On 15 September 2008, Bobby Seagull arrived at his Canary Wharf office before 6am - punctual for what would be his last day as a Lehman Brothers trader. He had the foresight to bring a shopping trolley and empty his £300 vending machine card on chocolates, correctly reasoning that if the bank collapsed, his snack fund would become as worthless as the bank's mortgage-backed securities.
Now, with multiple warning lights flashing on the world economic dashboard, some wonder if we're in the foothills of another financial crisis. This time, the canary in the coal mine appears to be private credit - a $2.5 trillion shadow banking system that has grown from nothing in 15-20 years. Sarah Breeden, deputy governor of the Bank of England, notes there "are echoes of the global financial crisis" with "leverage on leverage on leverage" creating what she calls a "layer cake" of debt that nobody fully understands.
Mohammed El-Erian of Allianz says the similarities with 2007 "keep me awake at night," pointing to "clear fragilities in the financial system that are not properly appreciated." Larry Fink of BlackRock, whose firm has limited withdrawals from private credit funds, disagrees entirely: "I don't see any similarities at all. Zero."
Add to the mix oil prices above $100 a barrel following the closure of the Strait of Hormuz, which Fatih Birol of the International Energy Agency calls "the greatest energy security crisis in history," more serious than 1973, 1979, and 2022 "put together." Meanwhile, over $2 trillion has poured into AI investments in what Bill Gates calls "a frenzy," with 37% of the S&P 500's value concentrated in just seven companies.
And if policymakers need to respond, they'll find their toolkit depleted. UK government debt has climbed from under 50% of national income in 2008 to nearly 100% today. The IMF warns that "policy space has been eroded" and "international cooperation is weaker" than in previous years - making it harder for countries to coordinate the way they did when Gordon Brown helped lead the global response in 2008.
Sarah Breeden offers a note of optimism: banks are "much more capitalised now" than in 2008, with higher reserves of cash. "I don't think if we get stressed it will be on the same scale," she says. El-Erian agrees - to an extent: "We're not exactly in 2008 territory because I do not believe that the banking system, and therefore the payments system, will freeze. But I believe we are in a world where the risk of a financial accident is high."