MORE Private Credit Funds Are Collapsing Are The Banks Next

The multi-trillion dollar bubble that is private credit is collapsing right in front of our eyes. The next big crisis in the financial markets is going to be private credit. You could be looking at very significant losses across these portfolios. So the question becomes, will your job, will your portfolio, will your bank survive what could be the beginning process of a GFC 2.0 playing out right now? I'm going to answer those questions for you in three simple fast steps. Step number one, let's go over the GFC versus today. Now I know a lot of people just kind of brush this to the side as though it's a complete impossibility. Trust me, those people aren't paying attention. We'll start with a chart of the S&P 500. Now this goes way back in time. This is November of 2008. And we start with this chart of March in 2007. It goes from 700 up to 1500. So back in March of 07, the S&P 500, right around, we'll call it 1400. And it's just cruising right along here. And what do you think the financial planners, the Dave Ramseys, the CNBCs, the people on well, there wasn't really too much social media back then. But if there was, what do you think they'd be telling you right here? They'd be telling you to buy the dip. What do you think they'd be telling you right here? They'd be telling you to buy the dip. They'd be saying, you just got a dollar cost average. They'd be saying, oh, it's not timing the market. It's all about time in the market. In fact, there's a fantastic chart of the S&P 500 that I modeled this after from Lance Roberts. Editor, go ahead and throw up that chart. And it shows the human psychology during these cycles, where in this case, the S&P can go from 1500 down to 700. In fact, it went down even further if we go into 2009. Basically, it gets cut in half. So ask yourself, what would your portfolio look like? What would your retirement look like if the S&P 500 went down by 50%? But going back to the psychology, the reason people just get absolutely annihilated during one of these cycles is because they're, in fact, buying the dip. They're adding to their position here, here, here, and here. And then the bottom completely falls out till you get to this point. And it's demonstrated on Lance's chart where everyone buyer sells. And that's actually the time to buy. But we as human beings aren't hardwired to do this well. We're hardwired to do the exact opposite, meaning you've got all this recency bias, where if you would have bought the dip, let's say, over the past 10 years, well, you would have done fantastic. But at the end of the day, that's very similar to playing Russian roulette, where sure, if you've got the revolver that has six bullets, five of the times you pull the trigger, you're going to come out OK. But the sixth time you pull the trigger, you got big problems. But now let's get back to the eerie similarities between 2026 and 2008. So, editor, let's throw up a chart of Wells Fargo right now. And we can see, year to date, it's down probably 20 or so percent, depending on when you're watching this video. But now, editor, I'd like you to throw up a chart of Lehman Brothers about six, seven, eight months after it hit its high in 2007. You see, if we just look at that year to date chart where Wells Fargo hit its high, it looks very similar to Lehman Brothers chart. And oh, by the way, the chart of the S&P 500 today looks very similar to this chart where it hits its all-time high, call it the end of 2007, beginning of 2008, and really rolls over. And then you hit the Wile E. Coyote moment. And editor, you showed the chart of Lehman Brothers about six months after it hit its peak. Now go ahead and show the rest of the chart going into 2008. So the question becomes, is the Wells Fargo chart in 2026 going to look like the Lehman Brothers chart in 2008? So the point here, before we go into even more very eerie and just bizarre similarities, we have to highlight the fact that it's just like going bankrupt. It happens very, very, very slowly and then all at once. You see, it happens very, very, very, very slowly. You're buying the dip. You're doing OK. You're only down about 5% and then, whoosh, all at once. OK, so what's happening in the news right now? Well, you guys know, in the Middle East, we have this development, war, conflict, whatever you want to call it, that has taken oil up to $100, right around $100 a barrel. And many experts believe that this could escalate and take the price of oil to $150, maybe even $200 a barrel. Well, most people forget what was happening during 2008 because they just remember the GFC. But let's go back in time to a chart of oil. We see that it was going straight up. And then let's also go back to a chart of nonfarm payrolls, because we're going to use that as a proxy for the labor market. Now, you guys know from watching my channel that the most recent nonfarm payroll print today, in 2026, was negative $92,000. So if we go back to 2008, what were the nonfarm payrolls doing? They were doing the opposite of oil. It's a very sophisticated chart right here. The nonfarm payroll, the labor market, was absolutely tanking and oil was going straight up, the exact same thing that's happening today. In fact, Editor, go ahead and throw up this meme that's based on The Office, which, by the way, is my favorite show of all time, and it really highlights what we're dealing with today. In 2008, we had oil