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

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

#421

Post by laughing_man »

pocksuppet wrote: post #363
Aboutplants wrote: post #257

Earlier quoted context omitted.

Time to short them?

It's never the time to short a company, even a really bad one. You have only 100% upside, infinite downside, and you have to time it perfectly. A short can be a part of a combination strategy where you go long on one company and short on a related one, but you still have to be really careful. If DB stock increases 50% before it crashes, would you be forced to sell at the top and lose all your money?

Squeezing shorters is a national pastime in the US. You can lose a whole lot of money shorting a stock that objectively must go down eventually.

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

#422

Post by Bluebirt »

RobRivera wrote: post #98
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...

Deutsche gonna Deutsche. Recruitment tables should just have a banner that reads 'we've already spent your bonus on legal fees, here's some chocolate'

Whenever a Bank is sued, you can be certain a guy from Deutsche is somehow involved.

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

#423

Post by globular-toast »

sehansen wrote: post #128
lenerdenator wrote: post #27

Earlier quoted context omitted.

We didn't recover from the 2008 crash properly because we didn't introduce consequences for those who created it.

Hundreds of financial institutions with greater or lesser responsibility for the crash in 2008 went under in those years[0]. The shareholders in almost all of these companies lost all of their money and the responsible employees lost their jobs. This includes some of the most guilty companies, like Washington Mutual, Countrywide Financial, IndyMac, Lehman Brothers, Merrill Lynch (through First Franklin Financial), Be…

The tap went off, but they kept the water they collected from it.

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

#424

Post by jart »

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...

DB's fall has been glorious. I shorted them back in January when I learned they were delivering 1.3% of their market cap in gold to the COMEX. No bank gives up that much of a hard asset unless something is wrong. Things are also looking bleak for Scotia Capital, BofA, Barclays, and UBS. JPMorgan seems to be doing fine. However Citigroup appears to be making out like a bandit. https://www.cmegroup.com/delivery_reports/MetalsIssuesAndSto...

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

#425

Post by sehansen »

keernan wrote: post #249
sehansen wrote: post #128

Earlier quoted context omitted.

Hundreds of financial institutions with greater or lesser responsibility for the crash in 2008 went under in those years[0]. The shareholders in almost all of these companies lost all of their money and the responsible employees lost their jobs. This includes some of the most guilty companies, like Washington Mutual, Countrywide Financial, IndyMac, Lehman Brothers, Merrill Lynch (through First Franklin Financial), Be…

>The shareholders in almost all of these companies lost all of their money How is that penalizing those responsible? Isn't it a pretty big leap to go from penalizing those selling packaged fraudulent loans to the public (whom, to my knowledge were never prosecuted) to the shareholders losing money as protection against it happening again?

The shareholders are responsible for the management of the company who are in turn responsible for their employees. By wiping out the shareholders in these companies hopefully other shareholders in other financial companies will demand more oversight. In the end people respond to incentives and the individual employees that sold the fraudulent loans were implicitly or explicitly incentivized to do so by management, who were in turn rewarded for this by shareholders. Going after the specific employees that sold the loans is of course morally satisfying, but if we want this to not happen again we need to make shareholders and executives keen to avoid a repeat. Looking at how popular Klarna, gambling companies and now private credit has been with investors, it doesn't seem to have worked, unfortunately.

But, yes, it is a travesty that more of the subprime loan salesmen weren't prosecuted. It has a lot of value for a society to actually convict people that have done actual wrong. We all want to live in a just world and seeing that people who have done wrong get what they deserve is part of that. Looking at the US from the outside I think a lot of the polarization we've seen in the US over the past 15 years could have been avoided if more prosecutions had happened in 2008-2012.

IMO this is also why big companies being allowed to do settlements without admissions of wrongdoing is so bad. They fail to fulfill the moral purpose of law enforcement. Ironically Goldman Sachs _did_ admit wrongdoing in their settlement with the SEC over their Abacus CDFs...

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

#426

Post by jart »

iwontberude wrote: post #401
klodolph wrote: post #400

Earlier quoted context omitted.

“Shorting” a company does not just mean short selling stock. Instead, it means having a short position, which you can use without unlimited downside. The easy way is to buy puts. Maybe your next question is, “who is selling puts?” And that’s a good question, but you don’t really care, because you can buy your puts on the open market and when you do that, you get protection from credit risk. There are other reasons wh…

And puts are highly manipulated by MMs so you have to really study the chain and how it behaves before you have a chance to buy the contracts at a fair price. MMs will flood the market with contracts and devalue yours even when the price is moving in your direction. I highly suggest people think twice about trading options, they are best used as hedges for large positions during particularly vulnerable periods.

It would be more helpful to say don't buy options once the trade is obvious. As soon as something has hit the FOMO phase and IV skyrockets and all strikes cost the same, that's a sign you're too late and might want to bet against your thesis or use a different instrument. The financial shoggoths do a reasonably good job ensuring there's no free money. However they're obligated to trade regardless of conditions and sometimes that's their weakness.

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

#428

Post by silverlake »

csa wrote: post #342
JumpCrisscross wrote: post #293

Earlier quoted context omitted.

> now the VC lends the money from the bank, buys the clinic, and here's the important part: _they push the debt onto the clinic's books This mostly correctly describes a leveraged buyout (LBO). LBOs are done by LBO shops, a type of private equity (PE) firm. Not VCs. (VCS do venture capital, a different type of PE.) And LBO debt isn’t “pushed” onto the company’s books, it’s never on the sponsor’s (LBO shop’s) books in…

> And LBO debt isn’t “pushed” onto the company’s books, it’s never on the sponsor’s (LBO shop’s) books in the first place to any material extent. Could you please explain the how and why of the mechanics of this process (edit: from the perspective of the lender)? It seems like the lender is taking a massive sucker bet. Or is the reality that the lender gets repaid the vast majority of the time, and we only hear about…

It’s the same as buying a house. I want to buy a house for $1.2m. I put down $200k and borrow $1m. The bank determines the value of the house. My equity absorbs a 20% drop in prices, so the bank is fairly protected. Businesses are different because they really can go to $0. Banks will need more collateral and/or make many different types of loans to dilute the risk.

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

#429

Post by ahoka »

gradus_ad wrote: post #385
ehnto wrote: post #366

Earlier quoted context omitted.

I think the free market response is that another vet with fair prices will show up, but A) that's a waste of everyones time and very inefficient and B) a real grass roots business takes time and passion, somebody to start it, buy in from the community etc. That work had already been done. To throw it all away for VC or PE to squeeze the life out of it and by extension the community, that's just sad, and a net negativ…

Waste and inefficiency is real. As unpalatable as it is, cleaning up the mess of decay often requires brutal methods. That begs the question, is waste and inefficiency socially undesirable? Maybe not. Maybe not on certain scales or in isolation. But waste compounds.

"That begs the question, is waste and inefficiency socially undesirable? Maybe not."

Organic farming is one example.

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

#430

Post by retube »

jart wrote: post #424
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...

DB's fall has been glorious. I shorted them back in January when I learned they were delivering 1.3% of their market cap in gold to the COMEX. No bank gives up that much of a hard asset unless something is wrong. Things are also looking bleak for Scotia Capital, BofA, Barclays, and UBS. JPMorgan seems to be doing fine. However Citigroup appears to be making out like a bandit. https://www.cmegroup.com/delivery_reports…

What do their gold deliveries have anything to do with their financial situation? That'll just be settling GC contracts, and there will be clients on the other side.
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