There’s a script. Every institution has it, and every institution follows it.
It goes like this: “We have no significant exposure to the risks in question. Our balance sheet is well-diversified. We remain confident in our long-term fundamentals.” And so on. It’s boilerplate. It’s theater. And by now, any regular reader of this publication knows exactly what those words actually mean.
They mean the opposite.
In the days before Bear Stearns cratered. In the week before Lehman stopped answering the phone. The words were the same. The stock charts told a different story. And the stock charts, as usual, were right.
So here we are in 2026, and the script is being read again. Deutsche Bank just flagged $30 billion in exposure to private credit in its annual report. Morgan Stanley just capped investor redemptions in its private credit fund. Software-heavy loan portfolios are deteriorating. Layoffs are being announced. And the official narrative from every corner of the financial complex is: nothing to worry about. It’s AI. It’s a transition. It’s shareholder value creation.
Come on. Come on.
The private credit market is not quietly imploding. It stopped being quiet months ago. What we’re watching now is a slow-motion train wreck that’s been picking up speed, and the question every serious investor needs to be asking isn’t whether this is a problem. The question is how far this thing has left to run.
So if the institutions running these funds are bleeding and the layoffs aren’t about AI at all... what does that tell you about where we actually are in this credit cycle?