prices spiking up to $150, and we had subprime deteriorating, to say the least. In fact, remember, subprime is contained. And today, we have oil prices going straight up. While the private credit bubble slash Ponzi scheme is also deteriorating right in front of our eyes. Oh, but wait, there is more. Most people don't even realize, because they don't study history, that right here in July of 2008, the ECB, the European Central Bank, raised interest rates. It raised interest rates right here. Why? Because they were scared of inflation. Because the CPI during this time was going up because oil was going up. So the expectation was for the major central banks around the world, including the Fed, to have to stop cutting rates, because nonfarm payrolls were tanking as the labor market was tanking. They had to stop cutting rates, pause, and actually start hiking to combat inflation. They thought they were going into the next round of the 1970s, right here in July of 2008. And then what happens? You get that Mike Tyson, boom, right hook from subprime mortgage that says, homie, don't play that. Inflation? We're going straight into a deflationary bust. When today, you could have that right hook from Tyson, not necessarily coming from subprime, but coming to its equivalent, its sister, which is basically subprime private credit, as opposed to just subprime mortgages. Now, I know a lot of you are watching this video right now and say, OK, George, I get it. But there is no way that we're going to have a recession or an economic contraction based on what's happening with the financial plumbing right now, with all these financial institutions and these shadow banks, because back in 2008, you're forgetting there was a lot of fraud. And today, oh my goodness, these financial institutions, these banksters are squeaky, squeaky clean. Well, if that's your opinion, I've got news for you. In fact, I've got some oceanfront property in Arizona that I'd love to sell you. We're going to get into that right now. Step number two. So the S&P 500 chart looks almost identical. The chart of a lot of the financials look almost identical to Lehman Brothers. We have oil spiking. We have the labor market deteriorating. And on top of that, I forgot to even mention in step number one, we have an un-inversion of the yield curve, which is an extremely, extremely powerful recession indicator. But I want to be very clear. It's not just George Gammon saying this stuff. It's people like the head of UBS saying the exact same thing. In fact, he was calling it out a couple of years ago. Editor, cut to the clip. UBS's chairman called private credit an asset bubble that could set off the next financial crisis. Okay, now let's get straight into the fraud because I can assure you there is just as much fraud, if not more right now than there was back in 2007 and 2008. Let's go right over to this article from the Wall Street Journal, and this is the latest cockroach, if you will. This is Cliffwater that just came out last week and announced that they were also halting redemptions. This is on top of, obviously, Blue Owl, but Blackstone, BlackRock, Morgan Stanley, Deutsche Bank, JP Morgan, they've all come out and said they have exposure to this Ponzi scheme bubble that is imploding right now as we speak. If you don't think the Ponzi scheme, wait about 30 seconds until we get down into the second or third paragraph. So the title, inside a $42 billion private credit black box. By the way, when's the last time we were talking about these black box type business models? Oh, that's right. It was FTX and Sam Bankman Freed. That was his model. So that in and of itself should tell you what you need to know about what's playing out right now, but let's get into the juicy details. Check this out. And for this one, I hope you're sitting down because it is absolutely stiff drink time. This is going to piss you off. Cliffwater is the largest SEC registered private credit interval fund. Okay. Got it. According to interval fund tracker, it's trustees until last year included Paul Atkins. Oh, wow. Cool. So now you may be asking yourself, well, who is Paul Atkins? That name doesn't really ring a bell. Well, he actually resigned from Cliffwater's board just shortly before he came to SEC chairman in April of 2025. Wouldn't you know it? So if you were committing fraud, who would you want to be the SEC commissioner? Oh, that would be one of your buddies because you want the Fox watching the hen house. And that's exactly what's happening here. And if you want another eerie, bizarre, I would call it infuriating similarity between Guess who was the SEC chairman from 2002 to 2008 when the rampant fraud almost brought down the entire global economy. Who do you think was in charge of the SEC back then? Oh, that would be Paul Atkins. I'm not making this up. Editor and make sure you're throwing up B roll to back me up on this one. I am not joking. The exact same guy that was in charge of the SEC in 2008 is now in charge of the SEC again. After he was sitting on the board of one of the biggest cockroaches, one of the biggest Ponzi schemes in this entire bubble that's blowing up. Oh, but wait, there is more. I've been calling this a Ponzi scheme. Now, a lot of you may be saying, George, okay, this is unethical. They're probably breaking the law here and there, but it's not technically a Ponzi scheme. Oh, that's because you haven't read the details as to what's happening with