Part 7/14:
- Private Company Failures: Firms like First Brands Group, an auto parts supplier, demonstrate another layer of systemic risk. They engaged in fraudulent financial reporting, hiding billions in liabilities and collapsing when their true financial health was revealed.
These incidents underscore the hidden depth of financial fragility that persists beneath the veneer of stability, with losses piling up silently on the books, awaiting a trigger to erupt.
Repetition of the 2008 Playbook
The parallels to 2008 are stark. Back then, banks bundled and sold mortgage securities built on fraudulent or over-leveraged assets. When the true risks surfaced, panic ensued, liquidity dried up, and only massive government bailouts prevented utter collapse.