I've been quite busy with year-end deliveries these past two days, so I'll just jot down my thoughts as they come to mind.

Everyone is aware of the situation with the young couple in Zhengzhou, but this article is not intended to focus solely on them. Instead, I'd like to use this incident as a springboard to discuss how everything seems to have changed suddenly over the years. Recently, I've been browsing through headlines where people are expressing their expectations for 2024, and it's surprising to find almost unanimous agreement that next year will be even more challenging. This is the first time I've encountered such a situation since I can remember.

Many issues are listed in the table below:

Our past rapid economic growth was largely due to "consuming leverage." This is not a new concept; even the younger generation on TikTok knows that the prosperity of the past few years was largely due to borrowing from the next thirty years and spending it in the past few years. It's similar to those who max out their credit cards; the more enjoyable it is to use the cards, the more painful it is to repay the debt.

Looking at the chart, it's clear that since 2008, our country's household leverage has been on the rise, and it has now reached a point where it's almost impossible to continue increasing.

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Many of this year's problems, such as reluctance to buy homes and sluggish consumption, are essentially because people can no longer borrow and have started to worry that debt will crush them, so they have become anxious.

In fact, this shift in mentality did not occur this year; signs of it emerged in previous years, but people did not realize it at the time. For example, the peak of China's car sales was in 2017, and the highest value of real estate was also in 2017.

The reason why the decline in real estate after 2017 did not seem abnormal is that the government began to introduce regulatory policies. In fact, looking back now, even without regulation, it would have turned downward. It's just that if it reversed on its own, the speed and magnitude of the turn would have been outrageous. There must have been people within the system who saw this at the time and stepped on the brakes in advance.

Moreover, the problem has been accumulating and magnifying bit by bit. From what we can see now, it should be the three years of the pandemic that have accelerated this process.Previously, there was a mental inertia among people that believed the economy would always grow at a high speed, and their wages would continue to rise as they had in the past. Many consumption concepts also had a distinct "forward-looking" nature. People were not afraid to leverage, thinking they could slowly repay it in the future. As a result, leverage kept increasing.

For example, the young couple from Henan in the past few days is quite representative. At one point, 70% of their family income was used to repay the mortgage. This is why when the girl's income slightly decreased, they immediately became very tight financially. If one of them lost their job, they would directly face the risk of default and supply interruption. What's more troublesome is that they also had a child.

The most worrying issue now is that we don't know how many people across the country are in a precarious financial situation like them.

So, compared to the unfinished buildings, there is an even more troublesome issue, which is the supply interruption tide caused by unemployment.

This fear itself has a great destructiveness. The more people are afraid of supply interruption, the more they need to tighten consumption. Tightening consumption will lead to sluggish consumption, and sluggish consumption will lead to further unemployment. Just think about it.

Now, people find it inconceivable that the Zhengzhou couple's leverage has reached the top. However, a few years ago, people thought it was quite normal. After all, at that time, people thought wages would continue to rise, housing prices would also rise, and there was no situation of unemployment and difficulty finding a job. Housing prices have been rising for many years, and there is almost no possibility of a price drop. Buying is making a profit, and if you don't buy, you will miss this opportunity, and you will never be able to afford it in the future. At that time, even the worst case was to deliver food and run DiDi, who could have thought that these two industries are now saturated.

It is precisely because people were willing to leverage at that time, and a large amount of money was borrowed from the future to the previous few years, coupled with the prosperity of foreign trade, the overall economy was booming.

In just a few years, it has become difficult for people to understand the ideas of that time.

Moreover, this is a spiraling downward process. In the past, people were willing to spend money, the market was booming, and you could quickly find a job if you were unemployed, and people's desire to save money was not so high.

Now, the situation is exactly the opposite. People are unwilling to consume, the market is not active, and it is not easy to find a job.The more you worry about the difficulty of finding a job after unemployment, the more reluctant you are to spend money. If everyone stops spending, the number of positions society can offer will decrease, and you might lose your own job one day. When salary reduction becomes a trend and the difficulty of finding a job becomes a consensus, it will further intensify everyone's consensus on saving money for the winter.

The current problem is that everyone doesn't know how long this state will last. Since we don't know, we can only think of the worst-case scenario. After all, if you are in a very tight financial situation and face the risk of bankruptcy, and you are not cautious, you may really become a debtor overnight and never recover.

Many friends say, if you are unemployed, just sell the house? The main problem is that the liquidity of houses in many places has already disappeared. That is to say, even if you offer a painful price, you still can't sell it.

At first, only a small number of people thought of the worst, but the epidemic accelerated the spread of this thought, and the whole society began to turn conservative.

This conservatism is not only in the concept of consumption but also in social concepts. I won't say much about this. If you are sensitive to social public opinion, you should be able to feel it.

It has even changed the worship of academic qualifications that has been formed over the past few decades. You know, the number of candidates for postgraduate entrance examination this year has unprecedentedly decreased by 400,000.

It is obvious that many people have realized that if you can't get into a 211 or above, it can't be said that 100% of the three years are wasted, but 90% are wasted. Against the background of the employment winter, many employers now only look at the first academic qualification and also limit the age. So, if you are not well-prepared for the postgraduate entrance examination, it may not be worth it.

