00:00I've got to turn to the private credit story and I'm starting to feel like we've beaten this story
00:04to death. On the other hand, every day we get new headlines about bigger withdrawal requests or
00:12companies that have institutional shareholders so they want to take advantage of retail investors
00:19that are fleeing. But analyst after analyst comes on this show and says, look, private credit,
00:26all of it is only one point eight trillion dollars. Right. And the software funds are a smaller
00:33subset of that. And then the expected defaults are an even smaller subset of that. Like it's not going
00:39to amount to if they all default more than like three hundred billion. It just doesn't seem like
00:44enough to, you know, cause a great financial crisis. Part two. So how bad is it? Well, and again,
00:51going back to the point, Matt, that that it doesn't have to be a great financial crisis. Part two,
00:56it doesn't have to be a major systemic risk for it to have a problem for other risk assets and
01:02for
01:02the credit markets, because, again, the stock market is still quite expensive. And when you have a credit
01:08event, it sucks liquidity out of the system. One of the things that helps the market stay at expensive
01:14levels is excess liquidity. And, you know, again, we have to remember that the mortgage back to
01:21security problem was only two or three trillion dollars only. But so it's not as it's not as tiny,
01:28I guess, as people try to portray, number one. And number two is that the one thing is that people
01:34keep talking about, well, it's just, you know, it's kind of a crisis of confidence, a liquidity
01:38mismatch. But I think the, you know, people talking about, you know, really smart people talking about
01:43cockroaches and the wheels coming off. And then, of course, the president of PIMCO saying that
01:48this is not just a crisis of confidence. It's a crisis of really bad underwriting. So with a
01:54market that really doesn't see price discovery, it still makes me quite nervous.
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