Transcription
The leading company is Blackstone, you know. Blackstone, KKR, Apollo, you know. Buo, which is a private equity firm, you know, invests in stocks before they go public. The stock price, from the day I warned you, has dropped by about 40-50%. And all of them have problems with private credit, regional banks in America, which have problems right now, 1,488 regional banks. As of the end of last December, there was 1 regional bank in Chicago that went bankrupt. But its value wasn't very large, about over 200 million dollars, the value of the bank. But there is a problem that there are banks that are in crisis right now, about 680, 18 banks. So, the next day, you might wake up and see 50 banks go bankrupt simultaneously at the end of a month from now, starting from this point onwards.
The FDIC has insurance for Americans of $250,000, uh, $250,000 per person per account. It has a fund of only 0.5% of the damage value of 1.77 trillion dollars. >> It's too low. >> This, this is the bomb that has gone off. And all of this will stem from private equity firms that have invested, and private credit, and the lending of commercial banks. America's problem is not debt right now. It's not debt. >> Uh, what is it, professor? >> Right now, in America, there are 3-4 major issues. Let's put it this way, I don't see the tech firms as a bubble, but the situation is that they invested too much in OpenAI. The problem for tech companies is that others are not a bubble, but they invested too much in OpenAI. This is number one.
>> Which >> Which the elites knew about this before. You know that in the third quarter of last year, Bridgewater sold two-thirds of the Microsoft shares they held, on behalf of Bridgewater and Medella, who held Microsoft shares. And look at the chart, during the third quarter, it made a double bottom. And they sold two-thirds of it. Mark Zuckerberg sold his shares worth billions. And Jeff Bezos sold his Amazon shares. And during that time, I warned through my Facebook page, saying to be careful. At that time, I was criticized, saying what is this, creating fear and so on. But what I knew was that there was selling by the elites. I don't call these people rich, I call them elites, because they are the elites of the world. And another part is that I warned about private credit, which will get more complicated. It's probably fortunate, really, viewers. I had an appointment with Khun Nao on Tuesday, but on Sunday and Monday, I was sick and went to the hospital first, so it was postponed. Which, it's probably fate that you will see a real case that yesterday, Blackstone also got involved with private credit funds, which will allow us to discuss it tonight.
Viewers, please look at the chart. The leading company is Blackstone, you know. Blackstone, KKR, Apollo, you know. Buo, which is a private equity firm, you know, invests in stocks before they go public. The stock price, from the day I warned you, has dropped by about 40-50%. And all of them have problems with private credit. Last week, you know, Buo, in Thailand, probably doesn't know them. And we probably don't know much about them if we are not in the finance sector of private equity firms. Buo has suspended investor redemptions. They have suspended all investor redemptions. And Buo's stock in the private equity firm has fallen the most, more than about 50% from the time I warned you around the end of September last year. And Blackstone, which just fell yesterday, has already closed its private credit, private credit. And I think it will follow. I think it will be zero, it will be zero for this fund.
Viewers, you need to understand this first: Blackstone manages mutual funds, and private credit funds are one of them. This doesn't mean that if they close the fund, Blackstone will go bankrupt or anything like that. It won't be like that. But it will be a financial supply chain. I will explain further. This Blackstone that has fallen is just one fund. And there are thousands of ETF funds, with a market cap of about 7 trillion dollars. This fund is only 23 billion dollars. Compared to that, it's very small. But it will be the trigger that will cause 401K funds, which are pension funds, insurance companies, life insurance companies in America, and long-term investments, some banks, to lose 100% of their money. And this will cause a rush of withdrawals, which is a financial supply chain.
