Eurodollar University A Trillion-Dollar Time Bomb Just Went Off on Wall Street
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Nov 19, 2025 Concerns about the economy's stability are rising, with industry giants warning of 'garbage lending' reminiscent of 2006. Hedge fund redemptions signal increasing market stress, and unconventional lending practices are under scrutiny. The repo market is tightening, raising fears of liquidity crises. As risk appetite diminishes, even top firms beg the Fed for more reserves. Additionally, low interest rates could persist due to the accumulation of risks. A perfect storm is brewing, and Wall Street is on alert.
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Mainstream Acknowledgment Of Shadow Risks
- Major Wall Street figures like Jamie Dimon and Jeffrey Gundlach now publicly warn about “cockroaches” and “garbage lending.”
- That mainstream acknowledgment signals the problem has moved from theoretical to visible and credible.
Hold A Cash Hedge
- Allocate a meaningful cash buffer to hedge against a potential market implosion.
- Jeffrey Gundlach recommends holding about 20% cash amid private credit concerns.
Private Credit Bigger Than Reported
- Private credit is at least $1.7 trillion and likely larger after Fed reclassifications increased shadow lending estimates.
- Reclassifying bank loans to shadow intermediaries can hide true size and risk of private credit exposure.