

Is Private Credit In The Public Interest? with Jim Grant
24 snips Apr 25, 2024
Financial expert Jim Grant joins the hosts to discuss the rise of private credit post-2008 crisis, its $1.7 trillion industry size, and lack of traceability. They analyze risks in unregulated lending, potential spillover effects, and the public interest implications. The conversation emphasizes the need for transparency, regulation, and honesty in private credit markets to protect investors and the financial system.
AI Snips
Chapters
Transcript
Episode notes
Volatility Masking in Private Credit
- Private credit markets mask volatility by allowing interest deferral and principal additions.
- This makes default rates appear lower than in traditional lending.
Interest Rate Risk and the Everything Bubble
- Many businesses structured their finances based on low interest rates.
- Rising rates will stress these businesses and potentially cause a credit crisis.
Socialization of Credit Risk
- The socialization of credit risk, where authorities intervene to prevent market failures, underpins private credit.
- This creates a moral hazard where private credit assumes future bailouts.