Private Credit COLLAPSES British Economy As Contagion Spreads GLOBALLY

The private credit collapse is escalating and spreading overseas. Over the last week or so, we've seen two British firms collapse for the same reason as all of these other firms as well. Too much debt that they can't afford to pay off in an opaque private credit environment that incentivizes lies and deception. And contagion from these British collapsing firms has already started to spread to American private credit firms and American and even global banking organizations as well. Now, every week at the moment, we're getting new information about the scale of the problem that we face here, in particular, as it becomes more and more clear that this isn't just a few bad apples going bankrupt. And it isn't just a couple of private credit lenders who were maybe a little bit too laissez faire and risky with their lending. This is a global problem and an industry wide problem with asset manager behemoths like Apollo and BlackRock getting caught out with their trousers down, along with the biggest banks in the world like JP Morgan. So today we're going to dive into these British firms and their collapse and how it ties into the rest of the private credit crisis. And of course, if you want to stay up to date on the financial news that the legacy media don't want you to see and get the truth mainlined right into your veins with daily videos like this, like and comment under this video so the algorithm shows you my future videos. And of course, subscribe to the channel as well. And let's take a look at what exactly is going on. The collapse of Market Financial Solutions, a UK mortgage lender accused of widespread fraud, has intensified concern over a growing problem in finance. What happens when lending is pushed out of the regulated banking system and into the shadows? Private credit. The firm which borrowed more than two billion pounds, 2.7 billion US dollars from heavyweights including Barclays and Santander, claimed to be one of the UK's biggest providers of short-term bridge loans until its demise. Yet MFS operated largely beyond the primarily because it did not issue conventional homeowner loans or hold customer deposits, even though firms of its kind are capable of inflicting costly damage to mainstream lenders who do. Continues. Century is another firm. They entered administration with about 95 million pounds worth of total debt, maybe 130 million US dollars, days before the larger rival Market Financial Solutions fell into insolvency as well. Both Century and MFS relied on funding lines from private credit firms and bank lenders to originate short-term property loans for borrowers who may not qualify for traditional bank financing, typically at higher interest rates. Unlike MFS, though, creditors haven't accused Century of fraud. And we'll get into the details of that fraud later on. But first of all, just to recap, two British firms have collapsed under mountains of debt within days of each other. And they both basically do the exact same thing. They give out short-term loans for real estate for people who can't get traditional mortgages. One of the firms, Market Financial Solutions, they're accused of fraud, basically doing the exact same thing that Tricolor Holdings did last year, that American auto brand lender using a single piece of collateral for multiple loans, selling on those loans as assets onto others without telling them the truth. And that's very, very illegal. The other one here, Century, they've not been accused of any fraud. They just lost too much money, basically giving out subprime loans to people who haven't paid it back. Now, both Century and MFS were funded by private credit and funded by the banking system as well in secret, meaning they're part of this shadow banking system. That also means that Contagion is already starting to seep out from these two, not actually huge collapses, but this will continue as we slowly work out who lent money to these failed firms and who is going to lose out here. Blue Owl Capital, you've probably heard that name, especially if you've listened to or watched some of my videos in the past. They have a 48 million US dollar exposure to Century, the London-based property lender that filed for administration. Blue Owl, which manages $307 billion of assets, funded the riskiest tranche of loans originated by Century, their bridging lender, which was focused on high-end central London real estate. The company's shares, Blue Owl Capital, that is, fell as much as 7% in New York based on these news. Now, so far, between these two firms, we know that a few will get hit from Contagion already and who some of those are. Blue Owl Capital, obviously being very infamous already in the private credit space, we'll touch on them a little bit later. But in essence, they're a massive $300 billion private bank, private credit lender, and they've gone out of business over the last month. They're shutting down their entire fund and trying to give all their money back to their investors, but they've made huge losses. The market is expecting somewhere in the region of 20% to 30% losses. So, you know, 80, maybe even 100 billion US dollars in losses from that one firm at all. Essentially, though, one of the private credit, the shadow banks, they are skirting regulation and they've gone bankrupt. Now, there's also a bunch of normal banks that are exposed to