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Dear Readers,

Ever heard the term “Law of unintended consequences” before? I can tell you in my line of work, I’m often reminded of it.

Which you would expect given the amount of history I study. This involves constantly reviewing the news as it drops and relating it all back to the turning of the real estate cycle.

Most of the time, it reinforces the view that history is repeating and doing it on time.

And then all of a sudden, you see something that stops you dead.

The realization overwhelms you. It is a feeling of utter dread and irrevocable anger.

How could they possibly be this stupid…. again!?

Take a look at the following headline.
Source – Wall Street Journal

Cast your mind back to the absolute bottom of the post-2008 global financial crisis – which you and I know was the end of the previous 18.6-year Real Estate Cycle.

Around that time, because of the enormity of the crisis, we witnessed governments passing a slew of laws and regulations that barred banks across the globe from the type of lending and investing which many believed was behind the 2008 crisis.

Big banks – on Wall Street, London and elsewhere – were never to place so much risk into the global financial system again.

Well, here we are again.

Only, it isn’t the banks this time. Rather, the key protagonists are some of the shadiest, low-profile and aggressive fund managers on earth: private equity asset managers.

You simply will not believe the set-up I have just uncovered here. This newsletter could end up being one of the most important I have brought to you in years.

Because we are getting close to the end.

The big short.

There is a great movie from 2015 that has gone down in infamy, called “The Big Short”. Based around the events leading up to the global crash in 2008. I highly recommend it if you’ve never seen it.

I won’t labor the point, but the key scenes in that movie were based on the SFVegas conference held in Los Vegas in the early 2000’s. SFVegas is the annual gathering for the structured-finance industry.

At the time, Americans—even those with poor credit scores—were buying homes in droves and getting mortgages from banks with features like “no downpayments”. Banks packaged up those loans and sold them on to investors, who were betting that homeowners would not default in large enough numbers to risk their investment.

But the financial machine powering the boom broke down when real estate prices fell, and credit markets froze. This led to the collapse of Wall Street firms such as Lehman Brothers. The above movie covered this era of wild finance. The bottom line, however, was that it was never supposed to occur again, thanks to intervention by the US and other regulators.

Well, not if this year’s SFVegas conference has anything to say about it.

This past week, the convention halls at the Aria Resort & Casino on the Las Vegas Strip were packed with bankers and their clients. The hotel’s sky suites were booked. Citigroup bankers claimed to have set up more than 900 meetings. A panel on data centers proved so popular, attendees sat on the floor. Bank of America arrived with clients it had just taken on a ski trip to Park City, Utah.

At 10,000 people, it was the biggest ever SFVegas conference. The last time it boomed like this was the heady pre-crisis years of 2006 and 2007. Back then, mortgage bonds were selling like crazy, until these financiers crashed the U.S. economy and sent the global financial system to the brink.

Now, incredible as it may seem, structured finance is back.

Wall Street is once again creating and selling securities backed by everything. And I mean everything!

We are talking about corporate loans and consumer credit-card debt, lease payments on cars, airplanes, golf carts, and payments to data centers.

“It’s amazing to me,” said Lesley Goldwasser, a managing partner with GreensLedge, a boutique investment bank that focuses on structured credit. “I have watched this with absolute wonder.”

“Wonder”. Not the noun I’d personally use. New U.S. issuance of some of the most popular flavors of publicly traded structured credit hit record levels in 2024 and are expected to surpass those tallies this year. Collateralized loan obligations – remember them? – rose to $201 billion, also an all-time high.

Folks, that’s bad.

But it’s worse than that. Way worse in fact.

It’s old home day!

There has been a huge shift, unannounced and mostly ignored, between the lending activities of US banks and their private equity cousins. Today, those same banks are simply the middlemen between these fund managers and the debt markets. There is a huge appetite now for these asset managers to borrow capital, or secure it via high net wealth individuals, and then lend against it.

What’s really driving this trend is that big investors believe that these structured debt instruments are safe and offer more returns than government bonds.

The only way to now satisfy this demand is to basically buy up debt of all sorts. Take a look at the following headline.
Source – Wall Street Journal

I did say to you it gets worse. Here’s why. It’s the type of people involved, right at the mania phase of the current cycle too. I mentioned Lesley Goldwasser from GreensLedge above. She has attended the last 10 Vegas events. Previously, she was working at Bear Stearns in 2008 when it nearly collapsed and was sold to JPMorgan.

“I lost my firm, my job,” she said. “A lot of people blamed us.” Pray, do tell?!

Goldwasser and GreensLedge, which she joined in 2013, advise and arrange structured-credit deals. “It’s like Old Home Day,” she said about the conference. “I walk down the corridors, and bump into all of these people. Old friends.”

Friends, need I remind you, who brought the financial world to its knees. Who ruined millions of people’s retirement plans. Maybe even your own?

But then add to this cohort of former criminals’ debt specialists a new wave of young and up-and-coming fund managers working for the hottest names in the industry, such as Ares Management.

Felix Zhang, 35, who was a sophomore at Harvard in 2008, is the senior partner Ares sent with a 20-person team to the conference. Formerly an investment banker at Goldman Sachs, Zhang joined Ares in 2015 to help boost its private debt business. He was part of an exodus of investment bankers from that industry, chased out by tighter regulations.

Are you seeing how this is all adding up now?

Then there is 34-year-old Jason Pan, an analyst at PGIM, the investment arm of Prudential Financial, who came to the Aria to talk on a panel about data-center asset-backed securities. It was so popular that people had to sit on the floor.

