimillionaire 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, you really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome listeners from around the world. This is your host, Jason hartman with episode 1021. 1021. It's great to have you here today and thank you for joining me from the Southern Command here in South Florida in hot, humid South Florida. So we got a bunch of stuff to talk about today. I want to start start planning with you. I think we need to start talking about the next recession. Yes. How do you like that? This will be a very happy topic today. Yes. Let's talk about the next recession. Let's talk about the Supreme Court. Let's talk about this new demographic of buyers, the rise of the older single female home buyer and renter. Some interesting stuff there. Walmart has been awarded a patent for blockchain based medical record keeping. The Walkaway movement. Have you heard of the Walkaway movement? Check out that hashtag on social media. Walkaway. Pretty interesting stuff there. Identity theft, America's oldest man. This is a very sad story. Why am I sounding cheerful? I shouldn't sound cheerful. This is terrible. But we talked about identity theft recently, folks, and now the oldest man in America has just become a victim of identity theft. There's a crowdfunding campaign going on for him. I'm sure he'll be okay. In fact, he'll probably be very enriched by it as Americans are such good people and come to people's aid. So a bunch of stuff we're going to talk about that. A lot of Other things. But let's get busy planning for the next Great Recession. Well, it probably won't be a Great Recession this time. It'll probably be kind of boring compared to the last one. And that's a good thing, right? So I've got Kerry Lutz here with me to talk about that today. Kerry, how are you?

A pleasure to be back, Jason, it's.

Good to have you. So 10 years ago we went through the Great recession. It's been 10 whole years already. It's been a decade. A decade has gone by and I just thought, you know, I was thinking yesterday that it would be good to revisit this topic with our listeners because, you know, we tend to have short memories, don't we? And this was not a US phenomenon, this was a global phenomenon. I remember traveling around Europe 10 years ago as the Great Recession was happening. I was in Romania, of all places, very interesting country. They had just recently joined the eu. I traveled to Bulgaria, Romania, a few other places on that trip. And I remember watching the news, staying at the Intercontinental Hotel in Bucharest, Romania, and thinking, gosh, the world is kind of falling apart. It was falling apart. So, yeah, it's never too early to plan for the next recession, but I don't think the next recession's gonna be that terribly significant. You never know. Of course, predictions usually worth about what they cost and mine don't cost you much. But hey, you know, Kerry, by the way, you give me some major cred. I want to thank you for that. You made me feel better for my predictions. Actually, you were talking about that last time we chatted. You think I've been pretty good about predictions, huh?

Not so much your predictions, Jason. What it is, is your system doesn't matter whether your predictions or your forecasts are right or not. Your system for the majority of people who invested with you in single family homes over the past 13, 14 years, for the most part, if they listened to you, your advice, which was prediction free, they came out smelling like a rose and probably even wound up with more doors under management. If they didn't listen to you and panicked, well, then they lost money. But basically, what was your advice to your followers, your real estate investors after the CRIS crash?

Well before, during and after the crash, it was to simply follow my ten commandments. And these are just time tested things. They, they don't, they work in and out of varying economic cycles, especially commandment number five. I'm thinking of this time as I say that thou shalt not gamble. And when you buy properties that make Sense from day one. It's hard to make a mistake. Now here's the thing that happened, though. I remember with some of our clients, they might become a cl. I'm remembering one person in particular, and I remember that she came to our seminars back when I had an office in Newport Beach, California. You know, she probably started coming around 2004, 2005, and she was buying up properties and her properties were actually doing fine. But how she got herself into trouble is with properties she didn't buy through our network. It's properties that she had. She bought one property in, I think it was Tucson. We'd never been in the Tucson market. We've been, you know, in the Phoenix metro area many times. In and out as, you know, like, look, we go in and out of the market as it makes sense and doesn't make sense. So when the prices get too high, our clients that are there, they're stabilized, they're fine. But we're not going to recommend that new clients get into a market. Right. Because we are area agnostic, which is another one of the Ten Commandments. But it wasn't her properties that she bought from us that were straining her during the Great Recession. It was the other properties she had. I think she had one in California, in Southern California, probably Orange county, and then another one in Tucson that she didn't buy from us. And it was kind of a higher priced property that didn't make sense. So commandment number five is thou shalt not gamble. And the corollary to that commandment is the property must make sense the day you buy it or you don't buy it. And in these heady times, and we've been in these heady times for a few years now. I mean, Carrie, look, when things are good, people's memories get very short. I always say everybody's a genius in a bull market. And we start to give ourselves too much credit. Napoleon said it. Well, he said, the most dangerous moment comes with victory. The most dangerous moment comes with victory. And hey, if anyone would know, Napoleon should know. He met his Waterloo. Right?

