Market Resiliency Watch: An Analytic Narrative Focused on Private Debt and US Regulations During 2008 and COVID

In 2008, the collapse of the housing bubble in the US would lead to the global stock markets suffering a crash that would leave several large investment banks bankrupt, millions out of jobs, and the world economy in shambles. Only 12 years later, a virus named COVID-19 would bring the next market crash along with the deaths of over 3 million people. The similarities between these two events and their causes, are not immediately clear. This paper will attempt to create an analytic narrative, tracking two key indicators based on the events of 2008, that will help analysts understand a common cause of notable stock market crashes. One part qualitative and one part quantitative, this analytic narrative will hopefully explain the meaning behind the Unite States’ rapidly inflating debt, and the complex regulatory system that has developed in the wake of the 2008 crisis. I will first focus on 2008 by analyzing private debt and the regulatory system during the Great Recession. I will then look forward to today. An analysis of current private debt levels, as well as the status of the regulatory system, will then be compared to the 2008 findings. Finally, I will look at a possible market disruptor, Student Loan Asset Backed Securities (SLABS), which is an asset class with many similarities to the mortgage-backed securities of 2008.