Private Credit: It's 2008's All The Way Down

In this episode of 'It Could Happen Here,' host Mia Wong and guest Molly dive deep into the growing crisis in the private credit market, drawing stark parallels to the 2008 financial collapse. They explain how private credit—loans made by non-bank financial institutions like Blackstone and Apollo Global Management—has become a massive, unregulated shadow banking system built on risky, opaque loans, often to subprime auto companies like Tricolor. These firms securitize loans, sell them to investors, and use leverage to amplify returns, creating a house of cards that collapses when investors demand redemptions. The episode reveals how major banks like JPMorgan and Barclays have lost hundreds of millions betting on these funds, and how credit default swaps are now being traded to bet on their failure. The core issue isn't just risk—it's systemic: the entire model is built on fake money, speculative bets, and the illusion of liquidity, with no real backing. The hosts argue this isn't a new crisis but a repeat of 2008, only worse—because now there’s no real product, just auto loans and AI hype. They conclude that the economy has become a casino, incentivizing destruction over stability, and warn that without mass organizing, we’ll keep rebuilding the same crumbling system. Key takeaways include: 1) Private credit is a shadow banking system with no FDIC insurance and no liquidity safeguards; 2) The collapse of Tricolor shows how subprime auto loans are being securitized like 2008 mortgages; 3) Investors are panicking because they can’t withdraw funds, revealing the system’s fragility; 4) The rise of credit default swaps betting on failure proves the market is already pricing in disaster; 5) The root cause is a zero-interest-rate era that flooded capital into speculative, high-return schemes; 6) The economy is now a casino where failure profits the few; 7) Systemic collapse is inevitable unless people organize to demand structural change; 8) The only real solution is to stop propping up the casino and redirect resources to real needs like housing and community wealth.