{"id":372265,"date":"2026-04-10T02:28:17","date_gmt":"2026-04-10T02:28:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/372265\/"},"modified":"2026-04-10T02:28:17","modified_gmt":"2026-04-10T02:28:17","slug":"were-making-assumptions-about-the-economy-that-could-prove-disastrously-wrong","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/372265\/","title":{"rendered":"We\u2019re making assumptions about the economy that could prove disastrously wrong"},"content":{"rendered":"

\u201cThings that were previously held to be sort of unassailable truths are now coming into question,\u201d a16z partner David Ulevitch told me last month<\/a>. He was making the point that previously uninvestable sectors \u2014 like hardware, long ignored by venture capital firms \u2014 were becoming attractive because of underlying technological shifts. But the last few weeks have shown that the gloomier inverse is also true.<\/p>\n

A generation of kids who learned to code are being supplanted before they\u2019ve even hit their 20s. Enterprise software was the most durable business model of all time, until AI arrived. Loans to those companies were underwritten on the basis of revenue with the assumption that profits would materialize; they didn\u2019t<\/a> and cans were kicked. In 2007, the thinking was that a mortgage in Montana didn\u2019t have anything to do with a mortgage in Maine; oops.<\/p>\n

Here\u2019s another one to watch: The fastest-growing type of bank lending<\/a> over the past decade has been loans to private-credit firms, secured by the value of those firms\u2019 own loans. That $1.3 trillion pot is, as Advent\u2019s managing partner neatly told me<\/a> a while back, \u201cleverage on leverage.\u201d<\/p>\n

\"Bank<\/p>\n

The portfolios are diversified, and banks lend 40 or 50 cents on the dollar, which leaves some room for things to go badly before they lose money. But that\u2019s what lenders said about mortgage bonds in the run-up to 2008. They built creaky securities to withstand losses of 10% or so, then watched prices fall by twice that or more.<\/p>\n

For the moment, concerns about liquidity in private credit \u2014 retail investors want their locked-up money out \u2014 have obscured the more important question: are some of the underlying loans bad? <\/p>\n

We\u2019ll ask them and hundreds of other CEOs next week about assumptions we\u2019re making today that could prove disastrously wrong. Risk underwriting has the same problem as AI models: garbage in, garbage out.<\/p>\n","protected":false},"excerpt":{"rendered":"\u201cThings that were previously held to be sort of unassailable truths are now coming into question,\u201d a16z partner…\n","protected":false},"author":2,"featured_media":372266,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":{"0":"post-372265","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/372265","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=372265"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/372265\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/372266"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=372265"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=372265"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=372265"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}