Pride cometh before a fall.

Yeah, well, that's another good way to say that. Yeah. And so look at. Don't become complacent. You gotta always stay grounded. That's a very important rule. And so let's kind of take a look back. Let's do a little autopsy, if you will. Carry on the Great Recession because people have a short memory. We all do. We're all susceptible to this. I'm not just. I'm not just saying you listeners do. I do, too. It's way back in the rearview mirror. You know, it's been a decade, right. So what do we need to be reminded of and, you know, what do we need to plan for? I mean, things are booming. We are in a boom economy. A lot of stuff Trump is doing, love him or hate him, and I know a lot of people hate him, but as far as the economy goes, he's killing it, okay? I mean, his policies, his anti bureaucracy, his, you know, anti regulation policies, and you can hate him as much as you want, but you gotta give him some credit on the economy. I mean, things are booming. We are. You know, if you look at the Austrian school, which I largely believe in, you know, we should have a business cycle right now. But, hey, you can escape the business cycle or at least prolong it with good governance. Okay? And I think a lot of the Trump administration stuff that's happening is pretty darn good as far as the economy goes. Forget about everything else, just the economy.

Well, I would aver, Jason, that we never really had an economic recovery after the great crash. They were very subpar growth, a lot of it. Our economic statistics have been cooked for decades.

Oh, of course. Yeah.

And in fact, the recession started earlier than they claimed it did, and it never ended until Trump became president. And now we're seeing potential 4% plus growth. They just downgraded the first quarter growth to 2%. But the first quarter traditionally, and we're going with the statistics because we have nothing better to go with, but traditionally, the first quarter is the weakest quarter of the year. We had a lot of weather events and not to mention all of the hurricanes that hit various places. So you can't really go by a business cycle because we never got out of the recession until the months before Trump. And I liken it to when Rudy Giuliani was elected mayor of New York. You had these squeegee guys. Could not get rid of them.

The police, the squeegee guys coming up to wash your windows of your car.

With a dirty squeegee.

Yeah, right. They make it worse.

They, like, spit on the window and then use the squeegee. And once Julian had been elected, but he hadn't yet been inaugurated, all of a sudden, the cops had a war on squeegee guys, and they were driving them out of the city before Giuliani even became mayor. This is exactly what happened when Trump was elected. All of a sudden, he wasn't president yet. But the optimism and the willingness of people to invest, take out money. Business decisions all of a sudden went on turbocharged.

Absolutely, absolutely. No question. Okay, so yeah, let's not go too far on the Trump thing. But I do want to mention one thing, Kerry, you brought up a good point. And one of our clients, Aaron Copleson, reached out to Drew Baker and I the other day on Voxer and he was talking about insurance and how insurance rates were escalating. Look at folks. Don't just stand by. If you have your insurance company send you a renewal notice with a much higher rate, talk to your investment counselor. We can help you with that. One of the things you get from our giant network, look, we do more volume than anybody else I know of in this business. Well, we're not the 800 pound gorilla, but we're, we're okay, we're pretty good.

250 pound gorilla.

