Canadians STOP Payments | Housing Bust DESTROYS Fund!

okay look I just went on a run and I'm

like I don't need to make another video

today I wouldn't have done enough work

it's been a headache of a day and then

oh my gosh

on the Bloomberg terminal is something

where I'm like huh this could

potentially be some of the reason why we

have so much dislocation and pain

everywhere see people wonder why is it

that crypto collapsing affects stocks

well it's not just those two it's also

Bond values collapsing Pension funds

nearly collapsing in the United Kingdom

and now this look at this notice that

was on the home page of the terminal

okay for this company they they do real

estate bonds okay like mortgages so

basically they're a fund and what they

do is they say Hey you know like

basically hey you uh invest money into

us you know give us uh give us I don't

know fifty thousand dollars or whatever

and we'll go use that to go buy

mortgage-backed Securities

mortgage-backed secure Securities are

basically bonds that are backed by

little ious from Individual investors so

or or homeowners so if you have like

these four homeowners here let's just

say and I'm greatly simplifying this

obviously and each of these homes is

worth 500 000 of loan value let's say

then this is a two million dollar pie

right here and then if you have 40 uh of

these fifty thousand dollar people you

just slice this up into 40 little slices

right and then now you have

mortgage-backed Securities and maybe

each of these is yielding oh I don't

know uh when these mortgages were made

maybe they were yielding four percent

and now the value of these mortgages has

plummeted the underlying value of them

because the Canadian real estate market

is starting to collapse in fact the New

York Times was suggesting that a

Canadian real estate values uh between

two months which was like terrible drop

I was just reading about this too which

is crazy so uh here's an Ontario real

estate market update and in Canada they

say prices for single-family homes in

Toronto which is in Ontario fell by 16.4

percent between February and August look

at this right here uh New York Times

look at that prices for single-family

homes fell by 16.4 between February and

August that's six months that's an

annualized rate of a 32 percent decline

so like by next year at this time real

estate in Canada could be down by over

30 percent that's remarkable so when

Real Estate Falls like that then the

underlying value of these homes is less

which means the security part of

mortgage-backed security is actually

less therefore the value of the bond

goes down the yield to new investors the

interest rate goes up but the value

value goes down which is a problem

because anybody who's invested in this

is like hey I want some money to go buy

some stonks that are on sale and then

the company's like yeah uh you know the

value's gone down a lot of these and

then people like I don't care give me

the money anyway and they're like okay

here you go well now it's gotten so bad

that this com company that has like I

think a hundred million dollars AUM or

whatever hey how sack maybe we'll have

as much as them soon now we're sitting

pretty but I was like we're doing really

well because we're just sitting on cash

it's like just gonna sit on our hands

and wait for all this drama to unfold in

the real estate market so yeah probably

a little bit biased when I see stuff

like this but it's like it sucks to them

good for us but anyway listen to this

the dislocations created in the North

American real estate markets and the

volatile economy are so bad that they

had to do Institute this thing called a

runoff pool to basically like like this

in in small increments give money to

investors who are demanding immediate

liquidity but the problem is the fund is

like uh but this is like the time maybe

to buy some of these mortgage-backed

Securities or sit on cash to be ready to

buy some of these and so we want to make

sure we have adequate resources to be

able to go chase the opportunities we

have and so uh the the this company is

like okay well let's just give fewer

redemptions to people and kind of make

people wait their turn well apparently

apparently that did not help solve the

problem and here we are this letter was

just published in Bloomberg today which

is the ninth I don't know if this just

sort of like was leaked or whatever but

the letter was apparently dated

yesterday who knows maybe they sent it

like 11 59 PM yesterday

but anyway look at what's happened now

it was anticipated that a reduction in

Redemption demand to manageable levels

would provide some leeway allowing the

company to navigate through these Market

disruptions

so in English hey we thought that our

program would let everyone relax and

stop demanding money back

and what actually happened was the

institution of this program did not

dampen Redemption activity and

um all of a sudden

um people aren't paying off their loans

anymore on these underlying homes so not

only are investors not demanding less

money back from the fund but now the

people who own these homes aren't

actually paying off their mortgages

probably because interest rates are

higher now so why would you refinance

and pay it off why would you sell when

home prices are so much lower but on top

of that it's entirely possible that

people just stop making their payment at

all

uh in fact that's what the uh the

Bloomberg uh mortgage um or or article

was talking about they were saying that

they're temporarily going to stop

Distributing uh or or providing

redemptions because people are just not

making their payments anymore uh at all

it literally says uh the Canadian real

estate lender romskin pin whatever this

company here investment Corp has halted

redemptions on its largest fund after a

number of borrowers stopped making

payments dude this is like we're turning

into freaking China over here that's

what's happening in China

in China people like uh real estate's

falling so much let's just

um

yeah stop paying our mortgage so so the

company then says well people stop

paying us and investors still wanted

redemptions so now we're just like and

don't worry everything's fine kind of

like FTX everything's fine we're just

gonna

temporarily defer people's ability to

get their money out

it's not going to be temporary because

you're probably gonna go bankrupt but

I'll tell you the odds of you going

bankrupt statistically is way less if

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expires Friday

all right we're confident given some

time these transactions uh will be

completed and that the underlying value

of the funds assets uh is something that

they they remain confident in

uh however there are uncertainties and

uh trustees may be compelled to

Institute other temporary liquidity

management measures dude they're effed

they've been in business for 50 freaking

years and they're asked

this is crazy

this is crazy

I mean maybe they're not like full left

okay like I I just want to be clear

I don't know if they're going bankrupt

just saying it sounds bad

it's probably an issue you're gonna see

less of in the United States because we

have like 30-year fixed rate mortgages

but I know bond funds are having pain as

well uh but what it sends you a signal

of is hey why is everything falling and

almost seemingly disconnected from

fundamentals because there's no money to

buy like people are selling stuff to

just be able to do what they want to do

for their business or or their end of

the year tax purchases or whatever they

got to do

so there's not a lot of buying pressure

because people are out of money

it's crazy and so then they call up

their fund dude I'm tired of this

mortgage bugs give me my money back and

they're like dude

the people are not making payments

anymore and then the investor is like no

I really want my money back give it to

me and they're like no

well damn

all right folks see you later