The development in the private credit sector is described as increasingly risky and is placed within a broader context of macroeconomic tensions such as oil price shocks. The central argument is that financial crises are not primarily caused by actual credit losses, but by changes in the behavior of market participants and the resulting shifts in the system’s state. Using the 2008 financial crisis as an example, it is explained that subprime losses alone were not sufficient to trigger the crisis. Instead, the decisive factor was the process in which expectations were abruptly adjusted downward. The US Federal Reserve was even able to generate profits from assets previously considered “toxic,” supporting the view that it is not the losses themselves, but the change in perception and behavior among actors that proves decisive.
To analyze such developments, a three-stage model of the credit cycle is introduced. In the first phase, investors gradually recognize the errors and excesses of a previous bubble, which is reflected in capital outflows and initial warning signals. In the second phase, banks increasingly withdraw, tightening financing conditions and triggering asset sales. In the third phase, panic-driven selling and market illiquidity emerge. These phases overlap and are characterized by an accumulation of behavioral changes indicating a fundamental shift in the system. The events between 2007 and 2008—from initial defaults and rating downgrades to liquidity problems and the collapse of institutions such as Bear Stearns—are interpreted as a sequence of such state changes, accompanied by clear market reactions such as widening credit spreads.
For the current situation, a similar dynamic is described in the shadow banking and private credit markets that emerged after 2008, as regulated banks shifted toward lower-risk strategies. These non-deposit-taking financial institutions increasingly took over lending to riskier borrowers, which led to a new bubble, particularly in the 2020s. Since 2025, signs of an initial downturn phase have been increasing, including weak labor market data, rising corporate bankruptcies, and fund outflows. Additional signals such as valuation markdowns, restricted redemptions, and initial asset sales point to ongoing behavioral shifts. A particularly significant development is the decision by a major bank to adjust collateral valuations and thereby restrict access to credit lines, which is interpreted as a possible transition from phase one to phase two, as affected funds may be forced to sell assets.