Yeah, yeah, 250 pound. And we' doing it the longest. Right. But by the way, the other lesson of this is don't take advice from people that have only been through one cycle. Okay? I've been through three cycles now. I've been doing this a long, long time. And just in the investment only business since 2004. But insurance, the insurance companies are definitely trying to raise rates and get you for this and that. And if they're not raising rates, this is another concept of inflation. You know, Carrie, how the bag of potato chips gets lighter so maybe the price didn't go up, but the bag is smaller, you know, and this is happening in everything. The same is happening with your insurance policies. There's more exclusions, there's more extras, riders, things that you got to add on that you didn't have to pay for in the past that now they're asking you to pay extra for or they're just not giving you at all. So shop for insurance. Contact your investment Counselor through Jason Hartman.com we can help you with insurance. You know, we've got the biggest network of anybody out there and we've got good providers and good advice. We can share with you on that. Okay, so back to the Great Recession. So we look at where we are now. Many economists are saying 20, 20, 2021, we're in for another recession. Look at the reality is nobody knows. But what we do know for sure is it's going to come again. So let's dissect a little bit and just bring our memories back in time 10, 11 years into what happened before. So the last recession. Now, Carrie, I'm kind of wondering. We've never Talked about this. I'm wondering if you agree with me on this. I say it was a two pronged event. The first part of it was the mortgage meltdown. That was the first thing that happened. But the second part of it was the Wall street hijinks. Okay. I predicted the mortgage meltdown. And listen, I wasn't the only one, okay. There were other people that predicted it too. It was just obvious. The loans were so liberal. It was absurd that, you know, Fogamir get a loan. It's just, you know, there's. Yeah, liars loans. There's going to be a foreclosure crisis. And those are the no do documentation loans. You know, there's going to be a foreclosure crisis. Obviously. Obviously. That was kind of easy to predict. You knew that the, the 31 arms and the 51 arms would start adjusting in late 2005. That was kind of easy to predict. Nobody noticed it. I said it was going to happen. In late 2005, I sold my other company to Coldwell Banker. We closed the deal. Listen to this, folks. November 11, 2005. And looking back, everybody said my timing was incredible. And it was, it was pretty good. But nobody noticed that the real estate market had slowed down until the following spring till about March or April of 2006. But what I didn't know, and what very few people knew was what was going on in the inside on Wall street. The way they were bundling loans and pools of loans and selling them multiple times. And there were these fake pools where there was no collateral in the pool and they couldn't even find the files. And it was just disgusting what was going on. Thoughts?

Yeah. Well, I kind of knew it was going to happen. I was in Vegas and there was, at the hotel, there's a sea of taxis. I've told this story many times. And on top of each taxi was an ad. Three bedroom.

Oh, high rise condo.

Yeah, this was three bedroom, two bath townhouse. No money down. Mortgage interest only 693 per month until the interest kicked in. And I think at that point you probably had negative amortization on these mortgages because they were teasers. And my partners, one on each side. I said the real estate boom is over. They're running out of customers. This is the only way they can get them.

It's the last gasp.

Yeah. And then you had these stated income loans, wage earner. It's one thing if I own my own business, stated income has a place. But when you're a janitor working for the Clark County Public school system and you state that your income's 350,000 so.

You can buy a $1 million.

That's probably not a good thing now.

