CW 495 FBF – Interior vs Coastal States with Meredith Whitney Author of ‘Fate of The States: The New Geography of American Prosperity’

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Our great podcasts, visit hartmanmedia.com hey, this is Jason Hartman. Thank you so much for joining me. Do you know what day it is? Yes. It is Flashback Friday where you hear the best of the Creating wealth show and you hear some good prior episodes, some good review. Remember, we've got almost 5, 500 episodes out. And you know what? Itunes doesn't even hold them all. If you're an itunes listener, if you are listening on Stitcher. Thank you for joining us. So we want to bring you some good review stuff. Now, what's interesting about Flashback Friday, it's a little scary for me. I gotta be very, very candid with you on that because you, the listener, you get the chance to hold my feet to the fire. Did I make any predictions? Was I right? Was I wrong? I've been right about a lot of things, but I've been wrong about a few. So you can give me a hard time about that if you wish. But it's Flashback Friday and we will give you the uncensored best of the Creating wealth show with a prior episode. So let's dive in. Here we go. Remember, this is not current. It's Flashback Friday.

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Welcome to the Creating wealth show. This is your host, Jason Hartman. This is episode number 331. Thank you so much for joining us today. Our guest today will be Meredith Whitney. You've probably heard of her. She is the one that I mentioned a couple of shows ago after I recorded this interview with her. But she wrote a very pessimistic piece about Citigroup back as the financial crisis was just sort of starting on October 31, Halloween of 2007 and many Wall street analysts listened, they paid attention to this and she since followed and wrote other reports and predictions. And after she this tended to leave the companies, which she was talking about with lower stock prices as the stock market took her opinion seriously. So she's going to talk about that today as well as some of her other predictions, and we'll have her on here in just a bit. But first, I've got Brittany on with me. And Brittany has not been on the show for quite a long time, but if you're a longtime listener or a new listener that's gone back and listened to the prior 330 episodes, you've heard Brittany on the show before. And Brittany, welcome back. How are you?

Thanks. Good to be back, Jason. Yeah. It has been a while, hasn't it?

It sure has. And I have to say most of the team members that we have on the show are investment counselors. You are not an investment counselor. You work on some of our marketing and communications things at the company and help us out with a lot of that stuff. And you have recently redone our membership site, so maybe we could talk about that a little bit, too. But first off, I'm just back from Europe, and you just got back from Europe a few weeks before I did. What did you think on your trip? How did you like it? I want to talk about mine a little bit, too. Yeah.

I'd like to hear from your perspective more on the economic side of it. You know, I had a great time as far as being a tourist, carefree, you know, enjoying all the different touristy cities with my husband. I went to Switzerland. We were in both Zurich and Interlaken. We went over to Paris for a few days, and then we finished off in Italy between Rome, Florence, and then down south in Positano.

Yeah, yeah. Good stuff. And Europe, I tell you. Now, that was, I think, your second trip to Europe, right?

It was, yeah. I went back in 2007 for actually a few months. I was traveling over there as a student, and that was amazing and great times. Again, it was interesting to almost see the same things, you know, as far as fashion and shopping, at least I was expecting to find different things, say, in Florence, for example, at the different outside markets. And I mean, gosh, it's been several years and literally the same things were being offered as back in 2007. So it was a little disappointing on my end.

Well, you know, that's a very interesting point that you raise, and that can tie in with some of our discussions on this. And, you know, I know we have a lot of European listeners and a lot of European clients, and I was born in Europe and I love Europe. I've Been there many times. But I gotta tell you, I think Europe is. Is in bad shape. And when I say that, of course it varies country to country. Germany is in pretty good shape. But when you go to the south, I mean, I was particularly just concerned. I'll say, when I visited Barcelona. Now, I've been to Barcelona before, many years ago, and I was back this time, and my trip, I should probably just say what this trip included. I started in Switzerland, and I mentioned that a few episodes ago when I said, if you want to know what inflation feels like, just go to Zurich because everything is so expensive. But. But really my opinion didn't change much. The whole trip. It was so expensive everywhere, almost. I mean, I went to. You know, I started in Switzerland. I went over to Germany, where I was born in Germany. I actually saw my old house. And. And this was kind of interesting. I said to my mom, I said, this time I. I want to go and see that house where I climbed out onto the roof as a little baby, because I actually remember doing that. And she said, jason, that wasn't in Germany. You climbed out onto the roof when we lived in Rochester, New York. Okay. I'm like, oh, okay. Well, whatever. But it's kind of like you have these very faint memories of even being, you know, like a one or two or three year old. @ least I do.

