When Trump announced last August a desire to see the public be allowed to invest into private equity/credit, I said to me that was a signal that those folks are in serious trouble. I said it would be smart to use it as a sell signal (not a buy signal) for that part of the financial world.
According to a Bloomberg article, EX-CEO of Goldman Sachs, fears a day of reckoning as private credit chases main street. He is warning that the rapid, unchecked growth of the $1.7 trillion private credit market could trigger the next major financial crisis. Similar to the pre-2008 mortgage buildup, he fears hidden, excessive leverage and overvalued assets are being offloaded onto investors.
Key Concerns and Context:
Hidden Risks: Blankfein, who led Goldman through the 2008 crash, suspects that hidden risks exist within private credit, where credit spreads are at their tightest in 20 years.
Mainstream Shift: He notes a concerning trend of private credit moving from niche to mainstream, with significant capital from savers potentially being exposed.
Market Vulnerability: Blankfein warns that the U.S. economy is “due” for a crisis, citing historical trends of major shocks every few years, regardless of current high market confidence.
Regulatory Scrutiny: Similar warnings have been echoed by others, with reports indicating that over 40% of companies using private credit had negative cash flow by late 2024.
I find it somewhat ironic, that the man who headed a company that played a key role in leading to the 2008 financial crisis, now believes another crisis is when, not if!
Pleasantly surprised to see “TOUT-TV” allowed this to be stated:
While the “Don’t Worry, Be Happy” crowd on Wall Street and the financial media tied to their hips do this about jut one of many crisis underway:
Yours truly continues to suggest one do this regarding private equity/credit:
