 Good day fellow investors. A concept that nobody talks about today, but in 2009 was a very very hot topic is too big to fail. Today I will discuss what is too big to fail, how it evolved since 1984 when it started and what is too big to fail now. Practically everything. Let's start immediately with 1984 when the Seventh Bank in the US, Continental Illinois defaulted and the Federal Deposit Insurance Corporation intervened and saved the bank from default because what is too big to fail. They said that it's better to save the bank, so pay from taxpayers money and save than what would be the cost of the damage if that bank failed to the financial system. So since 1984 when there is some trouble then the government intervenes and saves what has to be saved in order to prevent repercussions to the whole financial systems. The biggest too big to fail interventions were in 2009 from car manufacturers, banks in the Netherlands, banks in the US all over the world governments intervened to save corporations because they thought that the cost of those corporations failing would be higher than the cost of saving them and this notion of too big to fail has been going on in the last 40 years, 45 years and has grown to abrupt proportions and we'll see today what is going on. Let's first look at the top five US banks and their assets. Their share in the assets of all banks has been constantly climbing in their last 20 years and the situation hasn't improved since 2009, so the top five banks are still too big to fail as they hold more than 45% of all bank assets. This means that they can do whatever they want if they fail the government will bail them out. Further we can see how in the last few years the number of bank failures has really gone down. A lot of small banks failed in 2009, 2010, 2011 but now there are just a few bank failures per year. So nobody is allowed to fail anymore. So why there are no banks failing? Because there is so much money that you have to really, really be incompetent to fail in this market or risk too much, do crazy things. How come there is so much money? Very easy. Here you can see the liquidity being added to markets every month. So still the European Central Bank and Bank of Japan add 100 billion in liquidity to financial markets. As it's all interconnected, financial markets all over the world are connected, the liquidity simply makes it very, very difficult to fail, interest rates go down and everybody is happy. Even if the Fed has stopped adding liquidity to the markets, the ECB and the Bank of Japan continue there where the Fed has stopped in order to prevent anything negative in the economy, global economy, local economies to happen. However this added liquidity has made the whole financial system so distorted that everything is too big to fail. Global pension assets. In this case, let's focus on the US. The US has 21 trillion, that was in 2015. Now with the market going higher, it's probably even higher. 21 trillion in pension assets or 121% of US GDP. And of those 21 trillion, 47% is invested in equities, 23% in bonds. So imagine what would a 50% decline in the stock market do to the pension system. And that's something not even a remote possibility, but the normal historical average. If we take a look at current SAP 500 valuations and compare them to the historical level, a 50% decline in the SAP 500 would just mean going back to the historical mean, which would raise 23% of US pension fund assets or almost 5 trillion or 27% of the US GDP. So with the Fed, politicians, anybody allow the stock market to crash, highly unlikely. And if the stock market starts crashing, there will be so much monetary easing to keep stocks up. The same as what the Bank of Japan is doing in Japan, where they are buying everything. They have now 75% of all ETFs traded in Japan is owned by the Bank of Japan. Similarly, we can expect something like that in Europe and in the US when there starts to be some trouble. So don't get confused by the current tightening of the Fed. They try to tighten to make it easier to do more quantitative easing later. That's the story we live in. Everything is too big to fail, starting from the stock market. If you look at total market capitalization relative to GDP, it's close to where it was in the 2000s and the dotcom bubble. Those were highly pumped up equities that didn't have any value and the marginal addition created that value. At the current moment, the SAP 500 has been the value of the SAP 500 has been created over the last 10 years and not from some IPO where 5% of a company is put on the market, which makes it a huge market cap, like it was the case in 2000s. So the market is very, very related to GDP to what's going on and again, too big to fail in my opinion. Switching to Europe, let's leave the stock market and go to the bond market. The European high yield, which means junk, junk bonds are bonds that don't have an investment rating, which means that any change in the economic situation probably makes them bankrupt. The yield there is below 2.5%, which is extremely distorted and extremely crazy. However, it is necessary that even junk bonds have a yield of 2.5% to save Europe from going bankrupt, from going into a recession and falling apart. Similarly, the difference between 10-year German government bonds and Italian government bonds is just 150 basis points or 1.5 percentage points. Italy has a debt-to-GDP ratio of 132%, Germany 68%. So we all know the troubles Italy is going from government, from growth, from unemployment and they pay just 1.5% more per year in comparison to Germany. It's highly unlikely that the ECB will do anything in the long term, I'm talking, to create turmoil in the financial world. If Italy needs to pay higher interest rates, it goes default and that's something that would shake through the whole of Europe, destabilize it and who knows what will happen. So that is something that is too big to fail. Greece, smaller countries, Portugal, Croatia, Portugal also 2-year borrows at a negative interest rate, negative interest rate. So there is so much money, why? Because everything, every little financial piece in the house of cards that is made is too big to fail. To conclude, I'm really looking at what's going on, at how much our financial markets distorted thanks to central bank activities and I don't know what to think. There is nothing in history that I can go to and say, okay, compare it to this what has happened. Simply inflation is low due to high competition, emerging market competition, lower wages there, declining commodity prices, so there we have no inflation so everybody can print money and be okay. I wonder what will happen in the next 2-3-5 years if we see inflation and how central banks and politicians are going to protect what they have created. Because they have created the distorted market that is simply too big to fail. From stocks, from bonds, from corporations, from banks, from everything, from your credit, from house prices it's simply something that has to stay up. So today I'm giving you some food for thought, leave your comments below, click like but focus on the comments, I really want to see some fresh ideas, what am I doing wrong, what you think you can add to the discussion, let's see how will this evolve in the next 5-10 years. I think nobody knows but thinking about it could maybe show us some ways to profit, because that's what we want to do. Thank you very much and I'll see you in the next video.