You're probably going to get into trouble with that. By the way. Just. I always like to explain things. I know many of you know this, but amortization, of course, amort, the Latin word, to kill, to kill the mortgage, meaning you pay it off with principal and interest. Negative amortization is when the principal balance actually increases. Now you don't see these neg AM loans anymore, but they'll be back. We always have a short memory, you know, so we'll see them again in the future. Trust me, they'll be there. You don't see them right now, but. But we had this sort of two pronged set of events that caused the Great Recession and people just, so many people just walked away from their homes and they were simply just walking. I interviewed a couple of strategic default companies on the show. About 12 million Americans took advantage of this, and rightfully so. I mean, I think they should have. I took advantage of it. I remember I talked on the show about how one of my lenders that had maybe eight or nine loans on eight or nine different properties I owned, they sent a totally unsolicited letter to me and to all of their other borrowers. I couldn't believe it. I couldn't believe this. I thought there must be some incentive from the central bank or the regulators or it was just like advanced planning or something. And here's what the letter said. And I talked about this on the show. If you listen to the old shows or the flashback Friday episodes, you'll hear me talk about this. It's on there. The great thing is all my stuff's been recorded over the last 13 years or so. And they sent this letter to everybody. My payments were all current. Everything was on time. It just said basically, hey, we know times are hard. If you want a lower interest rate, just give us a call. And they were like just handing out free loan modifications. You didn't even have to be in trouble. Now most lenders required you to default where, you know, they basically told you if you called them up and you called B of A or Countrywide, you know, Countrywide was like the biggest offender. They just basically said, look, if you stop making your payments for three months, we'll modify your loan. You know, this was a bit of a dangerous game of chicken because you could end up losing the home in foreclosure because they would do this two track thing. And a lot of people, they, there was a lot of litigation over this, of course, because it was wrong what the banks were doing. And you know, the banks are all a bunch of criminals. Okay, the banksters. The banksters. But they were doing this two track thing where you'd be modifying your loan in good faith and working with them, but at the same time they'd be foreclosing on you. That was a dangerous game. But Kerry, thoughts?

There was a lot of nonsense going on with these banks and in this case they simply encouraged more people to default and to ask for loan mods. I'm sure everybody with a mortgage during that time period, whether they were current or not, asked for a loan modification because that was the. No one even knew what a loan modification was.

Yeah, a loan mod.

Until then, a loan mod. Nobody knew about mo.

Nobody knew what a loan mod was, but they learned. I knew what short sale was because as a traditional Realtor in Irvine and Newport Beach, California, during the 90s, I did a bunch of short sales, 64 of them to be exact. I counted because they were miserable experiences for my clients. And I just couldn't believe how they were sitting in their house, living there for free for, you know, six, nine months. But it was worse this time around. The last time around, I should say, in the Great Recession, people in Florida and New York were living in their houses, Carrie, for three years not paying the mortgage. And then they would get a bailout at the end. So the lesson here is debt is your friend. Just manage it properly and it always offers options. You make the lender your partner. Now, should you feel bad about this? I say no. I used to think yes, but here's why. First of all, if you listen to my old episodes on the giant bubble machine, there was a famous article in Rolling Stone magazine of all places about Goldman Sachs and the giant bubble machine and how the powers that be, the central banks and Carrie, we could spend three hours on this topic. They basically create these cycles to enrich themselves. What they do is they get all of the dummies, all of us little minions to come in and buy up the properties as they escalate the prices with cheap, low interest rates, the market drives up. They get all of us to put in their money and take out loans with easy, cheap financing and liar loans, and they basically, it's predatory. It's a predatory lending experience is what it basically is. It drives up the prices and then everybody defaults. They ruin everybody's credit. So they have to pay higher rates in borrowing. And most Consumers feel like it's their fault. Right? But it's really. There's a much bigger picture behind it. And then they go back in and they buy up all those assets cheap later and then they ride them back up and they're doing it right now. Look at all these institutional players in the real estate market. I mean, you know, Blackstone, Invitation Homes.

Invitation Homes. They bought them for nothing all over Florida. All over the country. Especially Florida.

They're the biggest landlord in the country.

Florida.

Or at least biggest single family home landlord.

Florida, Vegas, Arizona. I mean, they bought it all over Florida.

It was mind boggling.

And those houses were worth nothing when they bought them. They were just taking off the books of these banks that vaporize. Hey, I just talking about.

Remember Kerry, have you ever seen the movie? It's on Netflix. It's called 99 houses or 99 homes. Yeah, you got to see that. Takes place in Orlando. Yeah, go ahead.

Yeah, Good movie. And just like the big short.

Yeah, yeah.

So talk about.

Or Margin Call another one. You must.

Margin Call is a great movie. Demi Moore and Demi Moore's in that. Demi Moore was in it.

She still has a career. I never seen it.

Well, she was in. That was a kind of a low budget B class movie.

But it's a good movie though.

Who was in it? Was Michael Caine in it?

I don't know.