This leads to the issue of borrowing money. Khun Nao, to build commercial real estate, CRE. It turns out that after COVID, America stimulated by issuing loans, issuing loans to banks, with interest rates of about 3%, 2.5-3%, 5-3%, to build commercial properties, stores, and office buildings in America. But it turns out that after that, these office buildings have only about 40-60% occupancy. Therefore, some owners do not have the returns to repay the banks. And when they borrowed, they did this. Viewers, please be patient for a moment, and we will follow up. Because financial matters can be quite complicated. In these groups, they go to borrow private credit, with interest rates of about 12%, which is similar to the cost of issuing convertible bonds. But this is easily accessible. For example, if you, Khun Nao, are the owner of Company A, and it's a holding company, you will set up a company to do commercial real estate, right? And you, Khun Nao, will use the method of borrowing private credit. I'm talking about 100% first. For 100%, you will borrow private credit. 30% out of the 100 that we will invest in. >> Yes. >> That private credit is a loan. But once you have the money, Khun Nao will open a business unit within your group called a project unit. So, you will put 30% of that money into the company. From the debt borrowed, it will become a subsidiary and become shares, 30%. And after that, they will take those shares and ask the bank for a loan. >> Uh. >> To borrow from the bank, which >> The picture that comes out is shares >> But in reality, when we look at the second level, Khun Nao borrowed private credit, and then private credit was used to create the project below, and then borrowed 70% from the bank. Now, these offices and commercial properties, Khun Nao, it turns out that what happened is that the value has decreased by 40-60%. >> Uh. >> What will cause hell to break loose this year is that this 1.7 trillion dollar value, 1.77 trillion dollars, will be rolled over. That is, from an interest rate of 3% to an interest rate of 7-8% this year. >> Because it's been 5 years. >> Yes, it's been 5 years. And there will be a question of whether the bank will appraise the value at 100% or 50%. It turns out that it must be appraised at 50%, right? From 100. Therefore, the bank lent 70. The bank will lose 20 and repossess its own assets because the creditor gets it first. It turns out that the 30% that you, Khun Nao, borrowed from private credit is 0. >> Ah. >> Because no matter what, the value of the repossessed assets will not be returned to the creditor, because the value has decreased. Therefore, right now, the largest borrowers are, this is just for commercial real estate. There are also issues with healthcare, personal matters, and so on. Khun Nao, it is concentrated in regional banks. Regional banks in the United States, which have problems right now, 1,488 regional banks. As of the end of last December, there was 1 regional bank in Chicago that went bankrupt. But its value wasn't very large, about over 200 million dollars, the value of the bank. But there is a problem that there are banks that are in crisis right now, about 688 banks. >> Uh. >> So, the next day, you might wake up and see 50 banks go bankrupt simultaneously at the end of a month from now, starting from this point onwards. And this is the first one, which is, uh, called unrealized loss right now. And another thing is that due to low interest rates, banks took a portion of customer deposits and bought bonds. And when interest rates spiked from 0.25 to 5.5, everyone held bonds, and there was a loss from mark-to-market. If the old rules were used, Khun Nao, almost all banks would have gone bankrupt. Because they amended the rules so that it's still an unrealized loss. That is, it's a loss, but it's not a real loss yet. That's why Signature Bank, and 3-4 other banks, went bankrupt in 2023. It happened due to unrealized losses and people rushing to withdraw money. This is a very big issue. And the withdrawals today, Khun Nao, you won't see the scene from the books, people rushing to the bank, queuing up. All of this will happen within half an hour or one day. That is, it's transferred by digital banking. >> Uh. >> Ah, and the money will flow to large banks like JP Morgan, Chase, or others. Therefore, the failure of First Republic, Signature Bank, and 3-4 other banks in 2023 are warning signs of unrealized losses. Right now, it was negative by about over 600 billion, but now it's better, it has risen to about 300 billion, about 350,000, 50,000 billion, which is a loss. It's a bit better. But it will encounter this commercial real estate, which will be a very severe symptom.
And most importantly, the FDIC has insurance for Americans of $250,000, uh, $250,000 per person per account. It has a fund of only 0.5% of the damage value of 1.77 trillion dollars. >> So little. >> It's so low. >> This, this is the bomb that has gone off. And all of this will stem from private equity firms that have invested, and private credit, and the lending of commercial banks. Ah, so if you go back and look at the chart from last Friday, the leading stocks on the Dow Jones fell by over 1,000 points. That was the banking sector. And that's why last week, we saw that Blackstone, Blackstone got involved with private credit. This is the second or third cockroach that Jamie Dimon mentioned. And I think there will be a swarm of thousands of cockroaches after this.
>> This, I think the Fed knows, right? Everyone knows, right? It's the determinant that Trump must quickly deal with Iran. If he can manage it, it will lower interest rates. But if this game, it's a very risky game. I might be imagining it, but I'm looking at the history of World War I, World War II, and the Vietnam War. There are behind-the-scenes events that are repeated. >> Yes, history repeats itself, and similar things are happening again. Professor, professor. How large is the value of private credit in the financial system? >> There are other companies too. I think it's around 500,000-600,000 million dollars. >> I won't confirm that number. >> Oh, so if it explodes, it can be a trigger for economic and financial crises, right, professor? >> It will affect 401K funds, and pension funds. Companies like Blackstone, you know, how do they sell private credit? They buy insurance companies that have a lot of insurance funds. And they use the money from the insurance funds they bought themselves to invest in their private credit. And they go, for example, once they took over Toys "R" Us, and Toys "R" Us, which went bankrupt, and then they took it over, and from a debt of over a billion, they increased the debt to over 4,000 million dollars. And it turns out that this debt of over 4,000 million dollars from Toys "R" Us disappeared somewhere. And Toys "R" Us went bankrupt again. And this caused the 3,000 million that was borrowed not only from private credit but also from bond funds. And bonds will be another bomb that is in there too. Normally, bonds default by about 2-3%, so when we invest in mutual funds, it doesn't have much impact. But now, if there are severe withdrawals, all of this, the funds and the banks, are caused by people withdrawing money and causing a supply chain shock. This is the most dangerous part.