this problem as well. There is NatWest and Barclays and Santander, three banks which are very large here in the UK, very well known. Barclays is the second biggest British bank in the world. HSBC is the only one larger. Santander is the single largest Spanish bank and one of the biggest European banks in the world. They also have a very big presence here in the UK. And both of those banks have about as much assets under management as Wells Fargo, for a bit of context in a US sense. NatWest, they're a little bit smaller, about as big as Morgan Stanley in terms of assets under management. And the total AUM for these three banks sits at about 5 trillion US dollars. Of course, the focus at the moment is mostly still on Blue Hour Capital. The private credit nature of that organization means that no one knows for sure how bad this is actually going to be for them. But the fact that their share price is already cratering means the market is pricing in, you know, something like 20 to 30 percent in losses on their books. They've already also announced that they're shutting down due to their losses and they're trying to give their customers their money back. And there are some other banks as well that are mentioned, but they aren't really under existential threat here because of how large they are. And this goes for these British banks as well. Losing even 100 million dollars or pounds for an organization like Santander or Wells Fargo in terms of a size comparison isn't enough to take down the bank as a whole. But if this is truly a massive widespread problem that's going to continue to emerge over the coming years, this will basically be the exact same situation as what we saw in 2007 with mortgage-backed securities. People said that, oh, there's only a few of these MBSs which are going under. The banks are massive and they've got a really nice big cushion. And so it isn't going to be an existential problem for them. That really could quite easily turn on its head. Now, how did Blue Owl Capital get involved in these short-term bridging loans given out to people in London who can't get normal loans for money laundering reasons or whatever else it might be? Well, this is where it gets a little bit more interesting. The US private credit lender, Blue Owl Capital, roiled markets last month when it opted against reinstating quarterly redemptions on a retail fund and decided to return investor capital through asset sales instead. The firm has also faced scrutiny over its sizable exposure to software companies, a sector unsettled by rapid advances in AI. Its shares have fallen over 30% this year. Blue Owl became a creditor to Century through its 2024 acquisition of another private credit firm which was based, that had partnered with Century in 2021, sorry. Asset-backed has been touted as the new frontier for private credit with some of the biggest players in the industry gathering billions to buy debt backed up by hard assets. Top executives at PIMCO, Carlyle, Marathon, Blackstone have flacked the sector as a big area of growth for the industry. So once again, what we're seeing here is the cause for this contagion and for Blue Owl Capital somehow being everywhere there's a problem within private credit is rapid acquisitions, which is just the same story we're seeing again and again right now. Blue Owl, they were in the private credit bubble, it was exploding as an industry and they wanted to grow quickly and so they just bought up their competitors that funnily enough had awful risk management and now Blue Owl Capital are suffering with the public collapses in loan values that actually they never gave out these loans in the first place for the most part. Now the other thing that's largely being ignored here isn't just the the contagion from private credit into British or European banks, but actually the contagion is reaching out into the American traditional financial system as well. Even some of the names were the same. Santander and Jeffrey's Financial Group, which is a subsidiary of JP Morgan, both stung by first brands in recent months, are once again scrambling to recoup whatever money they can from this embattled company talking about these British collapses. This time they're alongside the likes of Apollo, Atlas, Barclays, Wells Fargo, Castle Lake and TPG, some of the biggest names in private credit and alternative asset management. Barclays alone had about 600 million pounds tied up in MFS according to a judge at a hearing. Atlas said it had about 400 million pounds worth of exposure, about 500 million US dollars, Jeffrey's about 100 million pounds. A spokesperson for TPG said the firm has a total exposure of 44 million, which represents less than 2% of MFS's loan exposures based on public figures. So again, these American firms aren't getting off scot-free here either. They are exposed and the contagion is reaching back across the pond and hitting the American traditional financial sector as well. Not even just the private credit firms like Blue Hour Capital, but real banks. Shares of Jeffrey's slumped as much as 12% on this news, whilst Apollo's slid by 8.6%. Barclays, and here's the big kicker here, had already said it was conducting a full review of its loan portfolio after it booked losses on its Tricolor loans, dropped as much as 5%. Santander fell by 3.7%. Now, why is this line here from Barclays important? Because again, this private credit's slow collapse