The $3T Problem No One in Real Estate is Paying Attention To

You've probably heard how the subprime mortgage crisis crashed the housing market in 2008.

Luckily, that's not happening in 2026, but there is a $3 trillion market

sitting in the shadows of the financial system that almost no one in the real estate investing

world is talking about, and it is starting to crack. And if it does, it could cause massive

damage to the economy and the housing market. So today, we're diving into what's known as the

private credit market. And we're going to break this all down. We're going to talk about

what private credit is, where the money comes from, who's at risk, and what it actually means

for both commercial and residential real estate. Stick around for this one because this stuff really

matters. Hey, everyone. Welcome to On the Market. I'm Dave Meyer. And today we're talking about

something that has been in the news more and more recently. It's called private credit. And

it's a part of the financial system that we don't really talk about that much here on On the

Market. And frankly, it's not even talked about that much in the mainstream financial news.

But recently, if you've been paying attention, you probably noticed that there's some cracks

starting to show in this part of the market. We've had big name CEOs like Jamie Dimon saying that

there might be some cockroaches in this part of the financial system. And when someone

as big as Jamie Dimon, the CEO of Chase starts to say something like that, we should probably all

start to pay attention. Because even though private credit is not mainstream, it is intricately

woven into the financial system. And if problems start to emerge in private credit markets,

it can spread. It can spread not just to other banks or to the stock market,

but directly to commercial real estate and actually to residential real estate as well.

And I am not trying to be a fear monger, but the more and more I dig into this private credit,

the more concerns I have about what's going on here. And that's why I did a lot of research for

this episode because I want to make sure everyone in the On the Market community understands

some of the risks that exist in the market today because of what's happening with private credit.

So in this episode, I'm going to explain just what private credit is, why it's getting so big,

some of the cracks that are starting to emerge, then we're going to dig into where private credit

and real estate intersect. And I told you a little bit, it's definitely commercial real estate. But

if you have a DSCR loan or you've heard about DSCR loans, this will impact that area as well.

And we'll talk about what you should be looking for in the next couple of months to make sure

that you are up to date on what's going on here and to protect yourself accordingly.

So with that, let's dive into it. We're going to start with just the basics. What is private credit?

Credit is just a loan, right? So private credit is basically debt issued directly to borrowers

by non banks. So instead of going to Chase Wells Fargo or any of those other banks, you go to an

individual or you go to a hedge fund or you go to a group of people who have pooled their money

together to lend directly to businesses or individuals. So this kind of lending actually should be

familiar more to real estate investors than most people because if you've gotten a DSCR loan,

that's usually a form of private credit. If you've taken out a hard money loan, a lot of times those

are private credit, right? You're not going to a bank. You're going to a group of individuals

who have pooled their money privately, not in a public bank and lent them out to individuals.

So hopefully this makes sense, right? It's a pretty straightforward concept.

Private credit has been around for a long time, but it really has started to take off and has made

up more and more of the financial market, more and more of the credit market after 2008.

Because after 2008, there were more and more banking regulations introduced into the system,

because after we saw the chaos that came from subprime credit, these horrible loans that were being

given out, Congress and the Fed basically made new rules, making it harder for banks to give out

risky loans. But a lot of those businesses, a lot of these individuals still want loans. And so

instead of going to banks to get these loans, they go to private credit markets. And I just want to

make clear that this isn't just like an individual. It's not me, Dave, going out to buy a house, although

that is a form of private credit. When we're talking about sort of these big institutional lenders,

private credit lenders, they're usually lending to like midsize companies, right? If a software

company wants to build a new data center, or they want to hire a bunch of new people or a manufacturer

wants to go and build a new plant. And they're maybe too small for the public bond market. They can't

get a bank loan. Or for whatever reason, they want private credit. That's what a lot of this

market is made up of. And it's gotten bigger and bigger. Just for example, back in 2007, the total

size of the private credit market globally was about $300 billion. Fast forward to 2020, just 13

years later, it nearly 7x to $2 trillion. Five years later, it's estimated to be about $3 trillion

globally with about $1.3 trillion in the United States. And by all estimations, that is going to grow

even more. By 2029, I found some reports that suggested that it's going to grow from $3 trillion

up to $5 trillion at 66% growth by 2029 in just the next three years. So it's gotten a lot bigger.