Remember. You're listening to Flashback Friday. Our new episodes are published every Monday and Wednesday. I don't know if you do or other people do, but I.

Do. I think most of the time, I think I remember things, but through pictures.

Right?

Yeah. I don't know if your mom got any pictures of you crawling out on the roof, if she had any.

Time for that, but I don't think I got a. There was no picture of me crawling out on the.

Roof. She pull out her iPhone and videotape it or.

Anything. You know, they didn't have. They didn't even have Apple back then, much less the.

Iphone. How did they.

Live? Yeah, how did they live? That's a good point. Good question. But anyway, I was. She was in her investment club meeting in Alabama, and I was texting her, saying, okay, I'm gonna. I'm gonna send you pictures of where she. She actually remembered the address. She wasn't sure she was right. But I took a taxi, of course, a Mercedes taxi over the house. And, you know, it's still there. And that is exactly what you were saying. So little changes in Europe. And Dan Sullivan, who I had on the show, I believe he might have been Episode number, just a guess here, number 130. Dan Sul, a fantastic business consultant and, you know, entrepreneurial expert. He counsels and coaches entrepreneurs, and his company is called the Strategic Coach. He's great. And I did a great interview having him on the show way back. Like episode number 130, I think it was. And Dan Sullivan makes this point. He says, when you go to Europe, it's really beautiful. Of course, and this is. Especially when North Americans go there. Their perception is there's so much culture and so much history and beautiful architecture and museums and. And fashion and food and. And, you know, it's just so cool and so great in so many ways. But if you actually move there and you say you start a business in almost any country in Europe and you try to get anything done, you find that that whole continent, and this is not just true of Europe, but it's true of other countries as well that have a lot of culture and a lot of history in the US you can bash us here in America and say, you know, we're so nouveau riche. You know, we don't have any sense of culture in history. And you'd be right if you say that. Okay. Because most Americans don't. You're absolutely right. So I'm kind of leveling the playing field. But when a person or a country or a culture is so rooted in its past, it becomes hard to change. And I totally noticed this. Dan Sullivan, he talked about it, too. He said, you try to get anything done, and it's like all these roadblocks come up. And, Brittany, I gotta tell you, I'm not always the easiest customer. Sometimes I am, but I just, you know, in the different hotels I stayed in, a lot of times the Internet wasn't working. And, you know, just problem, problem that, you know, I got put into a crummy room and this and that. And, you know, I'd ask them to change the room or get the Internet fixed or whatever it was. And it's like, nobody really can lift a finger is kind of the.

Attitude. There's never been any customer service. What we consider customer.

Service. It's a tragedy. I mean, it really. I remember being in this one hotel in Spain and the Internet didn't work. And I said, what's the problem with the Internet? And. And they tried to explain it to me, and they blamed it on Telefonica, the provider. Right. And I walked over and they had some computers that were plugged in at, like, a little business center area, and people were using them. And I said, does the Internet work? And to the people there and. And they showed me, yes, it's working. And I said, well, I walked back to the front desk and I said, it's not the Internet. The Internet is. They tried to tell me the Internet in the entire town was down and it wasn't blaming it on the provider. And I said, no, the problem is with your router or your WI fi system. And they couldn't understand this. And believe me, there was no language barrier here. Okay, I do speak a little Spanish, but I didn't even really need to. It was just this attitude of, like, they're working on it, someone else is gonna fix it. It's just nothing's urgent. And this whole concept of, like, invariably whenever you'd have a problem or a challenge in a European city, in that business, it would be, this is the procedure. And you're supposed to just abandon any thinking out of the box because this is the way it is. And that thinking is so rooted into, you know, and I just want to say it, the European mentality. And again, I love Europe. Okay. I've thought about moving to Europe. I still might. I love a lot of the cities there and they're just neat. But gosh, it's like roadblock, roadblock.