has been ongoing for well over six months at this point. And all of these banks and private credit institutions have basically said, look, yeah, OK, we weren't necessarily honestly pricing these assets before, but we are going to now, we swear. But they keep getting caught out. And this is proving that they aren't actually going back and looking at their assets with a truthful gaze. They are instead looking at it with what they want to be able to sell, and they don't want to book the losses unless they're forced to. Some see reasons for the market jitters in private credit. Marathon's chairman likened the dangers facing software firms, which have binged on tens of billions of dollars in debt in recent years, even as AI threatened to eat away large trades of their business, to, quote, a train coming down the tracks that you could see from some distance. It wasn't a matter of if it was just a matter of when the markets have just woken up. So private credit firms, their share prices have been dropping on news of these British lenders going under because they are directly exposed. And actually, American and European banks, their share prices are dropping on these same news as well, along with alternative asset managers as well, like TPG or Marathon. Now, Marathon's chairman said it's like a train crash. You can see it coming long, long in advance, but you can't really do anything to stop it from happening. But there is one really, really interesting thing here that literally no one else is talking about. The legacy media won't even mention this phrase because they'll be scared of actually being called racist, funnily enough. But there's a very weird coincidence here of this sort of private credit collapse being deeply, deeply linked to Indian scammers. Legacy media, again, not reporting on it. They are scared of being accused of being racist. But the coincidence is uncanny. MFS's owner, one of the two firms, these British firms that have gone bankrupt, the owner is called Paresh Raja. He's an Indian, and he's accused of billions of pounds, billions of dollars worth of fraud on this collapse. Basically, he was double pledging collateral on debt instruments, selling them on and then pocketing the cash. So far so that investors think as much as 80% of the company's assets have been fraudulently stolen by this Indian man. Now, why is it interesting that he's an Indian? Well, six months ago, we saw basically the same thing. There was an Indian billionaire called Bankim Brambhat, and he scammed Blackrock this time through private credit loans out of $500 million by basically getting Blackrock to lend him money based on fraudulent documents and a fraudulent business and invoices that didn't actually exist, only for him to just pocket the loans and walk away back into India as a billionaire. Now, this is two huge billion dollar frauds committed by Indians in the private credit space exposed over the last few months alone. That's incredibly interesting. And so I do wonder out loud if there are more instances yet to be exposed or just not being reported on because the media is worried about being called racist. It's also very interesting what the outcome of this will be. A lot of people are talking about India as a growing economy that, you know, there's a lot of money to be made in, but personally, I disagree with that completely. It's an innately low trust society and country. Scamming and fraud, it's considered smart and desirable in India. And they think that it's the fault of the idiot who trusted them and got scammed and that those who are scamming people, well, they're just smart and they're just hustlers and they're intelligent and they're just working hard and they deserve it. Now, in my opinion, it's the sort of widespread institutionalized instances of fraud and scams, which is why I'll never invest in an Indian company or say an Indian index fund, even though the country is growing ridiculously fast in terms of population and urbanization. Fraud is just too rampant and any Westerner who's investing in that country is going to get scammed eventually, especially since the government, Indian government actually supports it largely. It's also worth keeping in mind that Larry Fink, the founder, CEO of BlackRock, he's been making a special effort to get BlackRock more involved in the not less, which is very odd considering he just got scammed for half a billion dollars by an Indian billionaire. So this is certainly something to watch out for. And I'll take a big, deep dive onto this and probably make a video about it in the future if it does seem like this is a larger trend and not just a coincidence that there are these two Indian billionaires who are scamming people out of the private credit market. Now, of course, if you want to stay up to date and follow the financial news, the legacy media don't want you to see. Subscribe to this channel, like and if you just want to learn more about how BlackRock is being sued for running an illegal international credit cartel, click the video on the right hand side of the screen right here. BlackRock are running a global private credit cartel and they're currently being sued over it by their own investors. You heard correctly, BlackRock is colluding with its supposed competitors, other massive private credit and asset managers and private equity firms to screw over the smallest investors in companies that have failed.