
The ECB just published a warning that connects two of the biggest risks in markets right now. If AI disappoints on its promised returns, private credit - which has been funding buildout - becomes a major source of financial system stress. They compared the $1.4trn US private credit market to the $1.5trn subprime mortgage market that triggered 2008. In its stress scenario: pension funds lose 5-6% of total assets. Insurers lose 4%. Banks barely feel it. The risk isn't in the banks this time. It's in your retirement fund.