Roadblock. And Jason, you think with their unemployment, that there's a ton of other people out there willing to step up and maybe go above and beyond like those employees that you were mentioning, but it's really not. It's like you see the same people working at that front desk for years, whereas there's so many people. Being a recent high school or college grad here can get very discouraging trying to find a job. Whereas we were looking up these statistics earlier, we came.

Across. Oh, yeah, it's mind boggling. I mean. Yeah, in Spain, right. And I talked about this on the show. Overall unemployment, and this is the official numbers. Brittany and I have no idea how these other countries may or may not manipulate their numbers. We know the US does it for sure. And we had John Williams on a prior show, the founder of Shadowstats.com he does some great analysis on this stuff. But this is what the government is saying. The unemployment rate is in Spain of 26.6%. And that's the general unemployment rate. And that is. That is how it was in the Great Depression back in the 30s in the US. But then you look at the youth unemployment in Spain. 56.5% for workers, if you can call them that. I mean, they're not workers. They're not working under 25 years old.

This is shocking. And you know, when I was in Barcelona, Brittany, having been to that city before and having loved it the last time I visited, it's covered in graffiti, it's dirty, there's litter all over the place. I mean, it's just, it's.

Sad. Well, for me, that was most of the cities that I went to, actually. I mean, Paris for sure. Paris has, you know, graffiti everywhere. And like they were saying, a couple of the places we stayed, you know, and I've, you know, watched different, you know, House Hunter shows and different things on TV as well. And people will often make comments about the graffiti and the agents, the real estate agents in the area will just reassure, you know, whether the renters or the prospective home buyers that the graffiti has no tell on what that neighborhood's like. There's graffiti everywhere. Even in the nicest neighborhoods, to the poorest neighborhoods. There's, you know, that, that's just how it.

Is. Yeah, right, right. It's just, it's just amazing when, when I see a lot of graffiti, what that means to me is it either means gang activity or it means a lot of young, probably males with no job and nothing to do that are just getting causing trouble and getting into trouble. Just a reminder, you're listening to Flashback Friday. Our new episodes are published every Monday and every Wednesday. Yeah, France has definitely changed a lot. And you know, the US is the most mobile population. People move here, they trade their homes, they don't live in them a long time. And, and you know, you can certainly criticize that and say, hey, you know, people have no sense of roots in the us they move around too much and they don't have a sense of belonging permanently and community orientation. And, you know, there's some truth to that. I completely agree. But from just an economic standpoint, that velocity, like the velocity of money when you talk about economics is that's the velocity of people. And it's important that people can move and go to where the jobs are and go to seek opportunity in a more mobile culture. When I went to visit my old house and I was texting my mom pictures of street corners, is this one it? Is that it? It's this little apartment building in Germany. And she said, yep, that's the one. And finally I waited and there was graffiti around the bottom of it. And some guy finally walked in because it had a locked door to get in the small, like four story apartment complex. And so he, I said, hey, can I come in? I used to Live here when I was like 1 years old. And he says, sure. And he let me in and I looked around and. And the startling thing, Brittany, nothing has changed in the decades ago that, that prop that I lived in, that property. It's the same. I mean, it's the same. It's like they didn't tear it down and build a beautiful glass encased high rise building. They didn't even tear it down and build other building. They didn't even remodel it. Okay. You know, that's, it's just. Things just stay. They're just kind of stagnant in a lot of places. So it's. I don't know, it was, it was very enlightening. You know, I've been reading about how the real estate market in Spain is so devastated, how the opportunities in Croatia are so great. And I looked at property in a lot of these markets and I, I gotta tell you, I did not find anything. So far, my biggest hope for a local market specialist, Brittany, was in Malaga in the south of Spain, which was beautiful. I gotta tell you, I was, I was pleasantly impressed. Maybe it was the comparison with Barcelona, where I was, I was disappointed with Barcelona, but it's like little Monaco down there. It's super expensive, gorgeous. A lot of Saudi money flowing into there. Mansions owned by the Saudi royal family. One was a exact replica of our White House. I mean, isn't that kind of weird that, you know, you would be a Saudi prince would go and build a replica of The White House? 1600 Pennsylvania Avenue in Malaga, Spain. That's just. I don't know, that's just kind of odd. But whatever. I don't understand it. And Rolls Royces, Lamborghinis, Ferraris driving around the streets, very posh, a little flat. €750,000. Not dollars. Euros. So multiply times 1.3. Right, but. And incredible yachts in the harbor. But there are some properties in some of the. Slightly, not very far, but 10 minutes away. I'll call them outlying areas that almost make sense. And we might do a show on my jetsetter show, Real Estate Opportunities in Malaga. But, you know, I didn't find anything in Croatia that made sense. It kind of seems like Dubrovnik's definitely been discovered. I mean, there's tons of tourists there and it is gorgeous for good reason. When you go back to Europe, Brittany, you got to go to.

