US private credit defaults hit record 9.2% in 2025, Fitch says • Hacker News Board

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#111

Post by ifwinterco » Thu, Mar 12, 2026, 2:17 PM UTC

hnfong wrote: post #49

cmiles8 wrote: post #21

Earlier quoted context omitted.

Interest rates on things like CDs and low-risk bonds have been decent for a while now. It’s not been painful to sit on cash reserves provided you were smart about where the cash was parked. It’s not an either/or, it’s just a question of who was participating in the boom while preparing for storms ahead vs those all in on the boom. What implodes in the period ahead are things that are massively over leveraged and can’…

It's decent only if you believe inflation = CPI In actuality, the CPI is lower than inflation because technological advancement, automation, and economies of scale (due to globalization etc) are driving consumer prices low. In other words, if factories are still producing things like they were 20 years ago, the CPI would have been much higher, and that higher number is closer to what should have been the inflation nu…

A better measure is what % of the total money supply you have.

I.e. you started out with 2e-20 % of the total money, and after 5 years you now have 1e-20 % of the total money, then whatever happened to CPI, you've been diluted and you would probably have been better off investing in something else other than cash.

That makes sense in theory, but in reality what "total money supply" is is a complete can of worms and basically impossible to measure

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#112

Post by we_have_options » Thu, Mar 12, 2026, 2:18 PM UTC

lizknope wrote: post #102

I've never heard the term private credit so I googled it. > Private credit refers to loans provided to businesses by non-bank institutions—such as private equity firms, hedge funds, and alternative asset managers—rather than traditional banks . Is that correct? So if these companies go under does anyone care? If they go under are they a systemic risk to the economy like the banks in 2008 that got a taxpayer bailout?

Well, yes, as the article mentions. If this increases a bank's losses, then the bank could become insolovent.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#113

Post by WarmWash » Thu, Mar 12, 2026, 2:19 PM UTC

persecutor wrote: post #13

Go figure. Employers don't want to pay living wages or hire.

Employers will never be able to pay a living wage, because the real problem is a lack of housing. Rents and mortgages will always outrun wage increases in the current market.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#114

Post by [deleted] » Thu, Mar 12, 2026, 2:19 PM UTC

bargainbin wrote: post #22

Luckily debt will be solved by the power of AGI, right? Just one more data centre! One more GPU! It can nearly write a basic three tier application with only 10 critical security vulnerabilities all by itself! Definitely think we’re in for a rough year financial prospects wise, and doesn’t even feel like we recovered from the 2008 crash properly.

[deleted]

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#115

Post by ifwinterco » Thu, Mar 12, 2026, 2:22 PM UTC

vmbm wrote: post #34

hnthrow0287345 wrote: post #19

People have cried wolf or been wrong about incoming crashes and bubble pops so many times that this signal -- whether it's a good signal or not -- simply won't change anything I do. I'm sure someone somewhere could make a trade off of this article and this signal is definitely for them.

It is incredibly hard to make money going short. Even if you are right about the direction, most short positions require interest payments to hold, or have some sort of decay built into the structure. So timing is everything and even then, if the underlying security slowly grinds down (instead of a quick abrupt move) you could still lose if the interest/decay on the short position outruns the downward movement on the…

There's actually (at least) three things going against you going short:

- position has significant negative carry (what you're talking about there)

- stock/bond prices are nominal and the government constantly prints the denominator so prices tend to go up even if there's no actual growth

- for equities there is a genuine long term positive drift over time even if the denominator doesn't change

So yes, it's hard to make money going short and timing is everything

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#116

Post by cs702 » Thu, Mar 12, 2026, 2:24 PM UTC

Trouble has been brewing in private credit for quite a while, but lenders and investors have been reluctant to write anything down, resorting to all kinds of "extend and pretend" games to avoid write-downs.[a]

tick-tock, tick-tock, tick-tock...

---

[a] https://news.ycombinator.com/item?id=47351462

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#117

Post by naijaboiler » Thu, Mar 12, 2026, 2:25 PM UTC

marcosdumay wrote: post #41

reliabilityguy wrote: post #3

Earlier quoted context omitted.

> 2008 Financial Crisis was triggered by Oil prices. Not by the subprime mortgages given to anyone with a pulse?

I think the GP is trying to say that oil prices where the nudge that pushed the bad loans and derivatives out of stability. I don't remember oil getting expensive back then, but it's a long time ago.

it did. GFC was a financial recession no doubt, but oil prices was one of the final things that tipped everything over. Oil prices climbed high, slowed economic activity a bit, and the whole financial that teetering just collapsed.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#118

Post by gzread » Thu, Mar 12, 2026, 2:25 PM UTC

To private credit firms. Most of what banks do is private credit, the news is them funding private credit firms.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#119

Post by SlinkyOnStairs » Thu, Mar 12, 2026, 2:26 PM UTC

lizknope wrote: post #102

I've never heard the term private credit so I googled it. > Private credit refers to loans provided to businesses by non-bank institutions—such as private equity firms, hedge funds, and alternative asset managers—rather than traditional banks . Is that correct? So if these companies go under does anyone care? If they go under are they a systemic risk to the economy like the banks in 2008 that got a taxpayer bailout?

> So if these companies go under does anyone care?

This is nowhere near as bad as the 2008 crisis, no. The banks don't really use the checking/savings account money for this. If you've invested in something that either invests in Private Credit or is reliant on Private Credit, then it'll suck for you personally.

...

One teeny tiny extremely important detail: Private Credit is bankrolling the AI industry's datacenter construction. If anything happens to significantly increase interest rates, several datacenter companies and Oracle go bankrupt. The other big tech firms have taken on lots of debt as well so expect spending cuts there too, even if they survive.

The systemic risk isn't in "bankers fucked it up again", it's in the AI bubble.

Re: US private credit defaults hit record 9.2% in 2025, Fitch says

#120

Post by lumost » Thu, Mar 12, 2026, 2:27 PM UTC

JumpCrisscross wrote: post #94

Yeah, I'm going down a bit of a rabbit hole this morning. Turns out Wells Fargo's $59.7bn of private-credit lending is equal to 44% of its CE Tier 1 capital [1]. Meanwhile, Deutsche Bank got back to being Deutsche Bank while I was not looking [2]. [1] https://www.sec.gov/Archives/edgar/data/72971/00000729712500... [2] https://www.reuters.com/business/finance/deutsche-bank-highl...

With the current concentration of wealth and banking, it almost seems like there is an incentive for banks to ruin themselves when they end up in a little trouble.

If the bank has trouble, shareholders/executives lose - if the banking system has trouble... then QE will solve the bank trouble.