, Columnist
What’ll Spark the Next Crisis? Here’s One Candidate
Lenders to subprime corporate borrowers are dropping their guard.
The party resumes.
Photographer: Marco Di Lauro/Getty ImagesThis article is for subscribers only.
Now that everything has been said about the 10th anniversary of the Lehman Brothers bankruptcy, it’s worth asking how close we are to the next crisis. In the market for corporate loans, investors have fulfilled at least one prerequisite: They’re dropping their guard.
The financial cycle has a lot to do with inattention. When something bad happens, people are careful for a while. Then if all is fine for long enough, they forget that bad things can happen. This false sense of security leads to precisely the kind of behavior that precipitates the next crash.