Could Housing Crash the Global Economy? | Richard Wolff vs. David Woo

Could housing crash the global economy? There are currently a number of housing bubbles across the globe - house prices relative to incomes have been at all time highs and, until recently, interest rates have been at historic lows. To read more of our analysis on Capital.com, go here: bit.ly/3ySLpxP
As central banks hike interest rates and the global economy struggles, we’re asking: could a housing market crunch cause a global economic crash? And if, so, how different might it be to the Great Recession of 2008? Watch former Wall Street strategist David Woo and American Marxian economist Richard Wolff go head-to-head to debate this key financial topic.
To watch more from David Woo, you can visit his KZbin channel, David Woo Unbound: / davidwoounbound
And you can read more about the potential for housing crashes around the globe, by visiting all of our Capital.com analysis in the links below:
Will there be a global housing crash? bit.ly/3ySLpxP
Will there be a UK housing crash? bit.ly/3VGDbTa
Could interest rate hikes trigger another housing crash in Ireland? bit.ly/3s94cRA
Canada: could higher borrowing costs cause a housing slump? bit.ly/3TBoG0O
Australia: interest rate rises prompt price decline: bit.ly/3TfflMF
CHAPTERS:
0:00 - Could housing crash the global economy?
1:08 - Who is Richard Wolff?
1:34 - Who is David Woo?
2:41 - Richard Wolff - Is a housing crash coming?
3:53 - David Woo - housing market crash
4:20 - What increased housing prices?
4:50 - Price to income ratio 2022
5:00 - 2022 housing crash vs 2008 recession
5:50 - Can the economy survive a housing crash?
7:15 - What is rising inflation and interest rates?
9:00 - Are Russian sanctions helping?
9:57 - living wage crisis 2022
12:04 - Are central banks controlling inflation?
15:20 - Employers keep raising prices
19:20 - Is Capitalism to blame?
21:25 - Will interest rates drop?
26:50 - Which Markets are most vulnerable?
27:40 - How unemployment rates affect home prices
28:40 - How the energy crisis affects home prices
31:35 - What is the future of the global economy?
***
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[@Capitaltrading]

A very interesting comment from James Sydney below: "Given the current economic climate, is it better to invest in real estate or stocks?" What do you think?

[@WackadoodleMalarkey]

Real estate hands down

[@gresleymccaslin5948]

Neither…but then where does one put ones money?…defensive shares may at least make some ground in real terms…upcoming markets..semi conductors,finance etc..

[@helengarrett6378]

You must have money to invest it somewhere. And you must have enough money to make the investment pay off. One share of something isn't going to pay you more than a couple of pieces of bubble gum. You need to invest in fifty shares or a thousand shares to make enough money to get ahead of a system that puts profit in the hands of a very few and wages, always too little, into the pockets of a whole lot of people. Remember exactly what profit is. It's the EXCESS left after every single cost of production of a good or service is paid. In our system there is always pressure to MAXIMIZE profit and the first cost cutting measure is always wages. So if you work for wages it's likely that you are overworked and underpaid while the elite boss golfs. He or she shows up sometimes or never and skims the juicy profit into his or her bank account and investments. We show up,, work overtime, suffer wage theft, get bullied, and get lectured. We do the work. We go home exhausted to try to stretch our wages to cover the needs of our family. Sometimes we succeed. Often we don't. We turn to debt to make up the difference and we circle the drain that ends in homelessness and a third world standard of living in the richest country on earth.

[@reginaldmorton2162]

The look Prof Wolff made when the guy said we don't have a leverage problem, was priceless. 😆

[@haleybrown2836]

Exactly. This discussion could also be titled Practice vs Theory. Prof. Wolff spoke of the real world vs the Asian gentleman was strictly a number cruncher but far, far removed for real life.

[@compassioncampaigner728]

​@@haleybrown2836 A number cruncher that....."has". Take his comforts away and watch the number cruncher change his tune.

[@jmitterii2]

That's the source of inflation is the leverage problem. Allowing stupid low interest rates and ridiculous banks lending to anything that resembles a human because the bank can just sell that loan with half or more of the interest immediately on the debt market which the Fed Reserve was the prime and often only buyer in the stupidity of QE a way of monetizing loans made by banks. A double whammy effect of money creation... one already existing with fractional reserve lending, but then just say screw it, banks, you don't even need to keep those "assets" or loans you issued on your books, you can just turn them into cold hard cash reserves to make more loans again immediately don't wait 4 years or 5 years or 15 years or 30 years for that auto loan or mortgage to be repaid... just sell it and get those proceeds immediately and sell another loan. All on top of the fact they're fractional reserve lending and all money lent turns into deposits to lend more anyway. Hyper money monetization from the banking system.

