The Collapse Nobody Saw Coming

➡ Dan discusses the rising issue in the finance industry regarding mezzanine financing, a form of high interest, short-term loan used by property owners. He warns of a potential collapse in commercial real estate due to a rising number of defaults on these loans.
➡ Promote cyber security by signing up for Private Internet access and ensure protection. China’s largest bank, ICBC, recently fell victim to a ransomware attack exacerbating global cyber attacks.
➡ The current real estate market is experiencing a slowdown with properties unable to sell, resulting in people being stuck with loans. Renting is apparently a better choice over owning property currently.
➡ Party City’s financial blunder came after acquiring a balloon supplier known as Anagram which filed for bankruptcy, sending the retail chain into financial turmoil. Consequently, other retailers like Walgreens are also initiating cuts within their corporate office.
➡ Retail companies like Bass Pro Shop are generating employment and bringing back old-school Black Friday, announcing major sales initiatives. Amazon Prime’s delivery policy changes may upset the membership base, being they now deliver to non-members for free.
➡ Online mattress company, Purple, faces struggle due to declining sales projections. Amazon continues to let go of employees, most recently in their games unit, indicating a restructuring effort.
➡ Adobe’s recent report reveals that physical retail stores may become obsolete as online traffic and purchases progressively increase. This transition saves businesses the cost of maintaining a physical store and its employees.
➡ Decline in physical store shopping and rise in online purchases is leading to an inevitable closure of many standard shops and restaurants. Simultaneously, there is an ongoing trend of frauds related to buying valuables such as gold and bitcoin from non-reputable sources, necessitating careful buying decisions.

Hey, it’s Dan. Welcome back. You’re watching. I allegedly, and got a good one for you today. I’m out at the park. It’s getting very festive out here. But I have a question for you. And the question is, how bad is it going to get? And I have the answer. Okay. And there’s some signs that things are going to be bad quickly. So before I get into it, as always, like these videos, please subscribe to the channel.

And today we have a sponsor, private Internet access. Now we have all talked about everybody in the financial space about how bad it’s going to get for commercial buildings. And there is another sign that shows the finance industry how bad this is going to get in short order. And it’s something that nobody’s even looked at yet. There is something called mezzanine financing, which I was not familiar with, familiar with commercial loans, signature loans, personal guarantees, things like that.

Mezzanine financing is brand new to me. And as I started researching this, there’s real problems with these commercial buildings out there. Now, to give you an idea, when you go out and you buy a building and they give you a loan, and you take a loan against the building, there’s a mortgage, basically, and you have a deed of trust with your payment. And if you pay it off, the loan is considered paid off.

What other people have done recently is with the LLC or the entity that owns the building financing the building, they will go out and get extra financing short term. But the crazy thing about this is that they may have a mortgage for two, three, 5%. They will go out and get a mezzanine loan for 810, 15% on some of these loans that are absolutely crazy. And basically they’re short term loans for just a set period of time.

And you make interest payments and you don’t pay the loan off until it matures, whatever the date is, two years, five years, six months, whatever you agree to. And they’re seeing real problems with this. So you can tell the lights getting set up here during the day, so it’s not as bright, but just kind of nice. And there’s all these wild peacocks walking around here too. So give you a perfect example of this.

Wall Street Journal did a great story, and the story is included below about how there are over 100 of these mezzanines, loans that have been called into default right now. And basically they’re foreclosing on these. Now we’ve heard about the building in Los Angeles that I talked about about six months ago that was given back to the bank had a $52 million loan against it. But there was mezzanine financing that was in front of it.

Now, Margaritaville is a resort in Times Square. It’s 32 story building. And Sheriff L. Gamal bought this place and he took out a loan against the building as a mortgage, basically. And it was for $167,000,000 payment beyond that. But anyways, what he also did and where he’s in real trouble is he went out and got himself mezzanine financing. Think about this. This is financing that us common folk have never heard of before, that you’re going to go out and imagine borrowing against your house to the hilt as much as you can, and then you go out and get a signature loan that’s tied to the house.