Croatia. Super impressed with Croatia I got over there this.

Time. But beautiful people were really nice. The prices weren't too high. They're hot. The prices everywhere I went were higher than the United States. Would you agree with.

That? Yes.

Definitely. Yeah. Yeah. Everything was more expensive in Iceland. Oh, my gosh. In Iceland, I had a $19.

Hamburger. Wow, that's worse than.

Switzerland. Yeah, it is worse than Switzerland. It is. It is really expensive in Europe. And so what's interesting about that is people commonly ask me, well, they say, hey, Jason, you know, in a lot of ways, you're very pessimistic about the future of the United States. We have so much debt, that debt is going to create inflation. The standard of living is going to decline. And I think that's true. And I think Europe is a great. And when I say Europe, of course it's a stereotype. Of course it differs country by country. Of course it differs city by city. I completely get that. I'm making a blanket statement here, but I think European cities are a very good example of what is in store for the United States. And what I mean by that is this. People say to me, when I give some of my very pessimistic predictions about the future, especially as they relate to rather high inflation, they say, well, Jason, if it's going to be so bad, who's going to be able to afford to rent my investment property from me? And here is my answer. Something has to give. So in Europe, when you look at how people live in Europe, what has to give? What gave? Right? Food is expensive, housing is expensive, everything's more expensive there. They don't have very many big box discount retailers like Costco and Sam's Club and Target and Walmart. These kind of things are uncommon there. They don't even have big supermarkets. And you know, we sort of have that in the U.S. right? And so we have much more efficient governmental systems because we have less socialism, although it's going in the wrong direction.

God bless Obama. He's in Arizona today. So I'm guarding my wallet, okay? I'm like, I'm holding my wallet because I know Obama is not far away and I wouldn't dare get out on a, in a car because I'm sure the traffic is bad too. But we're moving in that direction, unfortunately. But what has to give? Well, the standard of living has to give. People will just live in a smaller house in an inferior neighborhood. They will have less clothing in their closet, less gadgets in their house. They will just have lower quality food and they will still have to rent some house. And you can catch the people who were doing better in, in 2013 by the time it's 2018. And you've owned your properties for five years, you can catch them moving down the economic ladder. And some people, you might catch them moving up. But I say on, on balance, more people will be moving down than up. And that's just the unfortunate reality. I don't like it, but I think it's the future and I think we need to be there as, as landlords to serve these people and to provide housing for them. And you know, I gotta say something else too, Brittany, and I'm sure you noticed this too when you were traveling around Europe. It is just amazing to me how. Well, because even in, though Europe has more socialism than we do in the US but these are still capitalist countries of. It is amazing to me how you can just show up in a foreign city and everything you need as a human being is there for you as long as you can pay for it. There is food for you to eat, there is a place for you to stay, there is a shower for you, a bathroom for you. There is an iron for you to iron your clothes. And some hotels, not all of them, there is transportation for you. You walk out of an airport, I mean, I remember I walked out of one airport, it was like 2:30 in the morning. There's a line of taxicabs waiting to take me wherever I want to go. Isn't it incredible how free markets just organize themselves, how efficiently capitalism works? It's just amazing to me. It's such a blessing. It really is such a blessing to all of us. So hopefully we can keep the governments at bay, whether they be in Europe or in the US and we can have more capitalism and, and less socialism and be more prosperous. But either way, our investment plan works pretty darn well. So that's my thought. What else do you.

Think? I couldn't agree more. It makes more sense the more we talk about it. And just, you know, being over there, seeing everything, you know, we're headed in that same direction. So people need to rent housing. Why not rent it to.

Them? Yeah, yeah, exactly. Be there and provide that housing for them and you can create a lot of wealth for yourself in doing it. Before we go to Meredith Whitney, our guest today. Brittany, let's talk, talk a little bit about the membership website and the upcoming property tour. And we have, we made the executive decision today to provide an executive property tour.