[@skaz1504]

As this system continues to unravel, people like Professor Wolff will become increasingly relevant. This has been true for the last decade and a half or so and is continuing as we speak.

[@kd-mi4mi]

prof wolff always a great guest on any program

[@Capitaltrading]

Thanks KD. We agree: Prof Wolff is always insightful and engaging. We enjoyed filming with him.

[@chantellemodisane]

Capitalising on human basic needs/right should be an economic sin

[@kippsguitar6539]

Enjoy life in cuba

[@antonimonti6902]

@@kippsguitar6539 you have no idea what you are saying...

[@ty-kk9vq]

@@kippsguitar6539 a small isolated island country under embargo is definitely comparable to the american economic powerhouse lol.

[@mrsuds9924]

@@ty-kk9vq A printing press monopoly money powerhouse...a Goliath in exporting jobs to asia, the juggernaut of frivolous financial derivatives and flim flam snake oil smoke and mirrors, America, a true giant in health care, human rights and poopy tent city streets...EVEN CUBA houses their poor 😁

[@mkl01_99]

Dave blames survival payments to people as he gaslights about cash give out by the fed to wealthy fat cats and predatory corporations. Victim blaming doesn’t work any more.

[@putraceface]

Professor Wolff's face during the final segment was priceless. I don't think he could believe he was hearing a somewhat mainstream analyst give that type of analysis.

[@MrSomeSkeptic]

It's amazing that someone calling themselves an economist could have such a horrible understanding. He said that the US would split into Socialism and Capitalism. Wtf? "Socialism is when the government does stuff" from a supposedly intelligent economist. Wow. I really wish wolf could have responded to that one. Because it's insane how stupid it was.

[@peepshow090]

​@@MrSomeSkeptic yes most of the economy talking heads are uneducated

[@dreadreaper7123]

​@@MrSomeSkepticthat's communism socialism is when people have power to decide and government is just there to make sure the will of majority is enforced

[@atomicstyle7344]

What about private equity firms buying up single family homes? The goal is to turning everything into basically a subscription aka reoccurring fees in the form of rent. It’s no longer enough for capital to make money off the outright sale of goods.

[@mkl01_99]

Entitled rich ppl see a correction; me, I’m looking at a tent.

[@jann9507]

Is Mr. Wu hallucinating or just doesn’t have a clue about Main Street ? Labor participation is low since we have gigs not jobs in the US. Professor Wolff nailed it; Collateral damage !! Inflation is created by Corporations and employees are the ones who pay.

[@josedipadua8575]

Power to the People’s 🗽

[@chantellemodisane]

The economist is right. Whether interest rates decrease or not, it won’t fix the current inflation and recession

[@ridethecurve55]

And then...the Game will be up on the Fed. Hopefully, for good!

[@Capitaltrading]

Thanks for your comment Chantelle. What do you think central banks should do to curb inflation?

[@kippsguitar6539]

Tosh

[@cakobjoker8134]

they're both economists...

[@haleybrown2836]

@@cakobjoker8134 Yes, but Prof. Wolff is a Marxist economist vs Woo a dedicated capitalist, they are on the opposite of the rainbow.

[@spotthedogg]

How’s that red wave Mr. Woo? I think that prediction mirrors the accuracy of a lot of his views.

[@ridethecurve55]

I live nicely in my cardboard box hus, and it's all mine. No loans, no taxes, no maintenance! ALL MINE!

[@peterpaul176]

They are coming for it just like they came after the trailer parks

[@WackadoodleMalarkey]

Anywhere you go, there you'll be

[@helengarrett6378]

Either housing or food can do us in. Working folks have been teetering on the verge of a personal economic crash for a very long time. We can't afford a home and we can't afford a car repair either. Anyone look at the price of veterinarian fees lately? Nothing is affordable right now. Add a recession to all this pain and I shudder at what is coming. January is coming. My lease will be over then and I have already been told that a rent increase is coming. I already pay 50% of my income on rent. Buy a home? Ha! I can't afford to buy Thanksgiving dinner fixing for four.