Okay? So it just really, as far as the financing and the hundreds of millions, if not billions of dollars that are out there with these loans that we don’t even know about yet. So Sharif went out and got himself another $57 million, and that’s where he defaulted because the interest rate was so high on this loan. It’s basically a loan that can have an interest rate of generally people are saying around 9%, but basically as high as 15% based on your credit worthiness, the LLC’s credit worthiness, and your ability to pay.

But basically these guys are using this as short term financing. And here’s the thing. People think because somebody owns an asset for $167,000,000 loan against it, they’re rich. People are overextended like the rest of us. Borrowing, borrowing, borrowing, borrowing like a bunch of debt hounds. So bad news, guys, bad news. But the Wall Street Journal found over 100 of these loans that defaulted this year. It’s well over double what it was last year.

And this is the problem with it, is that they have to research these loans. They have to research it and do it kind of backwards because these aren’t listed publicly. So these default notices. And again, this is the clearest sign that commercial real estate is going to collapse. And if you don’t think that this is going to bring everything else down, you are kidding yourself. I have had so many people write me over the weekend talking about how the bank shut off chase.

Bank will not redeem bonds right now that are over $200 face value. If you have a savings bond and they won’t redeem it, we can go to treasury direct. How do you cash these in? You have to set up a Treasury direct account. Imagine your Aunt Mildred has Bonds and she needs to cash them at her bank. And Chase is saying bad, bad. You’re starting to see not the collapse, but the crumbling of everything.

And it’s cracking and breaking away as far as the business side of everything. And if you don’t think this, you’re kidding yourself. You have to look at this. But this commercial real estate problem. Read this article out of the Wall Street Journal. It’s fantastic. But it also talks about how these rich people have just overextended themselves so much with these buildings and they’re like, oh, well, we’re giving them back now.

Give you an idea. I worked for a movie producer, and this was about ten years ago, ten plus years ago. Great guy. This guy would go out and he was what you considered last money financing. In other words, your movie may be done and you need a few hundred thousand dollars for advertising or the sound isn’t right, you need to go back in and fix it. So you go to guys like him and he gives you loans, but he’s what you call last money in, first money out.

He’s guaranteed his money getting first out. Now, that’s what they did with these mezzanine loans. So they take priority over everybody else. They get paid first. Isn’t that crazy? So the guy I worked for did a bunch of movies that you’ve heard of from ten years ago, and one of them was called the Hurt Locker, which won the Academy Award. The people that financed the movie were so mad at this guy because his deal was so good, okay? And the movie made so much more money.

Jeremy Renner, remember Best picture? All that stuff? Catherine Bigelow, I think, won Best director that year. Anyways, the movie made so much money, more than they ever thought it would. But this guy with his deal, last money in, first money out, made so much money, other investors that put in $10 million didn’t make nearly the money that this guy did. It’s crazy. So that’s what you’re seeing. Share your thoughts on this stuff, guys.

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So again, guys, protect yourself. It’s ridiculous. Read the story below. But this is happening more and more and more right now globally. They don’t care who you are, they want your money. Okay, great article below Talking about how it is better right now to rent than to own property right now. And the advantages to renting right now is like a 25% edge on renting over owning a home right now.

I think it’s only going to go up when you see some of these markets that are starting to have dips in housing prices. Think about this. If you had a neighborhood that went from $300,000 to $640,000 and now it’s back down to the 400,000, how would you like to be the person that paid 640,000 for that? Well, those houses right now in Las Vegas, that’s happening. A lot of areas like that, and tHey’re beautiful homes, but they’re sitting on the market longer and longer and longer.

You’re seeing more and more people getting residential real estate stuck because they can’t sell it, they cannot get out of these loans. And the other thing is that people are locked in their mortgages is ridiculous. Because let’s face it, if you have to sell, you’re going to sell right now. You’re going to do whatever it’s going to take to get out of these houses right now. But when you can rent one of these houses for $2,000 a month and the payment is $4,500, what would you rather do? Seriously? Seriously.