Anyway, you should see it. So I have a friend, to this day, she hasn't made a mortgage payment in close to 10 years.

This is your friend in LA, you told me.

Yeah, in LA she will go nameless. Well, she just filed a chapter 13.

Oh my God.

But mind you, like the weirdest thing, it was this is a case of the documentation of the mortgage, the assignment, all that stuff being corrupted then probably not even having the original docs. Almost certainly not. So they never really. They kept putting it on the foreclosure calendar. Notice of foreclosure, total scam on LA County. And then three days before they kick it off to the next month. And they did this for 80 months. And finally they said they weren't going to move it anymore. So they never took an affirmative act to foreclose, but they forced her to move. All right, that's what's interesting. They forced her to take the action. She has to bring the adversary proceedings in bankruptcy court and she has to prove what they did was wrong. They never had to prove what they did was right, which it clearly wasn't. So this is like passive aggressive behavior from the banks. From the bank. And I Told her I said, I don't believe that they would have foreclosed on you anyway. I think they just told you they were going to so you would make the first move. Because all they got to do now is just respond to your allegations rather than making their own allegations.

Yeah, it's not fair. The way the things set up is these banks are criminals.

Okay, but. But let's not forget, Jason, she got 10 years rent free. They've been paying her property tax.

It hasn't been too bad for her either. But yeah, there's certainly. Listen, there are certainly a lot of deadbeats that take advantage of the system. There's no question about it. But the banks take advantage of the people, too, because the banks, the last time around, at least in the Great Recession, right, they allowed the ridiculous appraisals to occur. They allowed people to get these cheap loans. They allowed them to. To lie on the loan applications. They encouraged it. Nobody in that system was putting the brakes on. They were letting it happen. They were complicit. They were totally complicit. And not just complacent, but complicit involved in it. And, you know, the thing that kind of moved the needle on my thinking on this was when I had that lawyer on the show. And of course, you can find the old episode. Just go to Jason hartman.com and type, what's the name of the company? It was youwalkaway.com. this lawyer was on the show. And I was kind of debating it with him. I was like, isn't this wrong? You know, that people are defaulting on their home? And he says, look, Jason, this is what the contract says. It says, pay the mortgage or give them the collateral. That's the choice. So you do one or the other. Right. You know, admittedly, this is not an option you want, but it is an option 12 million people took. Okay, so it's pretty popular. You know, you just always want to know that that backdoor option is available to you. And it's the implicit sort of option. Just like in the stock market, you have options, right? In real estate, that's an option. You have all these creative options you can use.

But what I would like to point out is people that did these strategic defaults really made a big mistake because they waited three, four years.

Well, a little longer than three or.

Four, but yeah, yeah, three, four, maybe five at the most. Jason, the market in Florida here, 2013, 14, picked up by 15.

Yeah, but say they were at the beginning of the Great recession, it was 2006 for them, right?

Strategically defaulting at the beginning, that became a strategy. More towards the end in 0, 9 and 10, that's when that became big. And then 11 and 12, it kind of reached its peak. But if they had waited to 15, they would have gotten their money out. And there's some houses nobody has ever gotten.

Do you know what blows my mind? This absolutely just blows my mind. You ready for this, folks? This is ridiculous. Sometimes some things in our world are so bass ackwards, okay? And this is one of them. How is it that these mortgage companies with these giant portfolios of billions and billions of dollars worth of loans staff their call centers with $4 an hour? People in the Philippines that don't understand what's going on, it's like mind boggling to me that they don't have real people. Like when countrywide BofA got their act together during Great Recession and they said, look, we want to do workouts. There was a time about maybe 2010 that they got their act together and they said, look, we want to do workouts. And they had a English speaking person in, you know, Woodland Hills, California. Okay, that actually was a thinking person not reading a script. And they said, look, you don't have to give us any documentation because like they pulled that on me. They said, hey, look, if you want a loan mod, just send us your tax returns and all this. And I'm like, in your bank statements and I'm like, I'm not going to send you that because you'll never give it to me. Number one, okay? My financial statement is way too good and I'm certainly not going to lie, okay? I'm never going to do that. But then they finally got their act together and they said, look, we just want to work these loans out. We'll just do it. You don't need to provide any docs. And that's after like one of the bailouts happened and they finally greased the skids and started healing the market.