[@ProDesignPortfolio]

lol both of their faces when the other was talking

[@josedipadua8575]

Central banker’s will destroyed itself and meet their evil demised and will be abolished forever Power to the People’s🗽

[@garciac4211]

200,000 dollar house loses 20% is 40,000 in losses ask yourself can you imagine you current home losing That in value? You just gave yourself the answer to the question the housing market can definitely crash.

[@ranjitsumati27]

Isn't it high Time, the Profitiers (including owners and realtors) making outregeous money from houses which way far Overpriced then what the houses even worth on the reasonable upper range and real VALUE of structures and place..................The housing marke MUST crash.

[@petershindler3729]

The metrics change and they can change very very fast.

[@iart2838]

Great analysis. Corporate media report nothing on these issues.

[@Davidagarcia911]

The last segment was… something else lol

[@karlad4082]

OMG! David sounds like a cheesy Salesman and Professor Wolff sounds like an economist. There was no fairness in this debate when you’re comparing apple and oranges 🤷🏻‍♀️ David may work great for rich investors but Professor Wolff works great for most Americans 😊👌🏼 Did anyone else notice Wolff’s dismayed look on his face about David’s delusional points? 😂

[@compassioncampaigner728]

Yep His look part of the show. Davey Delusional - works for me

[@mmx0732]

You should have let David make his point at 21:30!!

[@gresleymccaslin5948]

Excellent commentary…great views and debate..loved it.!

[@peternewman7940]

There has already been a housing crash in New Zealand over the last 12 months or so, of about 20 percent. In some places it is a bit more - perhaps 24 percent in some suburbs. Before this latest adjustment, house prices here had risen in real terms about 3 or 4 times since 1988. What you could have purchased for $200, 000 in 1988 would have cost you between $600 000 and $800 000 in equivalent value dollars before the crash. Since the early 1980s the price rises have been even more pronounced. These speculation-driven price increases have dramatically reduced the real incomes of the economic bottom half of the country and created a new poor. The newsmedia keeps mum about the social devastation.

[@jamessydney3022]

Hard to tell if this is the right platform for this. But ill try anyways as this is still considered business. Given the present conditions, is it better to invest into Real Estates or into Stocks? Which would yield better output.

[@cryptocasey1083]

Has got to be Stocks but of course, you have to be well informed on the right ones or better still, get a pro to handle it for you (that way, you save time and minimise risks). Made my first million this way earlier this year. One more thing, one can wake you up by 2am to complain about a leaking pipe, the other can't.

[@chrisjohn7823]

Very sound advise! I have been into both for long and though I won't say I have lost a fortune, I have squandered quite alot... If it's not a problem, do you mind recommending the pro you worked with? I could definitely use the help of one right now... I look forward to your reply...

[@twinfred3160]

Why not both??? diversify!!!

[@cryptocasey1083]

@@chrisjohn7823 Funny enough, I can honestly relate. It's not as easy as it may sound and takes some level of decisiveness and discipline. I don't know if I am permitted to drop it here, but his name is "Claire Anne Steinglass". Was in the news a lot in 2018. You may look her up online for more details.

[@eddiejohn8506]

@@cryptocasey1083 wow I know this woman. Once attended a fundraiser she was also in attendance in Vancouver, Great speaker with a funny accent,, She's American though I doubt she works with foreigners.

[@hadialnaimi8309]

ماقدر اسحب فلوسي ع البطاقة بعد المضاربة في المنصه عندهم

[@jayadams2771]

There are 100's of houses around me for sale. EVERY single one is PENDING. This is corporate housing buyout, the market has been officially blocked from anyone except corporations. Welcome to corporate fasicm in America.

[@chongjcj6977]

Richard Wolfe has clarity of thought. Tony Woo is woolley and needs to calm down in his delivery.😅

[@DiceDecides]

what does husing mean?

[@ridethecurve55]

Hus and Hus and Blow the Houses Down?

