Here we go again. The financial titans of Wall Street—those self-anointed masters of the universe who couldn't manage a lemonade stand without a taxpayer-funded subsidy and a three-tiered leveraged buyout—are currently shivering in their bespoke loafers. The news cycle, in its relentless pursuit of documenting the obvious, tells us that both traditional banks and the 'shadow' giants of the private markets are officially on 'cockroach-watch.' It is a charmingly apt metaphor for an industry that thrives in the dark, feeds on the waste of the real economy, and scatters the moment someone accidentally flips on the light of basic fiscal sanity.

The fear, we are told, is of 'lending blow-ups.' In the sanitized language of the financial press, a 'blow-up' sounds like a minor pyrotechnic mishap at a child’s birthday party. In reality, it is the sound of the 'private credit' boom—a $1.7 trillion shadow-banking playground—finally realizing that you cannot actually print money out of thin air indefinitely without someone eventually asking for their lunch back. For years, these private-market giants have operated in a regulatory vacuum, bragging about their 'superior returns' while ignoring the fact that those returns were predicated on interest rates being pinned to the floor by central banks who are just as clueless as the speculators they enrich.

Now that the cost of capital has returned to something resembling reality, the cracks are appearing. And where there is one crack, as the 'cockroach' theory suggests, there are thousands of disgusting little secrets scurrying behind the drywall of the global economy. The genius of the modern financial system is its ability to hide risk like a toddler hiding broccoli under a rug. But the rug is now bulging, the stench is becoming unbearable, and the 'sophisticated investors' are suddenly realizing they’ve been dining on a buffet of high-interest garbage.

Predictably, the political theater surrounding this impending implosion is as exhausting as it is useless. On the Right, we will hear the usual symphony of moronic grunting about how any attempt to peek inside the books of these private lenders is an 'assault on the free market.' They will argue that the 'smartest guys in the room' should be allowed to run their multi-billion-dollar shell games into the ground in peace, right up until the moment they demand a bailout to prevent a 'systemic collapse.' It’s a wonderful philosophy: privatize the gains, socialize the losses, and blame the poor for wanting health insurance.

On the Left, the response is equally performative and hollow. We will be treated to a series of sternly worded letters and committee hearings where politicians—whose campaigns are funded by the very private equity firms they are pretending to grill—will demand 'transparency.' They will offer up a slurry of new regulations that will do nothing but create ten thousand new jobs for compliance lawyers, while the underlying rot remains untouched. They talk about 'holding Wall Street accountable' with the same sincerity a professional wrestler shows when he vows to destroy his opponent in the next pay-per-view event. It is all a dance, a pantomime designed to distract the plebeians while the exits are quietly locked.

The truly pathetic part of this 'cockroach-watch' is the feigned surprise. We are led to believe that the sudden fragility of these lending markets is an unforeseen consequence of 'shifting economic headwinds.' This is a lie. The fragility is the feature, not the bug. The system is designed to be a perpetual motion machine of debt, and like all such machines, it eventually succumbs to the laws of friction. The 'private credit' market was sold as a safer alternative to traditional banking, a way to keep risk off the balance sheets of the big banks. But risk doesn't disappear; it just changes clothes and moves to a neighborhood where the police don't patrol.

As these lending blow-ups begin to ripple through the system, the victims will, as always, be the people who didn't even know they were playing the game. It will be the pensioners whose funds were 'diversified' into these private credit traps, and the employees of companies that were gutted by debt-laden buyouts. Meanwhile, the fund managers who oversaw this disaster will retreat to their Hamptons bunkers, clutching their management fees and lamenting the 'unpredictable volatility' of the markets.

Humanity’s capacity for repeating the same fiscal delusions is truly breathtaking. We are currently watching the slow-motion collision of greed and gravity, and our only response is to argue about which flavor of incompetent politician should oversee the cleanup. There is no 'fix' for a system that views debt as a commodity and common sense as an obstacle to quarterly growth. So, keep watching for the cockroaches. But don't be surprised when you realize that the entire house is built out of them.