On September 15, 2008, Bobby Seagull arrived at his office in Canary Wharf, one of London’s financial centers, shortly before 6 in the morning.
It was the last time he would have to worry about being on time. Expertise as a financial operator at Lehman Brothers, an American bank that was going through serious turbulence.
“We had seen on the news on Sunday from the US that they were filing for bankruptcy. We weren’t very clear about what the implications would be for us in the UK. So they just told us to turn up as usual.”
At first it was “chaos,” says Seagull. “There was no direct communication with our American colleagues. They didn’t respond to calls. Some people started taking things, like pictures off the walls, saying, ‘They owe me shares.'”
Seagull had a feeling that a disaster could strike and was well prepared.
“In fact, I bought a shopping cart on the last day. And, interestingly, that summer people were already feeling a little uneasy. I emptied my vending machine card, which had about 300 pounds (about US$500), buying candy, because I realized that if the machine or the bank collapsed, that card would no longer work.”
Seagull, along with thousands of his colleagues, left there with his professional career stuffed in a cardboard box.
It was a defining image of the global financial crisis, which caused thousands of companies to fail and millions of people to lose their jobs.
It gave way to one of the longest and deepest recessions since World War II.
There are now several warning signs flashing across the global economy dashboard leading some to wonder if we are in the early stages of another financial crisis.
What could the next crisis be like? And, with international relations in 2026 in a more tense state than in 2008, will those responsible for economic policy even have the tools to resolve it?
early warning sign
Before the crisis that hit the global economy in 2008, there were already warning signs in some parts of the financial system.
In 2007, subprime mortgage investments in the United States began to deteriorate as homeowners struggled to pay.
Funds managed by Delight in Stearns, BNP Paribas and other banks had to freeze investors’ ability to withdraw their money or liquidate the funds entirely.
These problems were early warning signs of what turned out to be a very deep financial crisis.
As uncertainty spread, even banks stopped lending to each other for fear of not getting their money back, leading to the so-called “credit crunch” (credit rating crunch, in English). This triggered a global financial crisis.
Let’s go back to the present.
Several lending funds have declared losses or restricted investors’ ability to withdraw their money.
BlackRock, Blackstone, Apollo World Management and Blue Owl Capital have faced withdrawal requests for billions of dollars from private credit funds, institutions that offer an alternative to traditional banking.
Banking regulators and financial sector veterans recognize the similarities.
Sarah Breeden is Deputy Governor of the Bank of England, with specific responsibility for financial stability. He claims that the new world of private credit has grown rapidly, has not yet been tested by adverse financial conditions and is little understood.
“There are echoes of the global financial crisis in what we are seeing now,” he says. “Private credit has gone from practically nothing to two and a half trillion dollars in the last 15 to 20 years. There is leverage (borrowed money), there is opacity, there is complexity and there are interconnections with the rest of the financial system. All of this is reminiscent of what we saw in the global financial crisis.”
He is also concerned that much of the money lent by private credit funds has in turn been financed with debt, creating layers of indebtedness — or leverage — that can amplify any losses.
“There’s leverage on top of leverage on top of leverage. What we want to make sure is that everyone understands how that ‘layer cake’ of debt builds up.”
Mohamed el Erian, senior economic advisor at the German financial firm Allianz and former CEO of PIMCO, the world’s largest bond investor, agrees that the risk of another crisis is underestimated.
“There are certain similarities with 2007 that keep me up at night. These similarities are clear fragilities in the financial system that are not being adequately valued.”
In fact, he affirms that it was the restrictions imposed on banks after the crisis that gave rise to this new private credit market.
Banks were forced by new regulations to be more prudent, so bank-mimicking funds emerged to fill the gap.
“Suddenly the system is flooded with private creditors willing to lend money to companies. Companies see all this money available and, of course, when there is too much money, people make mistakes.”
It poses a worrying scenario: “Suddenly everyone who lends you money wants it back at the same time. And the next thing that happens is that something that started as a very good idea grows into something that puts stability at risk and, instead of benefiting the economy, threatens to pull the ground out from under its feet.”
But Larry Fink, head of the world’s largest asset manager, BlackRock, recently told the BBC that he disagrees that private credit represents a threat to the global economy.
The problems affecting some funds represent a small fraction of the entire market, he says.
BlackRock itself is one of several firms that have limited withdrawals by restless investors from private credit funds.
But Fink insists there is no chance of a repeat of the financial trauma of 2007-2008, as he believes today’s financial institutions are safer.
“I don’t see any similarities at all,” he says. “None”.
Still, some have compared what is happening in private credit to a slow withdrawal of deposits from a bank.
There may not be lines outside Northern Rock branches, as was the case in 2007, but there is a line of people wanting their money back.
The cost of energy
Another way history could be repeating itself is through rising energy prices.
That was a component that contributed to the crisis of 2008. The price of Brent crude oil rose from around US$50 per barrel in early 2007 to US$100 at the end of that year, finally reaching a high of US$147 in July 2008.
This increase was driven by strong demand from a rapidly expanding China, but also, in part, by geopolitical tensions related to Iran.
Today, oil prices have surpassed $100 a barrel, with warnings that they could rise further if there is no quick resolution to the conflict with Iran, which has effectively closed the world’s most important energy artery through the Strait of Hormuz.
