Trump ECONOMIC COLLAPSE Hidden in Plain Sight

Added: 2026-05-05

[00:00:00]There's a bit of a tugofwar going on in the world of economics right now.

[00:00:04]There's what we can all see and feel happening in real time, like the economic strain of it all, and then there's what we're being told and how the markets are behaving. There's also some funky data that's coming out of government surveys right now. So, if you're feeling a little befuddled, believe me, you're not alone. We're going to go through some of the highlights today, but we're also going to bookend it with a conversation from a Bloomberg interview that really kind of put me on my heels and I'm not seeing it talked about all that much, which is kind of strange considering who it's with. So, we'll start with that and then we'll try to clear away the fog to get a clearer picture of why it feels like everything is terrible as Wall Street is signaling the exact opposite. And I'll give you the last line of the story.

[00:00:45]Basically, nothing is as it seems. I'm Max from UNFR here with the macro take for the Midas Touch Network. Let's go.

[00:01:04]This crisis is different, right? If I when you hit the wall and you're trying to issue treasuries and the Fed is the only buyer and the prices of of the treasuries are going down, interest rates are up, that's a dangerous thing.

[00:01:17]People say, "When are you going to hit the wall?" I obviously don't know. It's impossible to know, but the law of economic gravity, you're you're not going to know that. So, and when we hit it, it will be vicious. So, we have to prepare for that eventuality. And I think we need an emergency break the glass plan which is targeted and short-term on the shelf so it's ready to go when it when we hit the wall. Remember that guy? That was Henry Pollson or Hank to the people that know him. Former Secretary of the Treasury under George W. Bush. And given his proximity to the 2008 financial crash, one might think that good old Hank has a bit of insight into these kind of matters. Pollson spent 32 years at Goldman Sachs, rising from the Chicago office all the way to chairman and CEO. And the thing about Pollson is when the entire financial system was teetering on the edge in 2008 when Bear Sterns collapsed and Lehman Brothers filed for the largest bankruptcy in American history. Pollson was in the room. Remember, he was the one who orchestrated the TARP bailout, $700 billion authorized by Congress.

[00:02:28]He's the one who seized Fanny May and Freddy Mack, which together backed half of the 12 trillion mortgage market. He told congressional leaders, and I quote, "If it doesn't pass, heaven help us all." Ben Bernani, the Fed chair at the time, reportedly told Nancy Pelosi, "If we don't do this, we may not have an economy on Monday." So, dig this. 5 months before the crisis peaked, Pollson had two Treasury officials write a secret 10-page contingency plan, and they literally called it the break the glass memo, as he alluded to. And when the fire indeed broke out, they broke the glass. So whether you're a fan of his or not, and look, there's plenty to criticize about the Goldman Sachs pipeline to the Treasury and who ultimately benefited from the bailouts.

[00:03:17]But given what we know and what he knows, it kind of makes the hair on your neck stand up when he goes on Bloomberg and says that we're essentially already in a crisis, one that resembles 2008. So when we hit a wall, his words it will be vicious. Now I'm not done with Paulson.

[00:03:36]We're going to come back to him in a little bit. But first, let's talk this out.

[00:03:42]Let me take you back to 2007 because what I'm about to describe might sound a little familiar. So going into 2007, the dominant narrative on Wall Street was the soft landing. Housing was slowing to be sure, but you know, the broader economy would absorb it all. A Bloomberg survey of 14 major brokerages predicted that the S&P 500 would gain 9% that year. A Russell Investment Group survey found that 86% of money managers expected stocks to rise. Only 1% thought that they would fall more than 10. And guess what? The majority wound up being correct. The Dow rose. It crossed 13,000 in April, 14,000 in July, and peaked at 141 in October of 2007, an all-time high. The S&P also hit a record on the same day. But here's what everyone was ignoring. Existing home sales were down 12.8%. Housing starts were down nearly 25%. And the homebuilder confidence index, the same one that we still track today, averaged 27 for the year. And that was the lowest reading in almost a quarter of a century. Oil had doubled from $49 a barrel in in January to 87 by November. And gasoline hit three bucks a gallon for the first time ever. And yet the Dow hit 14,000 for the first time the same week that Bear Sterns disclosed that its two hedge funds had lost nearly all of their value. So through it all, the market just kept going up. And here's what Bernani told Congress on March 28, 2007. He said, quote, "The impact on the broader economy of the problems in the subprime market seems likely to be contained." Pollson said it in August. The global economy is as robust as it has been for many years.