Cliffwater. Let's dive right in. Cliffwater fund first bought a stake in another private lending fund called Aries. Okay, fantastic. And Aries was supposed to liquidate all of its assets June 30th, 2025. Okay, fantastic. So Cliffwater kept adding to its stake. But when June 30th, 2025 came along and went, Cliffwater said that it still owned its stake in the Aries fund that was supposed to be liquidated. And oh, by the way, they were telling investors that not only do they still have the stake in the fund that was supposedly liquidated, but the value of that stake was obviously increasing. Weird. How would that happen? And oh, by the way, as of September 30th, 2025, call it months after they were supposed to liquidate the Aries fund, Cliffwater reported an $11 million unrealized gain. And of course it's unrealized. They're all unrealized because this whole thing is a massive fugazi. A lot of these assets, they don't even exist. And they sure as hell aren't valued at a hundred cents in the dollar, meaning what they paid for them. A lot of this is just BS going back and forth and just marketing and just a ruse. I would call it a scam between these private credit funds. Step number three. Now let's go over how this black box model actually works so we can determine whether your job will likely survive, whether your portfolio will likely survive, or if your bank will even survive what might be coming in 2026. Okay. So here it is in all of its glory and financial engineering. Oh yes, that's right. Oh, and before I get into it, I got to fact check myself. Paul Atkins, I said, was in charge of the SEC from 2002 to 2008. He was actually a commissioner and now he is the SEC chair. Want to keep things straight there. But I'd also like to point out the fact that he is one of these guys that's calling to abolish quarterly earnings reports for publicly traded companies. Why? My guess is because he wants to make the publicly traded companies more of a black box like the private companies in private credit that he came from when he took the gig or the gig of the fox watching the hen house. Yeah. Anyway, getting back to it here. We've got everyone's favorite, the average Joe. And well, actually, I think everyone's favorite is Moody the millennial. I don't know their pronouns, but I do know that Moody has blue hair, as you would expect. Moody the millennial. And we've got your friend and family member, Fred. And then here we go from the streets of San Francisco. We have heroin guy. And down here we have the question mark. Now you guys are really going to want to find out about the question mark because that's what makes this whole entire black box model actually work until it doesn't. And then the whole thing blows up. So we've got the bank right here and Joe goes to the bank. Now he's a hardworking American like most of you watching this video right now. And he's got a great idea for a business. So the bank looks at him. He's got a great credit score. He's a great credit risk altogether. So the bank says, yes, Joe, I will go ahead and give you a loan. Fantastic. But then we've got Moody the millennial. Now they go to the bank as well because they have an idea for a business. But Moody is not that hard of a worker. They have a lot of participation trophies, that's for sure, but not a great credit score. So the bank says, nah, there's no way I'm going to give Moody a loan. And same thing for your friend and family member, Fred and his vape pen business. You guys watched my last video. And heroin guy, well, he's dead. So there's no way he's getting a loan, at least not from a bank. All right. So insert Aries and Cliffwater. So they have great credit scores. So they go to the bank and say, hey, how about you let us take some of your money? And the bank says, sure, we'll go ahead and lend you the money. And then Aries and Clearwater or Cliffwater, they look at Moody and say, okay, we'll go ahead and give you some money, but it's going to be at an extremely high rate of interest. So they're borrowing from the bank, let's say 3%. They're lending to Moody at 12%. They're pocketing the spread. They're telling all of their investors that this is risk free. But the next thing they know, they're getting inundated with all this money because their marketing is really, really good. And they're pumping this on CNBC, on Bloomberg, on social media, how this is the next big thing. This meaning private credit or this new black box that is so mysterious. And the financial engineering is so brilliant that you are too stupid to understand how amazing it is. Just shut up, give me your money and accept the fact that it has zero risk. It's the free lunch that you've been waiting for, my friend. Get rich quick with absolutely no downside. That's the pitch. But little did you know, they're taking your money and the bank's money and giving it not only to your friend and family member, Fred, not only to Moody, but they're also giving it to heroin guy. That's right. Now, how on earth, how does this happen? Why would they do that? Because they have so much money coming into their fund, they look around and they look at the options for people to lend to. And they've already lent to Moody. They've already lent to your friend and family member, Fred, for his vape pen business. And Joe already has a loan. So this heroin guy, he's the only guy left. So there's no way we can put heroin guy's loan on our balance sheet. So what we'll do is we'll