And what do we mean by that? Well, we mean instead of going through all of the work of doing a Creating wealth seminar or boot camp in that city, when we do a tour, we'll do them that way sometimes, but sometimes we're just going to do a very brief tour where you can come and go quickly. Tell them about what we have coming up.

Britt. Yeah, I think our investors are really going to enjoy this just because we do have so many busy lifestyles out there. You know, a lot of business oriented people that just don't have time to take a long weekend to travel out to wherever it is to, you know, visit all these homes. So what we've put together for them is a very quick tour. They can even fly in and out that morning depending on where you're coming from. It'll be Saturday actually September 28th. We're going to be doing it in Austin this time around and you know, next executive tour is going to be somewhere else, but it's going to be from about 9am we'll feed you breakfast. We'll start touring around the city, going to see the different properties that are currently available in that market with the local market specialist. We'll stop for lunch somewhere. We'll be back around 4 or 5pm in the evening. And if you need to head out that night, you can, you know, I'm sure we'll get a small group to go to dinner if you'd like, but you're not obligated to and we'll just, we'll head out from there. And we're limiting.

This. 20.

People. Yeah, this time around will be about 20 just because we have had a little bit of talk about it and we know several people, many people that are going to want to come to this, but it might even be smaller in the future. So when these do become available on the website, just make sure you sign up right away if you are.

Interested. So think about the convenience of this. If you live close by in another Texas city, for example, you could fly in in the morning to Austin and fly out in the afternoon or early evening. You can fly in. If not, you can fly in Friday night. You only have one night hotel and then you can just fly out on Saturday evening and you can make it to church Sunday morning. It's pretty, pretty good for busy people who don't want to commit a whole weekend to these tours. What we're trying to do is by not having to set up a big tour bus and coordinate with the hotels for the seminar room and seven different meals and all of that stuff. Takes a lot of resources on our part to set that up. We're trying to do these, we'll call them executive tours, kind of like an executive summary. And you can get in and out, see the properties. Buy a property potentially, if you're interested in one really quickly, go to Jason hartman.com you can register for this. The price will be 297 and that includes breakfast and lunch and the tour. And I will be there of course and we'll have our local market specialist and some of our investment counselors there as well. And if you become a member though, and remember that membership, we are really trying to increase the value of it and a lot more good stuff to come. You get a 20% discount on what.

Brittany? On any upcoming events or educational products that we have listed in our current store. Any products you could go on there right now if you're a member and buy those at 20% off. 20% or more.

Actually. Yeah. So think about the way this works on the tour. The tour is $297. The way you want to do this is you want to sign up and become a member beforehand because that's only $10 a month. So $120 a year. You'll get half a year's membership fee paid right away on the savings on the tour because you'll save $60 on the tour. Definitely become a member first and then sign up for the tour. And you can do that all in just a couple of minutes on the website@jasonhartman.com and you'll get a whole bunch of other member benefits. Brittany, tell everybody about the next members monthly conference call that you're posting on the website just here in the next day or two. What was the topic on that.

One? Yeah, the. But every month we have a conference call with our members and we have whether it's Jason, one of our investment counselors and an expert discuss a topic. And those are live so you can come on the call and ask questions. The recorded version does get put back up on the site that I will post here today. And this last one was on how like best practices for 10 plus investment properties as far as financing goes. You know, a lot of our investors have 10 plus properties and they're.

Maxed out on their, on their Fannie Mae loans because. And what she means 10+ is you know, if you have more than 10 properties, more than 10 loans, it's hard to get financing. So that was the topic of the last call and we had one of our mortgage experts on talking about ways to get around.

That. Right, exactly. So just more added value in education as far as real estate investing goes. And it's right there for you. Really convenient right there in the Members only.

