Council on Foreign Relations 90d ago

This episode dives into how the opaque growth and structural risks in private credit, combined with global supply shocks and market stress spurred by the Iran war, are creating a uniquely fragile and unpredictable economic landscape. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) - https://www.cfr.org/experts/sebastian-mallaby Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) - https://www.cfr.org/experts/rebecca-patterson We discuss: 1. The rapid rise of private credit, its lack of transparency, and why recent bankruptcies are raising red flags. 2. How $10 billion in redemption requests were submitted to major private credit funds in the first quarter of 2026—including major funds Apollo, Ares, and Blackstone. 3. Why this moment isn’t a repeat of 2008, but still presents real risks due to government debt levels and the lack of safety nets for private credit. 4. As Rebecca Patterson, CFR senior fellow, puts it: “No one has any idea what’s going to happen—and that’s exactly the challenge right now.” 5. Current structural risks in private credit, including liquidity mismatches, redemption limits (“gates”), and growing exposure to retail investors. 6. Why financial markets are behaving unusually, with rising bond yields and weakening traditional safe-haven assets. 7. How central banks are stuck between fighting inflation and supporting growth, creating a far more complex policy environment than past crises. 00:00 - Introduction to The Spillover 00:01:30 - Today’s Topics: War in Iran, Private Credit, & AI 00:02:15 - Geopolitics: Duration & Global Shortages 00:04:21 - Policy Response: Subsidies & Energy Shocks 00:04:48 - Monetary Policy: Debt & Government Bonds 00:06:49 - Market Volatility: Fragile Four Economies 00:07:54 - Central Banks: Growth vs. Inflation Risks 00:10:00 - Financial Stability: Bond Market Function 00:14:02 - Private Credit: Market Run Risks 00:16:33 - Liquidity Mismatch & Redemption Gates 00:22:23 - Transparency & Mark-to-Market Issues 00:24:58 - Technology: SAS Apocalypse & Agentic AI 00:30:31 - Economic Outlook: Subprime Comparisons 00:34:45 - Fun Facts: Demographics & Crypto News Mentioned on the Episode: Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House - https://www.penguinrandomhouse.com/books/752231/the-infinity-machine-by-sebastian-mallaby/ Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released at http://cfr.org/newsletters. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.