go ahead and tell our buddies to start a brand new fund. We'll call it Black Pebble because it always has to be something black. It always has to be something very hard to give you that illusion that it's very risk free and there's only upside to it. So then Black Pebble takes money from Aries and Cliffwater and they give it to heroin guy. But remember, that loan to Black Pebble is an asset on the balance sheet of Aries and Cliffwater. And here is where the magic comes in. That's right. Because you see, Black Pebble can go ahead and tell Aries and Cliffwater that the loan to heroin guy is doing fantastically well. Why? Because there's no reporting. It's a black box. Nobody knows what the value is because it's a private company. So they can just say that they have a 50% return from heroin guy. Even though he's passed out on the streets of San Francisco. And then Clearwater or Cliffwater can tell their investors that this investment in Black Pebble is doing fantastically well. Trust us, it's an unrealized gain. And Aries can do the exact same thing. But they still have all this capital coming into their funds and they don't know what to do with it. Because they've lent to everyone with a pulse or in this case, without a pulse. So they look at how well their investment is doing in Black Pebble and they say, wait a minute, I've got an idea. Why don't we start another fund and just have that fund invest in another fund and have that fund invest in this fund. And those are assets on our balance sheet and they can just use the magic of BS, we'll call it. And we can just value the assets that we have on our balance sheet from the investments in these brand new funds at whatever we want. What a great idea. So Aries calls up some of their other buddies. They're going down the list here. And they say, hey, why don't you set up Black Marble? Got to be black. It's got to be something really, really hard because that gives the investors, the poor saps, the bag holders, the confidence to give us more and more and more money. More money, more money, more money. And then their other buddies that just got out of prison say, okay, we're going to take it one step further. And we're not going to start a fund called Black Marble. Ours is going to be Black Diamond. Whoa, great idea. Aries and Cliffwater says, I like the way you think, guy that just got out of jail. So they give them their money, Black Marble and Black Marble gives money to Black Diamond and then Black Diamond gives money to Black Marble. So you see what happens is the investment that Black Marble has on their balance sheet is the liability for Black Diamond. And then the asset or investment from Black Diamond is a liability of Black Marble. But none of these guys have to report. So they can sit there and tell you that this investment in Black Diamond or in Black Diamond's case, the investment in Black Marble and in Aries case, the investment in both of them and Cliffwater's case, the investment in Black Pebble and Black Pebble's case, the investment in Heroin Guy, they can tell you those assets are worth anything they want them to be worth because it's all unrealized gains. In other words, it's all bullshit. Now, you may be asking yourself, OK, George, but how do these funds pay back their investors? Aha, I'm glad you asked because that's where it becomes a Ponzi scheme. They have to go back to the bank or they have to go to their investors and they have to more money coming into the fund in order to pay off their current investors. Basically, the definition of a Ponzi scheme. So now we have to answer those questions that we posed at the beginning of the video. Is your job going to survive? Is your portfolio going to survive? Is your bank going to survive? Well, there are no certainties, there are only probabilities. And I'll let you guys decide what those probabilities are on your own. Whether this leads to a GFC 2.0, maybe it leads to a recession, maybe it just leads to a balance sheet recession like we saw it in the dot-com bust, or maybe it leads to nothing. Maybe we skate through this thing completely unscathed. But when you're deciding what those odds are, what I want to leave you with is a simplified version of everything that we talked about in this video. So imagine you're playing Jenga, a game we've all played and a game that was highlighted in the movie The Big Short. Well, you guys know that there's one piece at the bottom when you get to that point in the game that is holding up the entire house of cards. Right now, what you have to realize, if you can take one thing away from this video, is that one final Jenga piece is simply heroin guy, a bunch of BS, and a lot of fugazis. If you guys want more insider intel just like this, or if you want to know what I'm doing with my own portfolio to not only survive in 2026, but thrive, you can check out the private investor community I have called Rebel Capitals Pro. So my good friends Chris McIntosh, Brent Johnson, Patrick Ceresna, just to name a few. And it's where we go over contrarian strategies the pros use. In other words, strategies you're not going to hear from Dave Ramsey, you're not going to hear it on social media, and you're definitely not going to hear it from your local financial planner. Live streams, research, it's an incredible resource that is invaluable in these volatile times that we live in today. You can check it out. I'll put a link in the description below this video.