The tsunami of private credit losses; Defenestration, Clausewitz, Donald Rumsfeld
As the US-Iran conflicts steals our attention, the twin bubbles of private credit and AI are close to bursting.
AI is proving a double threat, in that it is both obviously a bubble and threatens to defenestrate many of the companies on which current prosperity rests.
Defenestration
The term originates from two incidents in history, both occurring in Prague.
In 1419, seven town officials were thrown from the New Town Hall, precipitating the Hussite War.
In 1618, two Imperial governors and their secretary were tossed from the Prague Castle, sparking the Thirty Years' War.[7]
These incidents, particularly that in 1618, were referred to as the Defenestrations of Prague and gave rise to the term and the concept.
We are little more than a week into renewed conflict in the Middle East, and already what the Prussian military strategist Carl von Clausewitz called “the fog of war” has settled like a pall over the entire operation.
In recent months we have also seen multiple instances of trouble in private credit markets. This type of lending has grown like topsy since the financial crisis, rising from around $4tn in global assets under management in 2008 to some $16tn today.
And there’s a reason why. Post-financial-crisis regulatory reform has significantly reduced the capacity of mainstream banking to provide corporate, property and infrastructure lending.
More lightly regulated private credit has moved in to fill the gap.
Jeremy Warner Telegraph 7 March 2026
“When markets encounter a black swan, everything could fall at the same time,”
“That’s what we’re seeing today — selling across every corner from equities to bonds and currencies, except for oil and dollar.”
Bloomberg 9 March 2026
Carl von Clausewitz “the fog of war”
https://www.perplexity.ai/search/carl-von-clausewitz-the-fog-of-h3f875fFTda1E9bGqV4e1A
“There are known unknowns”
“But there are also unknown unknowns, the ones we don’t know we don’t know,”
“It is the latter category that tends to be the difficult ones.”
Former Secretary of Defense Donald Rumsfeld
https://englundmacro.blogspot.com/2025/07/there-are-known-unknowns-former.html
Kommentarer