You can own a home later. The tax advantages are not what they used to know. You have to look at guys like Grant Cardone who have owned property. And seriously, when you start to get to different areas and you start to see areas like Boise, Idaho, that are crazy, you’re going to see these houses that are not going to sell, and they’re starting to drop in price. But just look at the days on the market for these houses, okay? And again, how would you like to buy a house that you have an $8,000 a month payment and the houses are renting for 3200 on the street? How do you get out of that? How do you fix that? Seriously? I know somebody that’s got a house like that.

Okay. Near and dear to me. Okay. Share your thoughts on this stuff so far, guys. One thing that large companies do is they look at their suppliers and they look at who they’re paying the most amount of money to, and they say, well, gosh, if we bought that company, we’d make all that money because we’re paying them an absolute fortune. Party City, the store chain, went out and bought a company called Anagram.

That is their balloon supplier. They bought them because they were paying them a fortune, and they said, wow, we’re going to save so much money. And it was a great idea when it first started. But guess what? Anagram just filed for bankruptcy because party City is going down for the count. So one after another, guys, these retail people are having huge problems that they cannot. It’s just. It’s there.

So I mean, hey, let’s go get balloons at party. Let’s go to party city. When’s the last time someone said that to you? Okay, Walgreens is letting go of 5% of their corporate office again. This just was announced. I thought, well, they just did that two months ago. No, it’s announced late last week. Okay, so you’re starting to see major cracks in everything that people are spending money on.

Laura works at Bass Pro Shop, which, if you’ve never been in a Bass pro shop, if you like, sporting of any type, the mean. This is Disneyland for adults, guys. It is insane how great a bass pro shop is. But she said, you know, Dan, we’re going back to old school. We’re going to go back to. That’s kind of a nice look there. We’re going back to old school.

Black Friday. They have a 58 page circular that she shared with me. And there’s some good deals. I’m like, I sent them to my brother. I’m like, hey, man, we should go to Bass Pro shop on Black Friday. But give you an idea, guys. I mean, like, the one in Vegas is just so cool. It’s right next to the Silverton Hotel. It’s got a lake, it’s got all the boats, it’s got all the hardware, if you know what I mean.

And it’s got all that stuff that you can buy, fishing gear, everything. But, man, oh, man, is it great. Now I get people that say, oh, Academy’s better, and oh, this and that. I’m telling you guys, you just need a place to start. And it’s nice to see a company that’s giving their employees lots of hours that she’s excited, like, hey, wow, we were going to have a sale is going to start, and it’s like they’re open at like five or six in the morning, so it’s going to be really cool and the lines will be great.

But again, if you guys have anything like this good Black Friday stuff that you think is worth sharing with us, share it with us, because I’ll share that link now you can go to. BlackFriday. com is a site that used to be really covert back in the day. I’m talking 20 years ago. It was really something that was really. They didn’t Share everything. And they’d get circulars and they would take photocopies of the, you know, early and you’d get this stuff and you’d know where you’re going to go.

Like I told you about with my mom, how we would take her places, we would do this in advance, but places like Walmart don’t have the deals like they used to. So this is kind of cool. So, Laura, thank you for sending me that. That was really nice of you. And next thing is Amazon Prime. The advantage to paying Amazon prime is that you get priority. Okay? Now, I love going into Whole Foods, and I hate it when I don’t have my phone that’s got the Amazon prime and I don’t save my two or 3% or whatever it works out to.

But one thing that Amazon just announced is they’re going to start delivering to people that are on Amazon prime members. So if that’s the case, why would you ever buy an Amazon prime membership again? They’re going to start free delivery for people that are not Amazon prime members. So you’re starting to see cracks in the armor. You’re starting to see places that we were hard and fast with our discounts that are changing.

