Have you ever seen The Big Short? If not, let me explain the scene that played in my head when Klarna (the Buy Now, Pay Later giant) announced its customer credit losses increased by 17%.
In the film, Dr Michael Berry is calling his client Lawrence Fields and reveals that when the mortgage rate on many of the Sub-Prime (shit) loans would rise in 07, and cause people to default on mass, and eventually cause the whole housing market to crash. And Lawrence couldn’t really believe it, saying “The Housing Market is rock solid.” Well it turned out that Michael was right, and made a lot of money by shorting the housing market. And right now? I feel like Berry.
Now, you might be thinking “Of course the market’s gonna decline, you ain’t visionary for thinking it.” But you are NOT thinking BIG enough. This ain’t gonna just be a recession. THIS WILL BE A BLOODBATH.
Klarna (and similar services) is ostensibly meant to be for larger purchases, like Sofas or Fridges. But now? When we live in a world where you can pay for your fast food “in 3 easy installments”, the market is obviously fucking terminal.
Another voice of dissent speaks up, “But the recent market volatility was just US tariff BS, it’s not a starting pistol for a new great recession.” The factors required for a market crash have been there for years. Anxiety over the tariffs just caused people to pee their pants, what the incoming collapse of repayments will do is cause a fucking shit storm localised in the ass cheeks of every investment banker.
And we all know what happened in ‘08 when the housing market collapsed. And mark my words, I will be proven right. And I’ll wish I was wrong.