[00:05:41]That was 2007. Contained. Robust. This is what I mean when I say that things are beginning to sound familiar. Like you know how they're talking about private credit is contained at the moment even though there's continuing fallout and they keep saying that oh manufacturing it's coming. It's on the rise because we can see it in construction which means we're going to have a robust year in manufacturing and construction growth. It's just a little too familiar. I mean if we just focus on the housing component this week alone existing home sales fell 3.6%. 6% month overmonth. And the Northeast got hammered. It was down 8.5% in a single month, and it's down 12% year-over-year.

[00:06:23]These are not insignificant numbers. The homebuilder confidence survey, the one that we quoted before, is at a 7-month low, and it missed all expectations. And the six-month outlook, which is where builders tell you where they think things are going to go, actually fell the hardest. We have 36% of builders are cutting prices and 64% said that they're offering incentives just to move units.

[00:06:46]So it sounds a little 2007ish because in October of that year it was the lowest in two decades all around in all of these numbers. The exact same month that the Dow peaked. So it feels like nobody was paying attention then and nobody is now. But what people are pointing to, at least in the market and some of the the more bullish people on Wall Street, is that we're getting some good indicators through manufacturing.

[00:07:12]So you might recall that we talked about two indicators a month ago, the Empire State manufacturing survey and the Philly survey. Last time we did this, the Empire State survey cratered, but the Philly survey was up. So we were saying at the time like numbers are funky right now, so you have to make sure to look at the trends. Well, this month the New York State survey came out and it skyrocketed and so did the Philly survey. So, we have to try and make sense some of this data in real time in isolation but also in the trend. So if you dig into the numbers, taking the Empire State survey for example, prices paid surged 14 points, meaning that input costs are accelerating and future optimism actually fell by 11 points.

[00:08:01]That's why you got to really dig into the number. Like what do these numbers consist of? Capital spending plans weakened. In the Philly Fed, employment actually turned negative. So 15% of firms reported cutting jobs and prices paid hit the highest since August with 61% of firms reporting input price increases. So if we think about what's really going on here, the reason that things are going up from a manufacturing percent perspective is because the input prices are increasing.

[00:08:34]So what it means is that firms are frontloading orders just like they did the last time the tariffs were going to go up. So remember, we're in this weird zone with tariffs where last year we front ran the tariffs because the inventory had to had to pile up before the the tariffs hit after liberation day. Then they were deemed to be illegal. So now they're importers are trying to go get their money back. But Trump has said that he's going to double and triple the tariffs through constantly rotating plans under AIPA with the temporary provisions that they have. So now the manufacturers are looking at this and saying, "Oh my god, input prices are going to continue to rise on top of what's going on in the fuel market, so I better order more." So it makes these survey numbers look like, "Oh my god, so much is happening."

[00:09:22]There's not a lot happening. They're just trying to get ahead of what they know is going to be more expensive orders. That's inflation.

[00:09:29]Okay, hang tight. Let me slow it down because I tend to get a little carried away. The bottom line is that there's misleading information when these numbers project growth. The reason they're projecting growth is because inflation is driving up prices and inflation expectation is causing these companies to frontr run their inventory orders because they know costs are going to get more expensive down the road.