It's basically 10x growth since the financial crisis. And it is bigger than other parts of the

market. It's bigger than the high yield bond market in the United States. And so there's a reason

that we need to be paying attention to this. Because even though it's not as big as mortgage

back securities market, and we'll talk about that later, but it still matters a lot. We are

talking trillions of dollars here. And anytime that we're talking about sums that big in a globally

interconnected economy, it is going to matter. So that's the size of the market. Now let's just

talk about briefly who's supplying this money. Yes, it can be private individuals. But when we say

private credit, it's not necessarily you and me individuals putting out money. It's a lot of

times it's pension funds, right? Or it's insurance companies or college endowments or sovereign

wealth funds, right? Like all of those has sort of historically been the drivers of private credit.

But in the last couple of years, we've had more and more what is known as retail investors.

That's like you and me, right? So that individual people who are managing a Robinhood account or

who are just putting their money in index funds or just normal people are putting more and more of

their money into private credit. Because frankly, the returns are pretty good, right? You can get

10-20% sometimes in a private credit account that's cash on cash return. So more and more of those

retail investors put their money into these funds. And that really matters. And we're going to get

back to that soon. So that's who's supplying the money. And again, they're investing in all sorts

of stuff. Everything from helping private equity companies go out and buy new businesses. They

can help manufacturers. They can help real estate investors. It really is kind of the Wild West,

which as you're going to see throughout this episode is both a benefit to these businesses,

but also comes with risk. Because there really is nothing inherently wrong with private credit,

right? People have been lending to each other for centuries, right? There's nothing inherently

wrong with that. It is liquidity that is needed for businesses to grow and for the economy,

but like with any type of credit, any type of debt, it does come with risk, right? We saw that

in the great financial crisis that if debt is not used responsibly, if lenders are giving out loans

recklessly, it can create huge problems. And when we're talking about the private credit market,

it can specifically go bad in two ways. The first is the most obvious, which is just defaults,

right? If these lenders are giving out money to businesses or individuals who are using it to

grow their business, but those businesses don't grow or don't perform, they don't pay on their loans,

that can cause huge problems, right? It's just like if you took out a mortgage and you didn't

pay it and defaulted on that. If that happened in mass, like a day in 2007, 2008, that can cause widespread

problems. And so the same thing is true in private credit. If there are defaults, there will be

problems. But there's another way that this can go sideways and it's not as obvious and it's

actually mostly psychological because loans are illiquid assets, right? You can't just go out and

ask for a back from the borrower. You have to wait, right? So let's just imagine here for a second

that I, Dave, become a hard money lender. I raise a bunch of money from 10 of my friends. We raise

$1 million and we're going to go lend it out to flippers. If I go and give these loans to flippers

and those flippers are paying their mortgages and they're paying their loans, I can't just go to

the flipper and be like, actually, I need that money back. Even if my nine friends that I went and

raised money from or like, Dave, I really need my money to go pay my own mortgage or to pay for a

wedding or send my kid to college or whatever, they can't get their money back. It is an illiquid

asset. That's just what it is. That's the nature of debt. But if you have all these investors who

all of a sudden start wanting their money back, like if all nine of my friends at once said,

hey, Dave, we need our money back. That can create issues. It's exactly like a bank run except that

it's in a private market that is not regulated. It does not have liquidity requirements like banks.

So this is the second way that it can create issues, right? You have defaults or you have

liquidity crisis, basically a run on this capital. And if you can guess why we're even talking about

this, why I'm doing this episode today, it's because signs of troubles are starting to emerge.

Now, if we look at the default rate, it's actually not terrible. The headline number that you see

published is about 2%, which isn't crazy. But the issue with private credit is that there aren't

the same reporting requirements that you see with banks. And so we don't exactly know what is

going on. And I actually found some research that shows that the true default rate, which actually

digs into who's kicking the can down the road. What? Lenders are sort of trying to mask what defaults

are going on. It's actually closer to 5%. And so that's actually pretty big because similar to

what's been going on in the commercial real estate market where lenders are working with borrowers

to try and restructure loans and kick the can down the road to stem off a bigger crisis.

The same exact thing is happening in private credit. In private credit, the term you should know

is payment in kind loans. This is a key warning signal, at least in my opinion, about what

distress could be happening in the market. Again, we don't really know. But payment in kind loans

is instead of the borrower paying back the lender with cash interest, which is what they're supposed

to do, they basically add interest to the loan balance. This is kind of like just tacking on more

payments to the end of your mortgage. Basically, you owe more next quarter than you did this quarter.

