It was early last month when observers noticed ominous cracks in the facade of one of America’s most important financial markets. Tricolor, one of the largest used-car retailers in Texas and California, abruptly declared bankruptcy. Federal investigators are reportedly looking into whether the company committed fraud by promising the same collateral to multiple lenders.
Shortly after Tricolor cratered, something similar happened to First Brands, a company primarily known for making car parts. Its investors discovered roughly $2 billion in loans not on its balance sheet. That’s when things started getting scary. Fifth Third, a regional bank, said it had lent Tricolor $200 million, nearly all of which it now expected to write off as a loss. Same at JPMorgan Chase, which reported it was out $170 million that it will presumably never see again. At Barclays the figure is nearly $150 million. They’ll survive the loss, but the incident cast into sharp focus a risk that had otherwise lurked in the shadows, growing year by year: a cascade of bankruptcies that triggers a widespread financial crisis.
Tricolor and First Brands had also borrowed from a breed of nonbank financial firms known collectively as private credit, whose workings are much more opaque. Giving voice to a widespread sense that the losses had only just begun to pile up, Jamie Dimon, JPMorgan Chase’s chief executive, warned, “When you see one cockroach, there are probably more.”
The 2008 financial crisis occurred in part because banks and other financial institutions were offering too many mortgages to borrowers who couldn’t plausibly repay them. When enough bad loans began caving in at the same time, they sucked big banks and the rest of the economy into the sinkhole along with them.
Banks today are subject to stricter regulations, which have largely functioned as intended, keeping banks from making as many risky loans. Filling the void has been private credit. Today, firms like Apollo, KKR and Blackstone that manage and invest huge pools of money have gotten into the business of making direct loans, and they’re doing so at staggering rates. Now an approximately $2 trillion market, it is a leading option for many companies and consumers alike.
Private credit firms say they can offer better terms than banks because they are not reliant on depositors who can withdraw their money and flee. But these firms are broadly exempt from the post-crash regulations that were imposed on the banking industry, so they are more able to make the kind of risky loans that brought down the economy the last time around. And they’re not exempt from the damage when those loans go south.
The problem is that often the funds they rely on are not their own. They’re drawn from the money that has been entrusted to them by insurance companies, pension funds and, soon, 401(k)s. As was the case in the run-up to the big crash, these potentially risky ventures may therefore be fueled with the money of ordinary people who have no idea how it’s being deployed.
Another troubling similarity: These not-bank banks, also known as shadow banks, do a lot of what’s known as financial engineering. That means packaging up a whole grab bag of debts — loans to corporations, leases on A.I. data centers, bills from plastic-surgery patients, car loans, anything, really — which are then sliced up and sold as new kinds of investment vehicles.
Because the private and public credit markets are so closely connected, cockroaches in one part of the house will always spread to the other. Lending to risky borrowers has been on the rise for years. It is inevitable that after a period of excess, cases of insufficient due diligence by lenders and indeed fraud will pop up in public and private credit markets alike.

Wholesale Turkey Prices Are Up by a Staggering 40% This Thanksgiving
POULTRY OFFERING
U.S. turkey stocks have plummeted to a 40-year low amid bird flu outbreaks, driving up wholesale prices by almost half. The American Farm Bureau Federation reports that tighter production is putting a squeeze on the nation’s flock ahead of Thanksgiving. It said wholesale turkey prices are about 40 percent higher than last year. Data from the USDA shows that 514,000 birds have been affected by avian flu this month. In total, 2.2 million birds have died in the past year across 12 states.

I have one account that I tell myself is a safe spot, but is it really?
Equal amounts in the following funds.
RPHIX
CBLDX
ICMUX
RSIIX
DHEAX
NRDCX
RCTIX
SWVVX

"US public pensions have made a dramatic change to their asset allocations over the past decade. Allocators at these pension funds took investments in alternatives—private equity, real estate, and hedge funds—from 14% of their risky investments in 2001 to 39% by 2021."
"A group of Stanford and Harvard academics is out with a fascinating paper making the case that this shift was not the result of shifts in realized performance, liquidity needs, or macroeconomic fundamentals. Rather, argue Stanford’s Juliane Begenau and Pauline Lang and Harvard’s Emil Siriwardane, the driver was a change in the beliefs of the pension funds’ investment consultants."

Project 2025 and Russ Voight wants to take the country back to 1926, and the policy reflects that.

I keep having visions of a 95-yr old orange blob still lounging around in the WH while American citizens, a quarter of which are now homeless and hungry, keep sending in the tax money to fund the DeUnited Sovereign Wealth Fund OR ELSE. (Give me the OR ELSE!)