[@DiceDecides]

@@ridethecurve55 this better not be a repeat of the 2008 house bubble burst

[@ridethecurve55]

@@DiceDecides Oh, No It won't be! It's going to be MUCH worse than that. Let's just call it the "Everything Bubble Burst". lol

[@DiceDecides]

@@ridethecurve55 worst time for me to be in debt gosh dang it

[@matthewkopp2391]

@@DiceDecides as Wolff says there is no fortune telling, but there are a series of symptoms: There is a housing shortage so one naturally would conclude prices would increase, they did, but no body wants to or can rent at the prices that landlords ask for as wages and incomes continue to stagnate. And businesses down size and relocate. So they lower prices, but still fewer people rent. If the trend continues landlords may default on their mortgages leading to foreclosure. But with fewer people capable of buying the banks will be forced to resell at a loss. Once again, there is an actual housing shortage, we need another two million houses, and people are living in rooms and sub-standard housing, so the smart thing for the government to encourage is an increase of supply. But this lowers the price of housing and rents and both parties are funded by real estate companies. So actually increasing the supply is prevented. So what will likely happen is a very big housing devaluation and no one wants to see a bank bailout this time. And properties will be even more monopolized. If there is a crash what could and should happen is an FDR style housing programs, making housing affordable to those who rent. But the US government has a 32 trillion deficit with taxes on the wealthy and corporations at its lowest since before WW1 with very few ways to balance the economy via revenue. So there is a set of symptoms for something worse.

[@schnealy]

I used my federal stimulus check to pay my federal taxes. Thanks for nothing Washington.

[@remojohann5450]

Our country rich people ,only 2or 3 guys can Restor American economy without problems……( piece a cake don’t worry about).

[@richardsttati317]

Houses crashe or not who cares houses are not for speculation or profit, they are for families love and roofs over their head !!

[@soicybunny]

…2008?

[@navinbhatia9936]

Why this video is US & EU centric ? World is beyond the non sense of G-7

[@thatguyofdark]

because policies in south africa and indonesia do not have a massive sway in the world scale. Policies in western europe, russia, china, and the us however, have the ability to crash the global economy and as a result are what typically ends up the main focus.

[@adityarajan592]

@@thatguyofdark Yes then why is there no discussion of China

[@thatguyofdark]

@@adityarajan592 there has been plenty of discussion about china but they are not as involved in the situation as western europe is. They have a different problem because a large chunk of their economy was run on unsustainable construction/housing and its begun to fall through. Also they have managed their economy and are seeing none of the inflation western nations are. Its not that no one is talking about them, but that their problems are mostly unrelated to whats happening elsewhere

[@adityarajan592]

@@thatguyofdark Well considering its the 2nd largest economy that produces a large amount of goods for other countries and is the world's biggest trading nation, including for western Europe and US, its bound to have a pretty big impact. For example, the covid lockdowns and resulting supply chain disruptions are undoubtedly adding to the inflation around the world. The real estate bubble thats the largest in the world has the potential to cause severe damage there and limit the ability of Chinese consumers to buy products from the rest of the world and thats pretty relevant too.

[@707Berto]

Spell check!

[@tj7870]

check out clear value tax! says no!

[@tomhenderson2430]

Never cut off the guest in mid-sentence. We spent all that time listening to him and we don’t even get to hear his conclusion thanks to you. I’m sure your next segment could have waited a few seconds. That was very disrespectful. Why even go to the trouble of inviting a guest to come if you plan to talk over them?

[@themelongourddevelopmentbo4963]

David’s predictions didn’t age well.

[@mjlivie]

Mr Woo needs to CALM DOWN

[@JSwift-jq3wn]

"So they came out and went into the pigs, and the whole herd rushed down the steep bank into the lake and died in the water." Matthew 8:28-34

[@klausburmester1018]

Friday the 21st will be interesting- a bit lengthy to explain but all big crashes happened on this date on the basis of the lunar calendar - I know I lost you right there- just watch out.

[@willspeakman2461]

Well...........

[@Sunnygrrl99]

And so.....?

[@klausburmester1018]

@@Sunnygrrl99 and so the crash didn’t took the chance of this prominent day. We need to wait.

[@realityusedtobeafriendofmi9159]

Does David Woo need to start every sentence with basically?

[@tongsllc]

Basically, yes!

[@AaronStierCohen1]

Crazy how theres never anything wrong with capitalism per say... its just always a liiiiiiitle too excessive...

[@blogintonblakley2708]

Could housing crisis crash Global economy. Never underestimate the power of capitalism to break things.

[@drrmdebnath8356]

Aggressive argument by one...