And maybe your business turns around and you're able to start making those payments. I think

that's the idea. But I'm sure you can see that if that doesn't happen, a debt spiral can continue,

right? You're just adding more and more and more debt. That's not good for the borrower,

but it's also not good for the lender because they're not getting paid back.

And these payment in kind loans are increasing. They were about 7% back in Q4 of 2021.

Q3 of 2025, the last quarter I could find data for, they're up to 10 and a half percent, right?

We also see an increase in what are known as bad payment in kind loans. Basically,

debt is added after the original deal was signed because the borrow hit trouble.

That's actually 52% of payment in kind loans that's up from 37% in 2021.

And so we basically are just starting to see a lot of performance issues with these kinds of loans.

And this is happening for all sorts of reasons because the economy is slowing down, businesses

overshot their expectations. But it's also coming from loosening underwriting standards,

which should get anyone who understands what happened in 2008 a little bit of pause,

because that's what happened then. Basically, lenders were giving out loans that they probably

shouldn't have been giving out. And we're starting to see some shades of that in this private credit

market right now. We are seeing the rise of what is known as a covenant light loan. These kinds

of loans, basically, they have something called covenants, which are basically rules that the

borrow has to follow to stay in good standing with their lender. But basically, what we're seeing

is more and more of these loans, at least over the last couple of years, have had fewer of those

rules. And that means it's easier for the borrower to go get money, which is maybe beneficial to them.

But what it means for the lender is they've less opportunity to stem off big issues with their

borrowers before they get serious. And again, those types of covenant light loans are increasing.

Now, what I've said so far is kind of theoretical, but we are starting to see this actually play out

publicly, right? If you haven't heard, basically in February 2026, some of this came to a head.

It's not a huge thing. I don't want to over dramatize it, but there is a big private credit fund

called Blue Owl. They had a liquidity crisis. It's actually pretty interesting because the loans

in their portfolio were actually largely performing, but they had promised their investors that they

would be able to get money out. They would get that liquidity that I was talking about at least

quarterly. Unlike a bank, these private credit funds, they can set their own rules, right?

So they can say, hey, you can't actually just ask for your money every day, but once a quarter,

if you want your money out, we'll give it to you, right? And so they have rules like that. And

that's what Blue Owl had promised was quarterly redemptions, but they actually suspended them

back in November. And this started to create more of a panic. It started around this merger that

they were proposing. It was going to create a markdown on some of their investments, but basically

investors got spooked. They started asking for more and more of their money back, essentially

creating a bank run on this individual fund. And then finally, in February of 2026, they basically

said, you know what, we're not giving money back right now. We can't do it. We're going to cancel

our previous agreement. And this was legal according to them. They were able to do this,

but basically now they're saying, we're going to give back money. We're going to allow

redemptions as we see fit. They're basically saying the company Blue Owl has decided we're not going

to honor these quarterly redemptions that we had originally said we would. And now you kind of

just have to wait for your money back if you're going to get it back at all. And I want to just

reiterate here that this didn't really happen because all of their loans defaulted. They were

having a couple of issues, but investors got spooked. And it created that second form of problem

that we were talking about before, which is psychological. People did not want to keep their

money in this fund. They said, hey, if they're going to slow down redemptions, I want to be the

first to get my money out. And so they all asked for it at once. And that created an issue.

Now, that is just one bank, but we're seeing it start to spread. Blackstone, one of the biggest

funds in the world, they actually saw a record 8% redemption request in a single quarter in early

2026. That was 3.8 billion dollars of redemptions that were asked for. That's a record. That's

blackstone. Black rock had to activate its 5% redemption limit for the first time ever. People

were asking too much. And they said, actually, in our rules, we can say, you know, it only can redeem

5% at a time. They activated that for the first time recently. Then we saw Morgan Stanley restrict

redemptions at its private credit fund. So we're starting to see this spread. Now, it is not

emergency yet. But what I want everyone to remember, the key thing to see here is that the stress

that we're starting to see in private credit, because this is going to matter for what we talk

about next, is that it's actually structural right now. It's about liquidity, not necessarily

about credit. Now, there could be credit problems. And personally, I think there probably are more

than we know about. But the stress that we were seeing to date is more about liquidity.

The loans, largely performing, this is a liquidity mismatch. People want their money out. And they

are not able to get it out. We're essentially having a very small, a very slow motion bank run

on private credits. So that's what's happening now. But again, to me, it's kind of starting to smell

a little bit fishy. And if it does get worse, it has big implications for the economy. The stuff

really matters. This is a massive market. And it also really matters for real estate, not

just commercial real estate, residential as well. And we're going to talk about where private credit

and real estate intersect right after this quick break. Stick with us.

