A lengthy article by BBC’s Business Editor Simon Jack published on April 29, sounds the alarum over a possible new Lehman Moment that is approaching for the global financial system. Headlined “A fresh financial crisis may be coming—it won’t play out like the last one,” the article states that “there are a number of warning lights flashing on the world economic dashboard that have some wondering whether we are in the foothills of another financial crisis.”
The first such warning light is the situation around the skyrocketing growth of so-called “private credit”—otherwise known as unregulated alternatives for traditional banking which EIR has warned about for months. These funds, conservatively estimated to total $2.5 trillion, are then leveraged and re-leveraged into a speculative bubble whose size is unknown. Recently, “several funds which lend money have declared losses or restricted investors’ ability to take out their money,” the BBC article noted nervously. “BlackRock, Blackstone, Apollo and Blue Owl have all faced demands for billions of withdrawals from private credit funds.”
BBC turned to Sarah Breeden, the deputy governor of the Bank of England, with specific responsibility for financial stability, for her reading. She was not reassuring:
“There are echoes of the global financial crisis in what we’re seeing now,” she says. “Private credit has gone from nothing to two and a half trillion dollars in the last 15 to 20 years. There is leverage [borrowed money], there’s opacity, there’s complexity, there’s interconnections with the rest of the financial system. All of that rhymes with what we saw in the GFC” [the Global Financial Crisis of 2008].