I had a person I knew, it was unfortunate they were going through a divorce, but they had defaulted on their home loan and the bank and it was one of the majors. I don't remember which one offered them a 50 year mortgage at 2%.

Oh my gosh. Did they take it?

Take it, please.

Yeah, that's the best deal.

I'll take it. Obviously I couldn't take it. But they didn't take it. It was a crime to let that go because at 2% interest for five decades, wow, 50 years.

Do you know who the lender Was. Wow.

It was a major. I think it was. Chase wouldn't say for sure.

Yeah, the Chase. The scumbags guilty of the robo signing scandal. Remember when they audited Chase? There was, there was one. This is how scummy and disgusting the banks are, folks. Just remember some of this disgusting, sleazy, illegal, unethical behavior the banks were pulling. Chase had one human being, one human being in the entire country that was signing off the robo signing of all these foreclosures. And they did the calculation that that person would have had exactly like two and a half seconds to spend on each set of loan docs and sign off on the foreclosure proceeding. I mean it was just a complete scam.

Yeah, total scam. And I might be wrong. Maybe it was 30 years they gave him, but it was an inordinate 2%.

Still a great deal.

Take that back. It was 40 years at 2% because they just didn't want the house back. It was upside down. They were going to lose money and as it turned out, it was a great deal that they were offered and they'd be so far ahead right now.

Listen, the bank is the one who ran the price of that asset up in the first place, okay? It's the bank and the powers that be. The whole structure of the system.

You know, demographics too. There's a lot of demographics involved here. Expanding population.

But cheap mortgages and liars loans will make it happen every time.

Of course. Just like cars. What would the cost of a car be if there was no sub sub subprime auto loans or even any auto loans? What if you had to pay cash for a car? That car would be less than half the price it is now. Every car.

Don't get me started on student loans.

Oh well, imagine if it was my sister in the 60s when she went to Douglas College, which was part of Rutgers. She paid $50 per semester and I think housing was like another 35.

If the, if the lending dried up in any asset class, the price would adjust to the real market. And that's exactly what should happen. Especially with student loans because that one is probably the biggest scam of all of them.

And real estate loans, you should have a natural rate of interest.

Back in 2010, 2011, I was saying I hope Fannie Mae goes out of business. And this would not be good for my self interest, by the way. Okay. But I think it would be better for the overall world, definitely.

For sure.

Yeah, no question about it.

For sure.

Okay, so let's just talk a little Bit because we got to get on some other things and then wrap it up. But what should people do to be ready for the next recession?

One thing you got to understand, it's like the old Chinese proverb, the symbol for crisis is two symbols, danger and opportunity. So you should have some cash. You should be accumulating cash now because it's going to be a huge bargain sale. They always are. Certain asset classes get killed. So you want to have some money there. You want to be in assets that aren't going to be decimated by these gyrations, which means you want to be in assets that are linear markets.

Linear market markets, not real estate markets. The linear market, real estate.

Yeah, yeah, exactly. That's gone up maybe 20%.

So it'll not 120%.

Yeah, you don't want to be. Yeah, because those markets are the first. Miami, perfect example. Miami, that's trading way, way, way above the peak in 06, way above anything.

On the west coast of the United States, the expensive northeastern markets or South Florida. It's just crazy what's going on. I mean the prices are so beyond the point of fundamentals. They're just crazy. You know, that will evaporate. That'll be the first thing to evaporate in a big recession. The other thing is have long term, cheap fixed rate debt. Because if we see rates go up and you have adjustable rate loans, you're going to be the first that has to try and modify. And usually at the beginning of the cycle, if it's anything like last time around, the bank, banks, reality doesn't set in for them very quickly. You know, it takes them a couple years to get real too, just like it did the last time, like we mentioned. So that's one thing. Definitely have a little bit of cash, no question. You know, cash is always good. You know, if you really want to get into it and you think the world's fault the sky is falling, you can listen to my holistic survival show. Yeah, well, that's a whole other topic.