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Welcome back to On the Market. I'm Dave Meyer. Today we're talking about the private credit

market. What it is, what's been going on recently, and now I want to turn our attention to where

private credit and real estate start to overlap. The main area where we see a big overlap,

and probably the more obvious area that you might be thinking about, is in commercial real estate.

Private credit is getting bigger and bigger in commercial real estate. We're actually seeing

that in some segments of the market, like non-agency closings. We're actually seeing that non-bank

lenders are lending more than banks. They're providing 37% of the capital. Banks at 31% of the capital.

So private credit is a really big part of the commercial real estate market. As commercial real estate

has struggled in the last couple of years, people have been increasingly turning to private money,

either to get bridge loans, to get extensions, or to do purchases. And so these industries

are really intricately tied together. Now, as you probably know, there is a lot of issues

in commercial real estate right now. And a lot of commercial real estate debt is coming due

in the next couple of years. We actually saw last year commercial mortgages. It was about a trillion

dollars. They are expecting about 1.7 trillion more to mature in 2026. That's actually about 30%

of all commercial real estate do in a two-year window. That actually makes sense. People really

dramatize that. But because commercial real estate, usually on a five, three, five, seven-year time

cycle, you're always having like 30% of the debt coming due in the next couple of years. That's

always true. So don't get freaked out about that. But the issue here comes up with refinancing,

right? Because if all of these operators, whether it's retail or office, which is getting smashed

or multi-family, which people are saying is now about down 20% off 2022 peaks, if all these

operators have to go out and refinance in the next year or two. And there is an issue in private

credit where some of that money is not available. It is going to make it harder and harder for people

to refinance. They're already contending with higher interest rates, right? I think a lot of commercial

operators have been kicking the can down the road thinking their fed would come and save them.

We'd have much lower rates than we do right now. I'm recording this sort of towards the end

of March and mortgage rates are going up, right? We have fears of inflation due to the war in

Iran. Now, if you add a tighter credit market on top of that, then things can get a little bit

dicey, right? Because only the best assets are going to be able to attract credit, right?

Banks are still going to lend to commercial assets that are performing. But if those funds

cannot lend because their investors don't want to give them money, right? Remember that if you

are a private credit fund lending out to multi-family operators, you have investors of your own,

right? You have either individual retail investors like you and me or a pension fund or an insurance

fund. They're putting their money into XYZ private credit fund, right? So if XYZ private credit fund

is not getting as much money from its investors or those investors are demanding their money out of

the market like it's happening with BlackRock and Blackstone and Morgan Stanley and Blue Owl,

some of the biggest ones in the world. If they have less money to lend out, that's going to spill

into the commercial real estate market, right? Because there's just going to be less money going

around into this market and that can create even more additional stress for the commercial market.

Remember, real estate is highly dependent on credit. And if any part of the credit market starts

to tighten up, we are going to feel it in real estate. And so it is too early. I am not saying

this is happening just yet. But when I read about these private credit funds starting to get

higher redemptions and if that starts to spread, commercial real estate will feel it. It is going to

lead to more distress in the market. It will probably lead to more foreclosures in this market.

I am not going to extrapolate and speculate and say how bad it will get because this isn't

happening yet. But this is the main reason why I want everyone to be paying attention to what's

going on in the private credit market because if this starts to spread, if it starts to get worse,

if private credit markets start to dry up, or if we start to see delinquencies go up in those

kinds of markets, commercial real estate will get hit and so will residential markets. Not in the

same way, but a lot of times when we talk about commercial real estate on the show and the risks

that are associated there, we make a point to say that the residential market is different,

it is not going to be impacted in the same way. And in a way that is still true, I do think that

commercial real estate is much more susceptible to issues in private credit than the residential

market. But you've probably seen the rise of what is known as a DSCR loan. This is called the

debt service coverage ratio loan. It's basically a loan for residential properties that is

underwritten similarly to commercial real estate. So it's basically it's underwritten on the

strength of the deal, not the borrower's personal credit worthiness. This is not something where you're

submitting your tax returns, your W2 statements, and they're calculating your DTI. It's basically,

you know, if the property covers a basic mortgage and expense ratio, right, that's that debt service

coverage ratio, they'll qualify. And it has become a really popular financing tool for residential

real estate investors for good reason. It's a good loan. Like I actually think it's a smart thing

for investors to do if it's done well. But as of right now, they are largely private credit funds,

right? Non bank lenders are the ones originating DSCR loans. They're often bundled into sort of

non QM securities and then sold to private credit funds. That's how it's done at scale. Sometimes

it's done just individually, right? Private individuals create DSCR loans or, you know, 10

investors pool their money together to make a small credit fund. Maybe it's not

securitized, but they are largely private credit. And so again, we don't know if this is happening.

