Dancing While the Music Plays

Ben Hunt returns to Excess Returns to break down the hidden risks building inside private credit and the parallels between today’s “alternative asset managers” and the shadow banking system that triggered the 2008 financial crisis. Using the Godfather’s Tessio as a metaphor for betrayal and broken trust, Ben explains how opacity, leverage, and narrative collapse can turn small defaults into systemic crises. He and Matt Zeigler explore what’s really happening beneath the surface of private markets, how common knowledge shifts shape investor behavior, and how Perscient Pro’s “storyboards” and “semantic signatures” help track the narratives driving markets in real time.

Main topics covered

• Why Ben believes we’re at a “trust-breaking” moment similar to 2007

• The Godfather analogy and what frauds reveal about human behavior

• How private credit has evolved into today’s “shadow banking” system

• Flow machines, hidden leverage, and why opacity is intentional

• The dangers of informational asymmetry between investors and lenders

• How broken trust creates chain reactions in financial systems

• The link between narrative collapse and liquidity crises

• Common knowledge, crowd reactions, and market psychology

• Doom loops between Wall Street and the real economy

• How Perscient Pro tracks financial narratives using semantic signatures

• Why gold’s current rally is about safety, not debasement

• What investors should monitor next in credit, housing, and macro narratives

Timestamps
0:00 Hidden leverage and the trust problem
1:04 Introduction to Ben Hunt and Epsilon Theory
2:12 The Tessio analogy – betrayal and the structure of fraud
6:10 How private credit became today’s shadow banking system
10:55 Flow machines and why opacity is intentional
14:48 Trust breaks and the “funding stops first” dynamic
18:35 The Biden “common knowledge” moment explained
21:00 What happens when narratives collapse
24:26 Apollo, asymmetric information, and shorting First Brands
28:00 Hidden leverage and the domino effects of default
33:40 The “doom loop” between Wall Street and the real economy
39:10 Why Silicon Valley Bank was different
44:18 What a “run on Wall Street” could look like
48:00 Perscient Pro and tracking financial storyboards
53:32 Semantic signatures and narrative detection
57:10 Housing, inflation, and gold storyboards
1:00:48 Where to follow Ben Hunt and learn more about Perscient Pro