Data-center bonds are backed by lease payments from companies that rent out computing capacity. It is estimated to cost about $3 trillion to build all the centers needed in the next five years, according to BlackRock. That prospect had many at the conference giddy with excitement.

“The growth feels exponential right now,” said Pan, a 34-year-old former actuary and recreational rock climber. Rock climber – of course.

I ask you to look at the descriptive terms used here. Like the good old days are here again. Nothing but blue skies await us. These people are financializing every single aspect of the US economy. And, recall, they are still buying residential and commercial property loans as well.

By 2022, private fund managers held over $1.5 trillion dollars of investors’ capital that was sitting idle. To charge fees on the capital, the fund managers needed to put it to work.

This has led to a flood of deals. Private equity firm KKR bought $7.2 billion of loans backed by recreational vehicles from the Bank of Montreal in December after agreeing in June to purchase from PayPal up to $44 billion of existing and future buy-now-pay-later loans.

Last month, Blackstone purchased $1.1 billion of credit card debt from the U.S. unit of Barclays.

Ares Management bought a $3.5 billion package of specialty loans from PacWest last summer before the ailing bank got sold.

Estimates of size of the total asset-based finance industry range from $25 trillion to $40 trillion. Private-credit executives say they ultimately hope to capture about one-quarter of that.

That could be up to TEN trillion dollars. The numbers are staggering.

Certainly, shareholders must be over the moon with the recent stock price movement throughout 2024.
Source – FactSet

That chart above tells me a concentration amongst a small select group of firms is underway. This means they will have greater influence across the US economy, not less, in the near future.

Maybe I have this all wrong though? Maybe, governments globally are across the risks here and will heed the lessons of 2008 via co-ordinated and targeted action to take some of the heat out of this lending?

The Global Financial Crisis (GFC) 2.0 is here

At one stage, there did seem there was some hope the risks had finally been acknowledged. Senate Banking Committee Chair Sherrod Brown asked the Federal Reserve and other regulators in November 2024 to assess risks that private credit poses to the U.S. financial system.

The Basel Endgame, Basel 3.1 banking regulations, which US bank regulators are attempting to implement, are designed to enforce stricter new rules governing the safety nets banks build under themselves. But in February 2025, UK regulators announced a delay to these changes until January 2027 to afford extra time to determine just what the US regulators would do.

And that’s because the Vice-chair of supervision at the Federal Reserve, Michael Barr, resigned in January. This was a position created after the 2008 financial crisis, amid the flurry of regulatory reform that followed. Trump can now fill this role with someone of his choosing.

We await news here, but if you need a clue, look at who Trump appointed as US Treasury Secretary, Steve Bessent: he is pro tariffs and tax reforms. So, it will likely be another yes-man or yes-women for Trump and his policies.

Frankly, it doesn’t matter who it is, it can be an AI chat-bot for all the difference it makes. We are officially in an era of deregulation.

Which means, sadly, the set-up for ultimate financial Armageddon and ruin is in place. Under the umbrella of less regulation, you have record amounts of debt and loans now mostly held in private hands.

A combination of the same cast of characters responsible for the first GFC event joined at the hip with 30-something year olds who have never experienced a land price-led recession in their adult years but will now lead the world straight into GFC 2.0.

With all this culminating at precisely the right time according to the history of the 18.6-year Real Estate Cycle.

After six years of screaming it from the bleachers I simply ask; can you see how this ends now?

This is not a ‘I told you so’ moment. I had no idea just how incredibly dangerous the debts were until now. Every person on earth should be demanding immediate action from authorities to recognise the threat to us all and step in to stamp it out.

The issue? No-one even sees it, let alone truly appreciate what it means.

But YOU can. You can be one of the few who does understand the danger here. In time it will mean a crash in the stock market of at least 50%. If you own bank stocks in your portfolio, such as some of those doing particularly well now, the fall in your net worth will be even greater.

But you can ensure you and your family are ready ahead of time. And the reason is you know you can trust the history of the real estate cycle to complete on time.

And that’s why your next step is to become our latest Boom Bust Bulletin (BBB) member. Let the BBB guide you on the inherent timing of the economy only knowledge of the land market can give you.

Each month this history and knowledge will be yours via monthly written editions and video postcards that will help explain the real estate cycle like never before. What I have shown you today is THE single greatest risk to the stability of the world, which isn’t the most stable to begin with currently.

We are going to have another GFC 2.0 happen soon.

Very, very soon. It can’t happen now, mind you. Am I an alarmist? Or simply a realist? Actually, I am neither. It is actually natural. The way we set up our economies naturally leads to a boom bust cycle. It’s the Law of Economic Rent in action. It’s something I teach my readers about.

The bill is now due.

Why am I only one of few seemingly able to put these pieces together to see the horror of millions of retirements ruined, the future of our children so abjectly threatened and our way of life about to be turned upside down? Why are you only finding out about all this via this newsletter?

The same reason almost 20 years ago our PSE members were explicitly told that this was how the end would come. And amazingly, here it is.

Knowledge of the real estate cycle is the only way you can rise above the dangers and secure your financial future.

Start learning it.

Sign up now.
Best wishes,
Darren J Wilson
and your Property Sharemarket Economics Team

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This content is not personal or general advice. If you are in doubt as to how to apply or even should be applying the content in this document to your own personal situation, we recommend you seek professional financial advice. Feel free to forward this email to any other person whom you think should read it.