But if we start to see the psychological element take off where fewer, fewer people are putting

their money into private credit or the real issue is if we start to get a run on private credit.

Now, these companies have ways of protecting against a run. But if faith is lost in the private

credit system, we will likely see capital for DSCR loans start to dry up. Now, that's not it. Like

that's just future loans. But I, you know, I've been trying to dig into this. You know, we had

Melody Wright on the show recently who was talking about DSCR loans in private credit. And I wanted

to dig into this because I was curious if DSCR loans are underperforming. And unfortunately,

the reality is that it is really hard to get that data because this is private is not

reported on by the Fed or by the mortgage bankers association or Cotality. Like all of these big

companies that track regular mortgages, mortgage-backed security delinquencies cannot track this

stuff. They are not required to report it. But I think you can just understand sort of intuitively

that there probably is some stress here, right? We've seen loans that were originated in 2022,

2023. Let's just say in Florida, right? Even if that property hasn't lost value, it's probably not

operating as profitably, right? Property taxes, insurance have gone up at a time where rents are flat.

And that means these DSCR loans that were at, let's say, 1.25 ratio might now be at 0.9 percent

ratio. That doesn't mean that people aren't paying their loans, but it probably makes it harder

for them to pay their loans, right? So you can imagine that the delinquency rate might be going up.

Also, a lot of DSCR loans were written for short-term rentals. And we all know short-term

rental industry has been struggling. And so they are probably struggling to pay those loans. Those

DSCR ratios are probably lower than they were. We also started to see DSCR loans with lower and

lower standards. Like most of the time they require like a 1.2 percent ratio, right? Then it was

now you see loans at 0.8. Now you see some, there's something called the no ratio DSCR loan,

which basically means you don't even need debt service coverage ratio. It's just a private loan.

Now these aren't that common. I am not saying that this is spreading like the subprime crisis,

but you were starting to see that the DSCR loan could have some issues. Again, we don't exactly know,

but this is how it could spread into the residential market, right? You can see that if DSCR loans

dry up, that can make it harder for people to buy deals. And if there is distress in the DSCR

loan market, that could mean more inventory coming on the market and potentially more foreclosures

in the private sector. Again, we don't know. This is kind of speculation. So I just want to call

that out that this isn't backed by hard data. But Moody's Analytics, one of the biggest, most

reputable analytics, economics sources in the world flagged DSCR loan defaults as a potential

issue going forward with rental demand softening. They called that out in specific markets like Austin

and Nashville and places in Florida. But you know, other people are paying attention to this. And

so I think this is something that you should be paying attention to as well. Now I know that a lot

of what I've been saying here can be scary. So I do want to put this all into perspective about

what role private credit plays in the larger real estate ecosystem. And how if, again, it is an if,

if this starts to get worse, what might happen to the larger market? We're going to get into that

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Welcome back to On the Market, I'm Dave Meyer. Today, we are talking about the private credit

market and potential trouble brewing there. Now, again, I just want to reiterate to everyone that

we don't know that this is a full-blown crisis, but it is something I really think that we should

be keeping an eye on because of just the sheer size of it. I know that private credit isn't something

that is talked about that much, even in the financial media or on the show, but I kind of want to

just put this in perspective for all of us. According to the Mortgage Bankers Association,

the total size of the commercial mortgage-backed securities market, so these are like more

traditional loans, is about $5 trillion. Right now, the private credit market, just as a reminder,

as we talked about before, is about $3 trillion. It's smaller, but not that much smaller. If you're

looking in the grand scheme of things, that's not that small. If you look at the total residential

market, it's estimated to be north of $15 trillion. Just keep that in perspective.

Compared to total mortgages in the residential market, it is relatively small, about 20 percent,

but it still matters. The actual comparison that I think is the most interesting here

is that when you look at the total size of the subprime mortgage market in 2007, like right at the

peak, that was about $1.3 to $1.5 trillion. That's a lot smaller. If you're just looking at the total

size of the private credit market, it's about double that of the subprime mortgage market peak.