[00:09:54]It's the same thing that they did after Liberation Day. They're just doing it for a combination of different factors today. But growth in this instance is a negative signal. Weird, I know, but this is Bizaro America. So, what else would we expect? Now, the IMF also revised its global growth forecast downward because of the oil shock related to the Iran war. And they noted that without the conflict, they actually would have been upgrading growth. So, you ready for some more whiplash? Then the administration announces that the straight of Hormuz is supposedly open and spot oil prices dropped 11%. So Brent fell from 98 to $88 a barrel and the S&P hit a new all-time high. The Dow was even up over 800 points. So Wall Street is up over 12% from the late March lows. That's 12% in just 3 weeks. So I guess everything's fine. And Scott Bessant, you know, my favorite Treasury Secretary, is out there touting that tax refunds are the highest ever, which, okay, the average household refund is $3,400 and it's up 11% from last year, but when you adjust for inflation, you're looking at a marginal gain at best. And multiple economists from Oxford to Stanford have pointed out that the Iran driven gas price surge has essentially wiped out the entire refund benefit. So Stanford calculated that it was almost dollar for dollar. So if the average household refund increase was $748 over last year, it's almost exactly offset by the projected increase in gas costs. And for income lower inome Americans who spend up to 4% of their income on fuel, it's even worse. The gas increase cost them more than they got back. So again, you would be forgiven if your personal experience doesn't line up with the market indicators and what's happening in the stock market and the promises being made by this administration. Okay, so let's slow it down again. I know I'm a bit more agitated and animated than usual, but it's because there's a huge blind spot right now and it's unclear how we're going to deal with it. But first, we have to acknowledge that we have this blind spot and that I think is what Pollson is doing for us. The the similarities between 2007, 2008, and today I think are pretty evident. It's the differences that are keeping me up at night. So when the 2008 crisis hit, it was a crisis in the private sector.

[00:12:33]Banks were basically failing, right?

[00:12:36]Mortgage back securities were worthless.

[00:12:38]The housing market was collapsing. But the US government, the government's balance sheet was comparatively clean.

[00:12:47]Remember, at the time, national debt was about $9.5 trillion. That was about 65% of our GDP. Our annual deficit was around $450 billion.

[00:12:58]And here was the crucial mechanism that made Pollson's rescue plan and Tim Gner and everybody that was everybody who was the architect of the financial crisis bailout. This is why it worked. When the world panicked, investors didn't flee from US treasuries. They flooded into them. This is what they refer to as a flight to safety. The US government issued $1.6 trillion in new Treasury securities in 2008 alone to fund the bailout. So T billill issuance nearly doubled in 3 months from 1.2 trillion to 2 trillion. Total marketable securities went from 4.9 trillion in August of 2008 to 7.5 trillion by early 2010. And despite this massive supply hitting the market, Treasury yields fell. The 10-year yield went from around 4% to 2% by December of 2008. Short-term yields went to almost zero. Prices went up.

[00:14:04]Demand overwhelmed supply. So, this was a reflection of faith. faith and belief in the US economy, in the fundamentals of our system, and the notion that adults were in charge of the world's reserve currency. In other words, Pollson's break the glass plan worked because the glass box itself, the Treasury market, was rock solid. The world trusted US government debt so deeply that the country at the epicenter of the crisis could borrow trillions at declining interest rates to dig itself out. So this is the key. This is the part that you're not going to hear on the mainstream. You're not going to hear the pundits talking about this. Pollson thankfully went out there and said we need a new break the glass plan because the original glass box the Treasury market might be the thing that breaks.

[00:15:05]Think about that. The national debt right now is $ 38.9 trillion. It's growing at $7 billion a day. Our annual deficit is projected to be $1.9 trillion. And these idiots are asking for another half a trillion dollars for the military budget. Anyway, interest payments on the debt exceeded $1 trillion for the first time in history last year. That's $1 trillion in interest. That's more than we spend on defense until now. This is more than Medicare. It absorbs 17% of total total federal spending. And the CBO projects that debt held by the public will reach 120% of GDP by 2036. And that surpasses the previous World War II peak. Now, don't get me wrong, we can absorb 120% debt to GDP. Remember, Japan's at like 250%. And they're not the world's reserve currency. So, we are that big and that significant in the world that we can actually do this and fund this.