Section. Good. Fantastic. So check that out@jason hartman.com and Brittany, thanks so much for talking to me about Europe today. And we will just, we will witness the calamity that is going to occur there because it's been bad in Greece. And next we got Spain, Italy and Portugal and Ireland. You know, the I could be for Italy or Ireland. They're both, they both got their own sets of problems. I don't know. I don't think Germany can save the world. Okay. And I certainly don't think the US can either. Well, we'll see as things unfold. But remember, in every crisis there is opportunity. The Chinese have a saying that their symbol, they use the same symbol for crisis and for opportunity. And literally translated that means crisis is an opportunity riding the dangerous wind. There's always opportunity out there, folks. Keep listening to the show to discover where it is and check out some of the properties@jasonartman.com Brittany let's get Meredith Whitney on here. We will be back with her in 60 seconds.

Are you interested in a property outside of our network? Do you need a second opinion? No problem. Let Jason's experts evaluate the deal. Our deal evaluator is only $50. For more information go to jasonhartman.com now.

It's my pleasure to welcome Meredith Whitney to the show. She is the founder of Meredith Whitney Advisor Group group and author of Fate of the the New Geography of American Prosperity. She's a banking analyst, a frequent guest and contributor on cnbc, Fox Business and Bloomberg News. Meredith, welcome. How are.

You? I am good. How are.

You? Good. Great to have you on the show. So you, you talk a lot about the, the different problems with the states and, and municipalities and, and how the geography. Well, as the title of your, the subtitle of your book would imply how the geography of prosperity is changing and feedback loop that is going on between businesses coming and going from various localities and tax revenues changing and so on and so forth. Tell us about that if you.

Would. Well, what happens is what I see over the next 10, 20 plus years is the strong states getting stronger and the weak states getting weaker. And what was responsible for what's largely responsible from that for that is the scars left from the housing bust has impacted certain states more than others and a housing boom subsequent bust means that many people are overlevered from the consumer standpoint and many governments are overlevered from state and local government perspective. And both the commonality of both is that both assumed that home prices would never decline. So spending continued leverage continued and then when the housing bust occurred, both were left with this is both the government and individuals very difficult decisions in terms of how to get the, how to.

Balance all that out. So consumers obviously had to delever cut back dramatically and governments had to delever cut back dramatically when the government. So when a consumer cuts back, that pain is felt by the individual consumer. When a government cuts back, that pain is felt very specifically by every taxpayer. So tax rates go up, services go down and you get into this feedback, negative feedback loop whereby people are paying more, getting less, so rich people and businesses leave, therefore weakening the tax base still further. And so services get cut even further. And that sort of, that cycle is a very, very difficult cycle to break. On the other hand, in the strong states, the strong states that continue.

Don'T have over levered governments don't have over levered. Consumers are spending higher tax receipts, more investment in the states, better services attracting more people. And so you see that that's what I mean by the weak getting weaker and the strong getting.

Stronger. Yeah, it certainly is true. I mean just from a real estate only standpoint, of course when property prices are up, property tax revenues go up, of course spending goes up in the local economy, home improvement and so forth. But then when the property prices decline, everybody starts disputing their property tax assessments and so revenues decline and some people just don't pay. So you have the foreclosure rate and so forth. But is it different this time? I mean I grew up in California. I spent the vast majority of my life there until about two years ago. And now we're seeing another nonsensical speculative frenzy form. I guess when Bernanke creates so much fake money out of thin air, you know, it's bound to happen again and again. And will it be saved? What is the future of you look at a state like California that that is so important on the national scene. And it seems like the middle class is just flocking out of it. People at some point decide it's just not worth it. But then you've still got a lot of money there. And you see real estate prices increasing again. I kind of can't believe.

It. Well, they're increasing off of very low levels. And just to get back to a second, it becomes extremely expensive for rich people will pay more and more to live in California and then middle class will pay more to live in California because as the services cut back, you have to pretty much cover those services or substitute those services with your own money. So if a school bus line gets cut back. You then have to drive your children to school. If, as an example, libraries are closed and you have to figure out a place for your kids to go to after class before you get home from work. And so it's disruptive and becomes incredibly expensive for all parties involved. And then ultimately, let's talk about the middle class. There's a high structural unemployment rate in California. And so are people going to be able to afford to live in states like California when there's not job creation? And as businesses do more outside of California, there are going to be fewer and fewer jobs inside of California, perpetuating the emigration. And I really believe Americans go where the jobs are. They're not driven by home ownership, they are driven by opportunity and opportunities around.