Fatih Birol, executive director of the International Energy Agency, has called the ongoing closure of the Strait of Hormuz “the largest energy security crisis in history,” insisting that it is “more serious” than the previous energy crises of 1973 (when some Arab countries imposed an oil embargo on the West), 1979 (caused by the Iranian revolution) and 2022 (Ukraine) “combined.”
That level of pessimism is not yet reflected in current oil prices.
Although it is up more than 50% since before the conflict with Iran, it is still well below the levels seen before the last financial crisis, when oil reached US$147 per barrel (in current terms, about US$190 per barrel).
And stock markets are currently at or near peak levels, nothing like the oil shock of 1973, which caused US stock markets to drop 40% from peak to trough.
Sarah Breeden of the Bank of England predicts that stock markets will fall at some point as they do not fully reflect the many current risks to the global economy.
But for now, markets seem to assume that peace will eventually prevail, and many large companies continue to make more profits than investors expected.
However, an energy shock is part of the Bank of England’s list of risks that Breeden says could materialize simultaneously.
“What happens if several of these risks materialize at the same time?” he asks.
“A great macroeconomic shock, added to the loss of confidence in private credit, while the valuations of artificial intelligence and other risk assets are readjusted… what happens in that scenario? And are we prepared to face it?”
Artificial intelligence
And there Breeden points out another risk that adds to this possible cocktail of disaster.
More than $2 trillion has flowed into investments in artificial intelligence, in what Microsoft Invoice co-founder Gates calls a “frenzy” and others describe as a bubble.
This has boosted the valuations of a few mega companies to the point that 37% of the value of the largest US stock index, the S&P 500, is now concentrated in just seven companies (including Nvidia, Microsoft, Google parent Alphabet Inc. and Amazon, which are also among the largest investors in AI infrastructure).
That means that the millions of people who invest in index funds are allocating a large portion of their savings to artificial intelligence, whether they want to or not.
A sharp sell-off of shares in these companies would hit savers – including individuals and pension funds in the UK – and would inevitably shake business and consumer confidence.
The bursting of the dot-com bubble, which peaked in March 2000, helped trigger a recession in 2001.
The Nasdaq technology index fell almost 80% between March 2000 and October 2002, destroying billions in market value.
That collapse of web companies, huge investor losses and widespread layoffs in the technology sector led to a broader slowdown in the economy.
financial fire
There is also the question of how effectively policymakers could contain a “financial fire.”
In 2008, governments finally brought the chaos under control by pumping billions of public money into major banks to prevent their collapse, and by increasing guarantees on bank deposits to prevent savers from withdrawing their money.
At the same time, major central banks cut interest rates, including a rare coordinated cut in the fall of that year.
But some fear those options no longer exist.
In 2008, the UK government debt It was equivalent to less than 50% of the national income. Today, that figure is close to 100%, after large interventions in 2008 to rescue banks, wage support during covid-19 and energy subsidies in 2022 after Russia’s invasion of Ukraine.
Therefore, the government’s ability to borrow is much more limited.
Mohamed el Erian uses the analogy of a fire department that has run out of water.
“Governments and central banks have had to respond to crisis after crisis and, in doing so, they have reduced their capacity to respond,” he warns.
That sentiment is shared by the International Monetary Fund (IMF), which earlier this month stated that the world’s multiple economic challenges come at a time when “policy room for maneuver has narrowed.”
There is also the deterioration of international relations.
In the midst of the 2008 crisis, national leaders met in a series of emergency meetings, including a crucial one in Washington in November of that year, where they agreed on a plan to pump billions into the banks; and another in London in April 2009.
Gordon Brown, the then British prime minister who helped lead the international response, has claimed that strong global cooperation was what prevented the crisis from turning into a depression.
All that could be more difficult today, amid major disagreements among rich countries over trade policy, NATO and even the status of Greenland.
Writing earlier this month about the risks of a financial crisis, the IMF warned that “international cooperation is weaker” now than in previous years.
The implication, perhaps, is that in a time of war in Europe, trade tensions between the United States and China, and President Donald Trump’s “America First” policy, it will be harder for governments to put aside their differences and sit down at the crisis table as they did in 2008.
And Gordon Brown has repeatedly warned about the dangers of an isolationist, “us versus them” approach to international affairs.
Financial fragilities
Sarah Breeden, however, offers a note of optimism, arguing that banks have more capacity to absorb shocks than in 2008.
He takes comfort in the fact that banks are “much more capitalized now”; That is, they have greater capital reserves, instead of depending on borrowed money.
“I don’t think that if there are tensions, they are of the same magnitude,” he says.
Mohamed el Erian agrees, to a certain extent.
“We are not exactly in the 2008 scenario because I do not believe that the banking system – and, therefore, the money of depositors and the payment system – is at risk. But we are in a moment similar to 2008 in the sense that the financial system could aggravate the economic fragilities that lead us to a recession.”
And if that happens, there is no doubt who will suffer the most.
“Economic and financial frailties tend to expose the most vulnerable segments of the population. They are the ones with the least capacity for resistance and tend to be the hardest hit.”
Bobby Seagull, now a mathematics professor, says financial markets are even more complex today and you never quite know what unpleasant surprises lurk beneath the surface.
“It’s like you’re passing financial instruments from one person to another without really knowing what’s inside. And I think the worrying thing is that if something happens, the situation escalates very quickly in the financial markets. And that’s where you don’t want to be the last person holding onto that package.”
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