[@sichambers9011]

Never heard so much shit about the UK ever. Labour is not socialist

[@haleybrown2836]

Labour is not Socialist But neither is US's Bernie Sanders who runs as a Socialist a Communist.

[@sichambers9011]

@@haleybrown2836 Did he call him a communist?! This guy knows absolutely fuck all

[@kippsguitar6539]

House prices always crash, rates always go up and down, it's called a cycle,

[@dfwherbie8814]

Yeah, but does it have to be? History shows that it doesn’t necessarily have to be so. Also, even if you accept this cycle, the obvious question is how steep does a trough have to be in order to result in a near-permanent collapse.

[@dfwherbie8814]

@@break1722 *wealth consolidation

[@hobarttobor686]

How is the housing in Cuba?

[@dfwherbie8814]

How’s housing in capitalist Haiti? We can keep playing this game lol use your brain and come up with better segments. Think harder

[@hobarttobor686]

@@dfwherbie8814 Please move there.

[@dfwherbie8814]

@@hobarttobor686 I’m both Cuban and Haitian and been to both countries

[@antonimonti6902]

@@hobarttobor686 Homless encampments everywhere in the US.... saying 'move there' is not relevant to the the topic.... but Cuba has almost zero people in the streets unlike the US, UK... if you're not homless in the US/Europe and live in a posh flat... good FOR YOU....pat yourself on the back ...but you still live in a socially, moraly, and economically destitute society compared to these 'third world" countries..... nothing worse than third world Anglo dominated systems....

[@hobarttobor686]

@@antonimonti6902 feel better?

[@r.a.m.4992]

Oh look, a capitalist getting it ENTIRELY wrong. What a surprise. “Red wave” hahaha😂

[@zaelu]

David Woo has little connection with our real planet. And makes a mess drooling so much out of unjustified excitement.

[@nhantran6645]

the malice and hates on wolff face

[@hadialnaimi8309]

حراميه انتبهووو منهم

[@akarakas1453]

I wish everything will go smoothly we need miracle

[@BabaBest2000]

David is basically boring.

[@firedplay]

This David character is just another snake oil salesman for capitalism. Lol

[@stefanlvkc7986]

35:09 Holy f#@$ was David waaaaaaaaaay off on that one. I hope his Trump 2024 win prediction is just as off. LOL

[@thedude579]

*THE MONETARY BALANCE OF FEAR AND GREED* The consolidated bank balance sheet is showing the smart money financing on the left side and the idiots on the right side. The banks earn interest and (some) capital gains (from small / medium fire-sales) on the left and pass on less or no interest to the idiots on the right side. They provide security to the idiots though and that is very important. The smart money are loans the banks make to the "rich and daring", so that they can invest with more or less leverage into stocks, precious metals, commodities, bonds, housing, property, agriculture and so on. The "rich and daring" reap the real rewards from the natural rate of growth. On the idiots (right) side of the consolidated banks balance sheet we find what is commonly known as the "money aggregates" (M1 - M3). These money aggregates are 10 to 15 times the size of the monetary base (M0). When the central bank buys financial assets from the banks it grows M0 but not the money aggregates by the same percentage (since they are 10-15x M0). So the money printing of M0 could go on for quite some time before the money aggregates bode for hyperinflation or the left side of the banks consolidated balance sheet gets so big that even the idiots lose faith and flee from overleveraged monetary aggregates into cash, or alternative assets (bank run followed by chaos, deflation and depression). Thus there are just two important things the central bank needs to watch out for: 1. The stock market valuation must adjust (30 - 70 %) every 7 to 10 years, so that the poor on the "idiots side" of the consolidated banks balance sheet never get the idea to switch into the assets held by the "rich and daring". The central bank will thus foster the poor mans fear of losing all he has. Unexpected volatility will also keep the "rich and daring" from over-leveraging. 2. The stock market valuation must never crash to such a level (70 - 100% loss) that banks will be forced to sell the assets margined by the rich and hand them to the poor in a great depression fire-sale or revolution. So it is really important for the central bank to strike the right balance between keeping the poor living in fear of losing it all and moderating the greed of the rich to the natural rate of growth. A long term investor that invests in the assets also held by investors leveraged by banks on their left side, need not worry unless the central bank loses this balance or changes its modus operandi. Please believe me, I am not writing this being a socialist. Who knows, it could be different next time around .....