Jobs. Couldn't agree with you more. Job creation is critical and people go where the jobs are. No question about it. You talk, Meredith, about the interior states and you know, of course North Dakota has its own oil boom going on, but a lot of our investor clients are looking at places like Indiana, Texas, Georgia, many other places as well, and how attractive these states are compared to the coastal states, California, New York, Florida. Just give us a little more insight on that, if you would, and what the future holds there. I mean, we've talked about it, but I want to just dive a little deeper into.

That. Sure. You know, when I talk about North Dakota in the book, I'm using it as an example because it is such a. It's such an outlier in terms of opportunity growth, personal income expansion. And people are like, I don't want to live in North Dakota. Okay, then don't. But the fact is there aren't that many people living in North Dakota. Fine. But you have, you know, 8% of the population living in Texas. You don't pay taxes, income taxes in Texas. There's incredible job creation in Texas, as there are in places like Indiana, Tennessee, Utah. So many states within the central corridor are attracting businesses, creating jobs, creating opportunity, and that's really exciting. You're going to go ultimately where you're going to find the highest quality of life for you. And jobs in North Dakota are paying 20 bucks an hour to work in a quick service restaurant like McDonald's. Right. You couldn't get that in New York. You couldn't get that in other areas. They're paying because they need to attract people. It's easy to say, oh my gosh, I had the equivalent job and the standard of living was the equivalent. Would you take Des Moines or California? Most people would take California, but it's not the equivalent standard of living. It hasn't been. And it's increasingly no longer even.

Comparable. Yeah, it's amazing. You know, I look at, you know, I remember back to California, my days in California, leaving it two years ago. And I mean, so many people, Meredith, they're living in literal shacks. I mean, little crappy tiny apartments and with parking problems and just the quality of life just isn't good, you know, and that same person on that. On. On a lower income can move to Texas or Arizona or so many other places with their own, you know, that have their own sense of beauty to them. You know, it doesn't all have to be waves on the beach, which those people don't live in those places anyway. They don't live in Malibu. They don't live in the coastal areas of Newport Beach. They live interior. And it's just a much better deal, in my.

Opinion. The original idea was that California was a better deal. Right. People aren't. People are no dummies. Like, they're going to go where they're going to reside where they thought the opportunity was. But since the credit crisis, the opportunity has changed and shifted. And that's what I want people to be really aware.

Of. Yeah. Well, it seems to me that a place like California is riding on a reputation that it gained 30 years ago. I mean, it.

Just. Or a hundred over the last 150.

Years. Yeah, sure. Well, I'm not going back to the gold mining days, mind you, but, you know, I'm going back to the days that it was really a nice place to live. A lot of television and movie production came out of there and people around the world saw California. Maybe the last example of that is Baywatch. I don't know. But yeah, it's just really changed. And it's amazing to me when you look at the public schools in California and they are just decrepit places falling apart that haven't had a coat of paint in over a decade. And then you go to Texas and you look at gorgeous public schools that look like really like universities. I mean, they're beautiful with big stadiums and facilities galore. And it's just an amazing contrast. It really is. I mean, people, if they haven't gone and seen this for themselves, they really just. They don't know they're living in a small world. I look at the schools I went to in California and they're just. They just have no.

Money. Well, it's also interesting if you look at the last seven years, the rate of tuition, the price of tuition, four year college in California public university has doubled. Right. Whereas it has not moved a peep in states like Ohio and has moved barely in states like Wyoming. And so it's a lot more expensive to access public education in a state that was so famous for its exemplary education.

System. Yeah, yeah, no, exactly. I couldn't agree more. Tell us about your outlook on. And by the way, before I say this, if people don't know, you became very, very well known back in 2007, 2008, when you made a big prediction about Citigroup. That was contrarian at the time, wasn't it? Maybe tell us about that first because then I want to ask you some of your predictions or outlooks on some other things. But can you give us a little background on.

That? Oh, well, in 2007 I think this really is what set off the market decline financial crisis. The day that I, I issued a report that said that Citi would have to raise $30 billion, sell 100 billion in assets and cut its dividend, the market was down $400 billion. And that kind of was the beginning of a year and a half worth of, or a year and several months worth of real chaos in the markets. And I look at things.

At a very simple level. The city was far over levered, far worse levered than any of its peers. And that was the math. And very shortly after I appreciated that the scope of the problem was so much bigger and again for 15 months or so that was the direction the market was going and I was ahead of it the whole.

