Part 6/11:
The core concern, Jeff emphasizes, is that many of these private credit deals involve risky lending practices that could soon reveal significant losses, especially as some funds become illiquid and investors seek to withdraw their capital en masse. Because much of this lending activity is in the shadows—outside traditional banking oversight—the true scale of potential losses remains hidden.
This opacity could trigger a cascade of withdrawals, similar to the redemptions seen during the 2008 financial crisis, where fear and uncertainty led investors to rush for the exits. This domino effect has the potential to morph from a credit crisis into a liquidity crisis, with widespread implications for financial markets.