[00:16:05]For how long is a question mark? Nobody actually knows the answer to that. But the bottom line is we still have room to grow. So, that's why some people aren't really panicking. But after a decade of exploding deficits, after Trump's tariffs and an illegal war with Iran and kidnapping the leader of Venezuela and thumbming his nose at the world, our refusal to raise taxes while cutting social programs, and now we're asking for a half a trillion dollars more in a defense budget while our deficits continue to explode, all of this is impacting the Treasury market. Our Treasury market is not the same as it was before. All three credit rating agencies have downgraded us from AAA. China's cut its treasury holdings in nearly half. Even Japan, our largest foreign creditor at 1.2 trillion, just sold about 20 billion in longdated treasuries in the first two weeks of April alone. The foreign share of the treasury market has fallen from 50% in the early 2010s to about 30% today. and the buyers replacing them. We've talked about this before. It's hedge funds, money market funds, retail investors, and a pretty funky route where hedge funds are buying them through what looks like central banks, but it's really just offshore investment accounts. They're not buying these treasuries for stability, by the way. They're buying them for yield. They're playing the arbitrage game. So, for them, it's not a matter of safety and stability. They're taking a spread, and they'll leave if something better comes along. Meanwhile, we've had multiple Treasury auctions this year that showed materially weak demand. Like the March 2-year auction had primary dealers absorbing 24% of the offering. That's more than double their usual share. And the Fed is constrained as well. In 2008, remember, they started at 5 5 and a/4% and they cut to zero.

[00:18:01]Today, they're at 3 and a half to 375 and inflation is sticky around 3%. And the oil shock from Iran is adding even more pressure. So rates aren't going to move the needle in terms of debt issuance. In other words, the Fed's not going to be the setting the going rate for US bonds. The market is going to set the rate. And right now, the market is saying it doesn't like what it sees. So what Pollson is saying is what happens when the fire extinguisher is on fire. If the central banks abandon our treasuries during a crisis, the buyer of last resort has to be the Federal Reserve. And so around and around we go. So, let me close by telling you this. You're not crazy. If it feels like the economy isn't working for you, that's because for the vast majority of Americans, it isn't. The latest BEA data shows that personal income dropped in February. It's down $18 billion. Real disposable income fell a half a% in a single month. And the personal savings rate is at 4% and that's well below the prepandemic norm of 7 to8. Household debt hit an all-time record high of $18.8 trillion and credit card debt is at $1.2 trillion. Credit card delinquency rates, mind you, which is the share of people that are 90 days or more past due, is at record levels compared to the two fin 2008 financial crisis. And that's not me saying it.

[00:19:35]That's the St. Louis Fed. Now, remember, the top 10% control 87% of all corporate equities and mutual funds. So when the S&P hits a record and when the Dow surges, it's overwhelmingly benefiting that sliver of the po of the population. So the administration is gaslighting you. And Wall Street, Wall Street doesn't care.

[00:19:59]It's running on the fumes of these three historic cash infusions. The first time from Pollson's time, right? TARP and the Fed's first rounds of quantitative easing. Roughly5 trillion dollars pumped into the system. The second from Trump's first term during COVID, the CARES Act and the Fed's emergency landing which added another eight to9 trillion dollars and the third under Biden through the American Rescue Plan uh the infrastructure act the chips act that added another 3.5 to 5 trillion. So all told somewhere between 17 and 19 trillion in combined fiscal and monetary stimulus went into the system over a 14-year period. But every time it came into the consumer's pockets, corporate America hoovered it right back out. The Fed's balance sheet went from 870 billion before 2008 to a peak of nearly $9 trillion. That's a t-fold expansion.

[00:20:54]Not to mention the ongoing tax cut and deregulation euphoria.

[00:20:59]But numbers ultimately don't lie. Not the madeup ones in the casino of equity markets. I'm talking about the realworld numbers of supply and demand, inflation and savings, personal income, household debt. The savings rate is at a near record low, but credit card delinquencies are at crisis levels. And the very instrument that saved the global economy in 2008, you US Treasury bonds is showing cracks that the guy who built the last break the glass plan said could turn quote vicious. So Wall Street has it to give here. We don't. And that's why nothing is what it seems. For the Midas Touch Network, I'm Max from UNFR. You can find me on YouTube and Blue Skyft.

[00:21:50]And you can also sign up for our free weekly newsletter at unftr.com.

[00:21:55]I'm going to slow my coffee intake, try to take a deep breath, and I'll catch you online. Want to stay plugged in?

[00:22:02]Become a subscriber to our Substack at midasplus.com. You'll get daily recaps from Ron Filipowski, ad free episodes of our podcast, and more exclusive content only available at midasplus.com.