Time. Yeah, yeah. So you made that prediction about Citigroup and then that, you know, really obviously that whole sector was in so much trouble, but Citigroup especially. And then I guess number two to Citigroup was probably B of A.

Right? I would say that year it was Citi, it was Merrill lynch, it was ubs. B of A was very involved, but not as the damage was not as bad as Citi, UBS and Merrill. Those were not only institutions that originated a lot of subprime product and obviously Bear Stearns and Lehman, but also bought a lot of products. So there were a of lot, lot of trouble spots in the market back.

Then. Yeah. And just so you know, when I asked that question, I was just talking about the sort of retail consumer type banks, although I know all of those entities you mentioned probably have a hand in that market as well. But what are your thoughts and what is your outlook on housing prices, jobs just generally around the nation? If you want to be geographically specific, we'd love that. But just maybe discuss your outlook there before we let.

You. Oh, okay. Well, yeah, as I outline in this book, and there's so much data that supports this, the US Economy is a tale of two economies. There is emerging market style growth in the central corridor and there is economic stagnation on the coast. And when you look at a number two and a quarter percent gdp, it really is not telling you the full story. The full story is that again, a country of two economies. So I think the US Economy is rebalancing itself. If I may just give an example. In 2006, the central corridor of 17 states that I talk about was a mere 23% of US GDP. Today it's over 25% of GDP. So it's carrying more of the weight of the economy, but it's really a rebalancing of law of large numbers. So let's see, in terms of the broader economy.

It'S all about structural shift again that the United States goes through every 40, 50, 60 years. And I am actually incredibly optimistic about the economic opportunities within the US they just happen to look different from what they were over the last 40, 50.

Years. Yeah, sure. I mean, one of the things you say is forget everything you think you know about the direction of the American economy, about the growing need for foreign oil, about the rise of the service economy and the decline of American manufacturing. Manufacturing. The story of the next 30 years will not be a repeat of the last 30. Do you want to mention any sectors there that people should be paying attention.

To? Well, actually it's every sector. So think about how you would have approached investing 40 years ago and over the last 40 years had you known that there was going to be outsized growth in the Sunbelt. Right. You would have bought Home Depot, you would have bought the home builders, you would have bought the financials in those areas. You would have bought transportation companies, restaurant companies, materials.

Companies. And I would have bought a bunch of houses.

Too. Yeah, well, one of the parts of the market that has moved the fastest, there isn't a lot of home development in terms of new building permits. There hasn't been in this area. Let's say forget Texas, without Texas. But land values have gone up dramatically because as I said, when people refer to the smart money, the hedge fund investors, private equity, did they spent the last three years buying up land in this.

Area? Yeah, yeah. So what about housing in general? Just any general.

Statement. Oh, so then in housing, housing, you mentioned California, the house home places have picked up a bunch. Phoenix, Arizona has been the area in the United States that has had the most dramatic bounce year on year bounce in real estate values. But real estate values are still. Home prices are still 45% lower than they were at the peak of the market. So surely they are better than they were. But in no way are they where they need to be to get people whole on.

Housing. Okay, so what does that.

Mean? It means don't get too excited about the housing. Housing is all about employment, GDP and household formation. And you have that in the central corridor. You don't have that on the.

Coast. Right, right. Yeah. No, I agree. I mean it's cheaper in many of the. These good areas that make sense. Texas, Indiana, other. Other places as well. It's actually a better deal to own than to rent and that to.

Me, afford more if you have a.

Job. Yeah, right, right. Obviously. Yes. And then. And you'll actually have a job there rather than being on some sort of government assistance or being a discouraged worker who's not counted anymore. So very good points. Anything you'd like people to say? Anything, anything you'd like people to know just to say in closing, meredith.

Go out and buy the book. I mean, it's really, it's a fast read and these are really important.

Issues. Anything on transportation, just before you.

Go, all plays into this.

Theme.

Yeah. All those lead back to Fate of the.

States. Fantastic. Well, Meredith Whitney, thank you so much for joining us today. The title of the book is Fate of the the New Geography of American Prosperity and the Thesis of It. I couldn't agree with more. So thank you for joining us today and reinforcing some of those.

Ideas. Thanks so much for all the smart.

Questions.

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