Look, it could potentially be bad. It could potentially be worse than the last recession. Even though it won't be real estate induced because we've got.

It's not going to be real estate induced.

Yeah, hugely inflated securities markets, housing markets to some extent high end.

In the cyclical markets.

In the cyclical markets we've got art and collectibles looming.

People are getting dumb and overconfident.

Painting is going for $450 million. So you see lots of inflated assets and a lot of securitized assets. It could well be student loans. There could be any number of black swan events triggering this.

You see, this time around, I think as far as real estate goes, the banks, even in the highly cyclical markets, the banks have been pretty conservative. I think the banks are pretty solid. Like most of them have done fairly well in that stress test they just did. A couple of them didn't do well, but most of them did pretty well.

It sounds obscene, but it's called Deutsche Bank. Yeah, they didn't do too good.

They didn't do so well, but. So it's not going to be the real estate probably this time around that causes the next recession. But you know what I think, Carrie, could be the auto loans. There's been a lot of subprime lending in auto loans, the student loan debt bubble, but also the automation and robotics bubble. We've talked a lot about that on the show. It's hard to know how that's going to play out. But look, I mean, there's that whole concept of UBI Universal Basic Income. We've talked about that on past episodes. There could be a lot of people displaced with some of the amazing technologies coming our way. And that could be a really big part of the next cycle, I think.

And let's not forget rising interest rates. Oh, yeah, Unserviceable government debt. The state of Illinois could default on their pension plan one bright sunny morning.

But we'll, we'll see bailouts. That's just like the California. All these mismanaged municipalities and states. I mean, the feds will just bail them out.

We got a difference here. Because most of the really badly marginal states are blue states.

Well, that's true.

I don't think for some reason that President Trump is really going to be interested in bailing out the great state of Illinois or California.

You saw that with the salt thing. That was like an attack on. That was like an F you to California, New York, you know.

Well, just to comment on that, that was Chuck Schumer and Nancy Pelosi's own fault because all they had to do was work with the Republicans. And that was sent, put out as a SOP to say, say, hey, if you don't work with us, it's going to be cut. The salt deduction is going to be cut to ten grand. So work with us. It was an invitation. And these morons. I don't want to get political, but if you're in a blue state, that's who you have to blame. Not the Republicans. It was an invitation to work with us, it probably would have been set at somewhere to 25 to 35,000, which would have taken millions more people out of this equation. All they had to do was open their door. Anyway, that's my sole comment on politics, Jason.

Yeah, that's good point, good point. Okay, we gotta wrap it up. But I just want to say to everybody, first of all, happy Financial Independence Day. It's coming up. Our next episode will be on the 4th of July, Financial Independence Day. And number two, join us in Hawaii. Okay? Take your tropical vacation in Hawaii in the first week of November. We've got two great events. We've got a brand new conference we're doing. And thank you to those of you who've registered already at this super, mega, incredible early bird price, which is like, I don't know, $800 off or something. We're selling some really cheap tickets right now. And you can go to jasonhartman.com and register for that. And this will be on Waikiki Beach. We're at the most iconic hotel on Waikiki Beach. It's gorgeous. We've got great room rates as part of our discount room block. And this is a brand new conference. We're doing a two day conference called Profits in Paradise. We're going to do this every year. And by the way, I know many of you listening have been to our Meet the Masters event over the years. We just had our 20th one in January and we are now moving Meet the Masters to spread these events out a little bit. So Meet the Masters is slated tentatively for March of 2019. Okay. So come join us in Hawaii and then come join us again in March of 2019. Okay, so Jason hartman.com for more info on that. Contact your investment counselors for anything you need. And thank you so much for joining us today. Happy investing. We'll talk to you on the next episode. Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the show's specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own and if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to itunes or Stitcher Radio or whatever platform you're using and write a review for the show. We would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.