This is Scott Becker with the Becker Private Equity Podcast, the Becker Private Equity Business Podcast. Thank you for listening. Today's topic is China, the canary, and the coal mine. I know there are so many signals that the apocryphus is upon us, but let me give you another one today. Today, Moody's downgraded the death of China to negative. They basically said that China and its provinces and states had so loaded up on debt, and also that in addition to loading up on debt, that the real estate sector, the commercial real estate sector, is also so overloaded with debt. This is going to cause China to have to go back to efforts to stimulate their economy. Now what happens is we're in a vicious cycle in that countries load up on debt, it provides the false sense of inflated growth or higher growth. The US just reported a five % GDP for the last quarter. That might sound old, but you're right. You're not good unless you realize that so much of that growth comes from excess deficit spending. Like China, the US is in a position where so many of our states are so overburdened with debt in so many different ways, and the situation seems to be getting worse.

You got states like Illinois, they're in horrible financial shape. They finally had a good year a couple of years ago, only because the federal government bailed them out. That's nothing to brag about. The spending is in excess of the money coming in. The same with the city of Chicago, and the pension burden is incredible. Much like in China, a lot of the states and local provinces, provinces and localities have excess debt and the government is bailing them out. This growth, fueled by debt is not sustainable. The great question is, China, the canary in the coal mine, maybe, and should our politicians move back towards figuring out how to solve some of our debt problems? Again, like China, we've so much hidden debt, hidden intensions, and obligations, and the social safety networks. I'm not against Medicare and Social Security. We need them. But there are huge potential long-term expense to those things, particularly in a country that's not really growing, the true growth that doesn't come from excess spending and excess deficit spending. Oh, my goodness. That's a lot. I know, but it really talks to the fact that China is way over debted. Much of their growth has been false growth because it came from deficit spending, which isn't real growth.

That's pretended growth. I could build an expensive, expensive house, but if I do it all with that, it's not really my house. And that's really the story here. Thank you for listening to the Becker, Private Equity and Business Podcast. I sure hope that we come to our census in this country and start to get debt versus spending versus revenue coming in under control. Thank you for listening.