US banks just racked up $118.4 billion in unrealized losses in just three months. The FDIC put 66 banks on its “Problem List.” Hedge funds are dumping stocks at the fastest pace in a year. This isn’t just another rough patch—this is systemic failure unfolding in real time.
Liquidity is vanishing. Counterparties are on edge. Swaps are unwinding. The Fed just had to inject $234 billion into overnight markets to keep the system from seizing up. This is what panic looks like.
And yet, while the cracks are forming, Wall Street is partying. The annual SFVegas structured finance conference just hit its biggest attendance ever—bigger than Davos, bigger than the Milken Conference. The last time it was this big? 2006 and 2007, right before the global financial system imploded.
Mortgage-backed securities, collateralized loan obligations (CLOs), consumer credit securitization—it’s all back. The same risky, repackaged debt that fueled the 2008 collapse is now being sold again under the guise of “safe, high-yield” investments. The biggest players are back in the game—KKR, Apollo, Ares—pouring capital into the same instruments that blew up the economy last time.
And while all this is happening, European banks are hoarding bonds like it’s 2008. The last three times they bought at this pace? Right before the Global Financial Crisis, during the European Banking Crisis of 2011-12, and before the 2020 pandemic crash.
Meanwhile, margin debt just hit an all-time high—$937 billion. That’s a 33% increase year-over-year. Leverage is maxed out, investors are all-in, and the warning signs are everywhere.
This is the cycle repeating itself. They’re pumping markets full of debt, knowing full well that when it crashes, the only people left holding the bag will be retail investors and taxpayers.
Tick. Tock.
Sources:
https://archive.is/h6fbA#selection-2515.0-2515.227
https://x.com/ODB123/status/1896026933239975941
https://x.com/DarioCpx/status/1896499524425924757
https://x.com/MyRoadToFi5633/status/1895473337846960187
https://x.com/ODB123/status/1896218639692407097
https://www.marketwatch.com/articles/investors-margin-trading-c44c6083?mod=home_ln