The Trigger For The Next Global Financial Crisis

(the following contains excerpts of our latest research report, read on to see how you can get our complete 18-page report free for a limited time)

While most analysts and investors solely focus on the major stock indices and popular large cap stocks, the credit markets are far more important.

The first signs of a potential crisis are often sniffed out in the credit markets, which is why any investor who is serious about their wealth needs to pay attention to it.

Over the past several months, the financial news has been full of stories about investors who have been blocked from getting their cash out of their private credit fund holdings.

Many investors may have thought, “this news doesn’t relate to me or the stocks I own” and dismissed the headlines.

However, we have warned our readers to take these growing issues in private credit very seriously as they could be the “canaries in the mine,” i.e. the first warning signals that could take the broader equity markets down with it.

It reminds us of events leading up to the 2008 Great Financial Crisis, which originated in the subprime mortgage market.

You see, following the Global Financial Crisis of 2008, regulators imposed Basel III capital requirements on banks, forcing them to hold more capital against risky loans. As a result, the availability of lending narrowed, especially for middle-market businesses, and private credit stepped in to fill the gap.

Private credit firms had no such regulatory constraints.

They could lend to borrowers that banks could no longer touch, and of course, charge handsomely for it.

In 2020, the private credit market had roughly $2 trillion under management. And that’s when the big growth in this sector started.

From 2020 through most of 2022, the Fed held rates near zero. Traditional fixed income was yielding next to nothing. Pension funds, insurance companies, endowments, and sovereign wealth funds were desperately searching for yield to meet their obligations. Private credit was offering floating-rate loans typically yielding 8–13% and therefore became enormously attractive.

Then, when the Fed raised rates aggressively starting in 2022, private credit became even more appealing for investors. Since most private credit loans are floating rate, the yield investors received rose along with the Fed funds rate.

For example: a loan that was paying 8% in 2021 was suddenly paying 12–13% by 2023.

Thus, over the past few years, a number of firms jumped into the “private credit” sector and large investors loaded up with this subprime credit.

In late 2024, some big, not-so-smart banks, were raising $50 billion to put into private credit funds. These banks include Goldman Sachs, Wells Fargo, and Citigroup, among others.

Over the past two years, the global private credit market became the “new game in town” for many financial firms as this sector ballooned to a $3.5 trillion market (assets under management).

But all of this growth came with a critical structural vulnerability that is now becoming more visible to investors.

The loans these firms made are illiquid, the funds have redemption gates, and many of the borrowers were underwritten in a zero interest rate world that no longer exists.

The first “canary in the coal mine” was noticed roughly 8 months ago. Since then, more and more “canaries” have been found in private credit, causing investors to flee from these formerly popular funds and private credit company stocks.

And as we’ve seen just ahead of other crises in the past, when the warning signs start to emerge, and continue to grow, it’s important to take notice and understand the potential repercussions.

Throughout our latest research report, available FREE for a limited time to ZeroHedge readers, we explain how the private credit sector’s growing troubles could be the trigger for the next global financial crisis. We also reveal how smart investors can protect their hard-earned wealth and profit when most others panic.

Get your copy today at DohmenCapital.com/SpecialReport2026

We hope you enjoy our latest report,

Bert Dohmen and Dion Dohmen