So it’s just a beautiful day out here today, isn’t it? It’s nice. Okay. Share your thoughts on all this stuff so far. There’s certain things that people buy online that I’m like, really? Really? You would do that? Purple is a mattress company. Purple’s just said that sales are off and that they lower their guidance for the year. Their third quarter sales were way off and they were down.

And I’m like, again, guys, I couldn’t imagine buying a mattress. I will sometimes stay in a hotel and I’ll say, wow, that was insane. The mattress is so good. I slept so great. What’s the name of the mattress? And you can find that out. I bought a mattress that way once because I laid on it inside of a hotel room. Okay? But to sit there and look at it and go, oh, it’s going to be great, and the service is great, and they’re going to ship it right to my house, and it’s going to be folded up and no pass Adena.

Amazon just announced another fIring, which I just thought was blown away by this one, because they’re letting go of another 180 people at their games unit. Now, their music side, they just laid off over 100 people a couple of weeks ago. So Amazon’s cleaning up shop right now, guys. And again, this is the sign of the Times. Okay, now here is the thing. Retail is finished. Retail stores are finished.

Adobe just issued a report about how good online traffic was in online purchases. And think about this. People are going to write me and get confused by this, because think about this. When you have a business that’s online, you don’t have nearly the employees. You don’t have somebody selling perfume, walking up and down the cosmetics aisle, spraying people and trying to convince them to buy it at the department stores.

Dillards is off. Dillard’s is getting killed right now. Okay? But online purchases for October, over $96 billion. Isn’t that crazy to think about? That is just such a huge number. So just was absolutely floored by that. So you’re going to see all these changes happen, and just a matter of time until you see more and more stores close and more and more restaurants close. But the infrastructure for malls, the infrastructure for a shopping center, remember you’d have an anchor store.

Remember that? That term, anchor store? What does that mean anymore? What? Anchor store? Oh, wow. If they build a Target, everybody’s going to go there. If they build a JCPenney’s, they’re all going to show up there. What about a Macy’s? What about Sears? Okay, how about a Dillard’s, guys? Okay, final, final story, which I love this one. A man was on Craigslist and was searching and found a guy that wanted to sell gold at a really good price.

And listen, meet me and we’ll meet in Redlands behind the gas station, and I will sell you this gold. So the guy met this guy a couple of times and gave him over $21,000 and got a tremendous deal on gold. Only problem was, the gold was not real. And when he went to verify that the gold was, in fact, gold, the experts told him, no, this is all fake.

Okay? So the guy said that he had long, stringy hair, tattoos down both of his arms, and really bad dental hygiene. Okay? So it wasn’t me. I’m laughing about this, but I felt really bad for this guy, okay? Because everybody wants a deal. There was a guy a few years ago, prior to the pandemic, that went out and bought a bitcoin for $8,000. An actual coin said it was a bitcoin.

Okay? And this is when Bitcoin, I think, was at 16,000. So he’s getting a 50% discount. And the only problem is there is no coin for bitcoin. So he was totally hosed. But that guy went to the press and told everybody and was just made the jackass of the year when that happened. Kind of like this guy, okay? So buy from somebody reputable. Please don’t forget to hit the like button.

Please don’t forget to subscribe to the channel. Tell me about these mezzanine loans, guys. Tell me if you work for a place like this and you see financing that we haven’t heard of yet, and this is going to be a problem, let us know about that because I think these mid level banks that finance this stuff, they’re doomed. They’re going to have nothing but problems. The other thing that’s going to be a problem is you’re going to see, you’re going to see this have a cascading effect because it’s just a matter of time until the Wall Street Journal, if they can find 100 of these loans, think about this.

They said that there’s got to be thousands out there like this. What does that mean? Okay, so share your thoughts. Reach out hello@iallegedly. com. Is the email address. Sign up for the email address to get an email if you use this link, if you take a picture of this with your phone, it will take you right to the registration. You can do that. And Onward and upward, guys.

I will see you guys very soon. Thanks for being here. You close. .