Now, I don't want people to freak out about that because we need to keep this in perspective as

well because the subprime market was just integrated in that much bigger mortgage-backed securities

market. In 2007, the mechanism that created all this struggle was that banks were holding

mortgage-backed securities on their balance sheets, but they were also highly leveraged. They

were relying on the short-term repo market to fund these things, and when that froze up,

the collapse was really rapid. Now, the difference in private credit is that the risk, at least

theoretically, sits with equity investors in funds. It's not on the bank's balance sheets.

That is at least the theory, but if you dig into it a little more, you see that U.S. banks have

lent a lot to private credit funds. Estimates are a couple hundred billion, so that is not

as clean of a break. It's not as clean as a separation between the banks and private credit as

some people might want. But I think it's true. There isn't this as systemic or risk, at least,

in the banking crisis, even if private markets go south. I think that's something to remember

and take some solace, is even if this does get worse, that it might get isolated into just the

equity holders. Only investors are going to get hurt. It's not like the banks are going to get hurt

so badly that credit dries up across the entire economy and creates this lasting recession like

we saw in the financial crisis. There is one thing, though, that I think makes private credit,

potentially even more dangerous than the subprime crisis. And I'm not saying in scale,

but basically, in 2007, the subprime crisis for those people who are looking, I was not, I was

in college at the time, but people who are looking at this, the information is public.

Markers back securities traded on public markets. People could see this and you could see

prices move in real time and the collapse happened because of that. With private credit,

there just isn't the same disclosures. We really just don't know. And that's sort of what worries

me about this is that it could get really bad before it's really even brought to public attention.

Now, I think if you look at Wall Street Journal or other places that are reporting on this,

I think they are trying to dig into this and I am grateful for that. But that is just something

to keep an eye on is that in theory, the banks aren't tied up. In theory, the losses that could

come from private credit and again, it still could, they would be isolated to equity holders.

They're not highly leveraged. But that's just in theory. We don't actually know. It's all private.

And so this is why I think it's so important to keep sort of a hawk eye on these things.

It can and will impact real estate if it gets worse. And we just don't really have any formal

reporting mechanisms to know if and when that is happening. And so this is something that I am going

to keep a very close eye on and will report on in the future. I wanted to do this episode

to explain to everyone what private credit is and how it interacts with our industry so that when

I present more information about this in a few weeks or months and sort of give you updates on this

same way, update you on delinquencies and inventory and all that, I want you all to know what I am

talking about. So hopefully that is what's going on. Now, before we get out of here, I just want to

say that, you know, I call these things to attention not because they're predictions. I think that's

sort of like the difference between what I try and do and what a lot of influencers do is they

say, the market's going to crash. Here's why I try to assess risk and upside, right? And I am just

trying to tell you that I see additional risk in the market because of what's happening in private

credit. I am not saying that it is going to be a disaster. I am not saying that there is going

to be a run on private credit for sure. In fact, most people who know a lot about this more than me

believe that there is going to be some rest. There's going to be some negative parts of the private

credit market, but it will probably be contained like the people who are giving out sloppy bad loans,

these paid and kind heavy covenant light loans, like they're probably going to take some losses.

They might not get the same investment from their LPs. They might need to write down some of these

loans and that will have some impact on the market. But most people believe that it will not spread,

that it will be contained to those individual funds that made bad loans and it won't spread to

the rest of the market. If that happens, which probably will impact real estate a little bit,

but probably won't be super dramatic. To me, the biggest risk is if you have something like that,

what we're talking about, combine with some other big economic shock, right? Like, if you see some

big macro shock like stagflation, which I think there is risk of, I've been talking about that for

a year or so and I think the risk of that is only going up. If you have a deep recession,

if you have more black swan events like the invasion of Iran, like if you have more of these

things happen at once, people can spook because remember, this is not necessarily only about bad loans,

it's also about psychology. And so that's the thing we need to really watch for is psychology

changing at the time when the private credit markets are already a little bit weak. That's where I

think this could really start to spread. So although no one really fully knows the true quality

of the collateral sitting in these private credit funds, we don't really know how big of the risks

there are. It is not yet an emergency, it's just something to keep an eye on. Hopefully this

episode has helped you understand a different part of the financial system that we normally don't

talk about here on the market and will give you the basis to understand what could happen in our

industry in the coming months or years should this industry take a turn for the worse. I will,

of course, make sure to update you on this as I get information about that. But until then,

I'm Dave Meyer. This is on the market. Thanks for watching.

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