Japan’s Banking System Collapsing! HUGE Bank JUST FAILED! $1.1 Trillion at Risk!

Summary

The video discusses a looming financial crisis involving Norinchukin Bank, Japan's fifth-largest bank, which holds $840 billion in assets. The bank's significant investments in high-risk collateralized loan obligations and the devaluation of its bond holdings due to rising interest rates have led to substantial losses. The bank's planned sale of $63 billion in US and European government bonds could destabilize global financial markets. The video warns of the potential for a market crash and offers advice on protecting investments, drawing parallels to the 2008 financial crisis and recent bank failures.

Takeaways

• 📉 The video discusses a series of bank failures that have occurred, including Silicon Valley Bank, Signature Bank, and First Republic Bank, which were triggered by poor risk management and rising interest rates.
• 🌐 The failures have had a global impact, with the video highlighting the potential for further significant bank failures, such as with Norinchukin Bank, Japan's fifth-largest bank holding.
• 🏦 Norinchukin Bank is at risk due to its significant investments in collateralized loan obligations (CLOs), which are similar in structure to the instruments that caused the 2008 financial crisis.
• 📈 Rising interest rates in the US and Europe have led to a decrease in bond values, causing significant losses for banks like Norinchukin that hold these bonds.
• 💸 Norinchukin Bank is planning to sell over 10 trillion yen, or 63 billion USD, worth of its holdings in US and European government bonds, which could lead to a panic fire sale.
• 🇺🇸 The Federal Reserve has provided access to its bailout program, the standing repo facility, to Norinchukin Bank, a highly unusual move for a non-US bank.
• 📉 The potential liquidation of Norinchukin's foreign bonds could significantly affect bond markets and global financial stability, as Japanese investors are the largest foreign holders of US government bonds.
• 💹 Higher yields resulting from the bank crisis could lead to increased borrowing costs for the US government, businesses, and consumers, slowing economic growth.
• 🌐 The video compares the current situation to the 2009 global financial crisis, with Norinchukin Bank expecting losses three times worse than those experienced in 2008.
• 🛡️ The presenter offers advice on how to protect investments from the next market crash and invites viewers to join trading training sessions to learn risk management strategies.

Q & A

What was the main issue discussed in the video script?

The main issue discussed was the potential for significant bank failures, particularly focusing on Norinchukin Bank, Japan's fifth-largest bank, due to its high-risk investments and the impact of rising interest rates on bond values.

What happened in March 2023 that was mentioned in the script?

In March 2023, the US experienced a wave of significant bank failures, including the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank, which shook the financial system.

What is a collateralized loan obligation (CLO) and why are they risky?

A collateralized loan obligation (CLO) is a financial instrument that pools various loans, typically from businesses with low credit ratings, and slices them into different tranches based on risk and return profiles. They are risky because they offer high returns but come with substantial risk, especially if the underlying loans default.

How did the increase in interest rates affect banks holding bonds?

The increase in interest rates led to a decrease in the value of bonds, causing significant losses for banks holding these bonds, as their bond holdings devalued.

What is the significance of Norinchukin Bank's plan to sell off its holdings in US and European government bonds?

Norinchukin Bank's plan to sell off its holdings could have a significant repercussion on bond markets, potentially influencing bond prices and market stability, given that Japanese investors are the largest foreign holders of US government bonds.

Why did the Fed provide access to its bailout program to Norinchukin Bank, a non-US bank?

The Fed provided access to its bailout program to Norinchukin Bank because it recognized the potential danger brewing at the Japanese bank and wanted to ensure liquidity was available in the financial system, which is highly unusual for a non-US bank.

What is the potential impact of Norinchukin Bank's liquidation on the global financial markets?

The liquidation could lead to a sharp decline in bond prices and a spike in yields, potentially destabilizing global financial markets and affecting the value of treasuries held by US banks.

How does an increase in yields affect the US economy and consumers?

Higher yields increase the cost of borrowing for the US government, businesses, and consumers, leading to higher mortgage rates, more expensive car loans, and increased credit card interest rates, which can slow down economic growth.

What historical event is mentioned in the script that has similarities to the current situation?

The script mentions the 2008 financial crisis, which was caused by a similar structure of financial instruments, but instead of mortgages, it's business loans this time.

What steps is Norinchukin Bank considering to shore up its finances?

Norinchukin Bank is considering raising 1.2 trillion yen and has started discussions with Japan Agriculture Cooperatives and other investors to shore up its finances.

What advice does the speaker give to viewers about protecting their investments?

The speaker advises viewers to watch a linked video to learn how to hedge their portfolio for free and mentions live trading training sessions to teach viewers how to make money work for them and protect their investments from market crashes.