Under the background of the devaluation of academic qualifications, the cost-effectiveness of postgraduate entrance examination is getting lower and lower, especially for a "non-211 and non-985" university, there is no cost-effectiveness at all. It might be better to take the civil service exam first, starting with Jiangsu, Zhejiang, and Shanghai, then Xinjiang, Tibet, and Lanzhou. I checked, and the number of people taking the civil service exam has indeed increased by 400,000, the highest in history.

There is another more troublesome thing, which is that the rich are getting old. This is a problem I suddenly realized this year.

I have always been very concerned about real estate, and many readers and friends also talk to me about buying and selling houses.I've observed a phenomenon where in Beijing, a significant portion of the multi-million yuan homes being sold are by the elderly. There's a characteristic pattern: when young people sell their homes, it's often to upgrade to a better type of residence, trading a smaller one for a larger one, or a larger one for a luxurious one.

The elderly are different; many of them live alone as their children do not live with them, and they find it pointless to occupy a large house, so they're preparing to sell it. They prefer to exchange their large homes for smaller ones, or simply move in with their children, depositing the money in the bank for future medical expenses and retirement. At the end of their lives, they plan to pass the money on to their children.

Millions of funds are thus deposited in banks, with no purchase of any technological products, no shopping, no entrepreneurship, and almost no creation of new employment opportunities.

As we all know, China's wealthy class is mainly concentrated among those born in the 1960s and 1970s. When China joined the WTO, they were in their thirties and forties, with some capital and experience to start businesses and become wealthy. There are also some who did not start businesses but became wealthy passively after the real estate boom.

Now, these two groups are approaching retirement age, and their increasing age has turned them into extreme risk-averse individuals, avoiding all high-risk operations, and their vast wealth will also lie dormant with them.

Of course, there is a 28 law in everything, and not everyone from that generation became wealthy; it is still a minority.

What's more troublesome is that Chinese society's concepts have undergone tremendous changes in the past two years. When I watch Bilibili now, I find that young people have basically reached a consensus that entrepreneurship is the biggest way to lose money.

Not only do young people think this way, but in the past two years, I've met many small business owners from Jiangsu, Zhejiang, and Shanghai. They started their own businesses, accumulated a huge amount of wealth, but strongly oppose their children continuing to take over and start businesses, fearing that the money made by luck will be lost by luck. Their most common operation is to distribute tens of millions of funds well, and then let their children take the civil service exams, and spend the saved money slowly, striving for a peaceful and prosperous life.

These ideas are not problematic, after all, entrepreneurship is indeed a high-risk venture, but if the children of wealthy families also understand this, I don't know what the world will become.

Regarding the future, as you all know, I have always been quite optimistic. After all, looking at the overall trend of the past hundred years, China's national fortune is like the U.S. stock market, with significant pullbacks, but overall, it is fluctuating upwards, and the trend has always been very stable. We have gone through the time of being poor and blank, and it is impossible that we can't move forward now that we have a large family and wealth.However, everyone should also be aware that a slight bump in history can come at the cost of a generation. If a downturn lasts for ten years, many people's golden decade will be gone, and their whole life may be like that.

This also helps us understand why everyone is rushing to take the civil service exam, fearing that the millstone will hit them, and they are all in a hurry to hide in a safe haven. Looking back more than ten years ago when I graduated, almost no one took the civil servant exam, as if it were a different era.

What can we do? In fact, the government has never been idle, lowering interest rates, attracting foreign investment, and promoting employment. I think in addition to what is being done now, the most critical thing is to reiterate consensus.

Our country has been able to prosper rapidly in recent decades by integrating into the world market, relying on countless enterprises to carve out their own piece of the global market.

Trade and market economy are the primary principles of prosperity. From the situation of countries around the world, those who respect this are not necessarily prosperous, because they also need a bunch of other supporting conditions. Those who oppose this will inevitably fall into poverty and turmoil, without exception.

Moreover, the greatest driving force in the development process is capital itself. It can be said that without capital, it is difficult to move forward. Everyone knows from the news that foreign investment in China has always been an important barometer. The stigmatization of capital in the past two years is a bit too much, fortunately, many things do not require too much preaching.

For example, many college students are most annoyed by capital. When they graduate, they will realize that without capital, there is indeed no exploitation, but there may be no job, and decades of investment in education cannot be recovered. Taking the civil service exam may not necessarily be successful, after all, the number of recruitment each year is so small, and it is really a helpless situation.

Practical education is more effective than any preaching, and a generation is estimated to slowly react.

In addition, the largest capital in the world is now basically social security, pensions, and insurance funds, which are all saved by the people themselves. If these capitals do not appreciate, what will everyone eat in a few decades? If the rich do not invest and start businesses, and put their money in the bank to earn interest or buy houses to collect rent, then everyone will know what class solidification is.

You may say, then let capital expand infinitely?

(Note: The original text ends abruptly, and the last sentence seems to be incomplete or missing context. The translation provided ends at the same point.)This is childish, don't we have laws?

Problems should be solved from a legal perspective, which can maintain consistency and stability. The rule of law and the middle class are the true stabilizers of society.

Talking too much about these things can easily get you scolded, but let's take it slow. The reason why laws are called laws is that if you don't respect them, they will punish you until you get back on track. In the adult world, there are no parents to advise you, only the harsh beatings of life. If your thinking is wrong, you can win debates with others, but you can't escape the brutal reality.

Just endure slowly, debts will eventually be resolved, confidence will come back, and the US dollar interest rate hikes will end. It's just a matter of time, everyone just needs to make sure they don't fall in the last winter.