Blain’s Morning Porridge Oct 20th 2025 – Mutant Credit Cockroaches? Whatever next?

Mutant Credit Cockroaches? Whatever next?“Smart men go broke three ways: ladies, liquor and leverage.”Markets feel increasingly nervous. Although someone has cranked up the party music to 11, and the euphoria is still pouring, concerns about banking and loan exposures are rising. If there is a wobble, then it’s likely to be leverage on leverage that sees a bunch of private credit lenders in trouble.What will this week hold for markets? Trade wars? Peace deals? Inflation (maybe not as the US Govt is still in Shutdown)? A bank run? An invasion of mutant credit cockroaches? Who knows, who can tell..? This is heaven, this is hell… Reading through the financial press, it now feels there are more negative outlooks than positive.. Every financial market scribbler is predicting some kind of shocking sell-off in overpriced markets. Whateva…If I am going to remain a contrarian… I may have to go out and find something positive to write about?How about gold? According to reports, Global Banks now hold more gold than US Treasuries. That is not because of the “Great Debasement Trade” all the crypto-shills keep screaming in our faces as they seek to justify buttcon as the only alternative to fiat currencies which are “tools of financial repression by evil governments”. Strait out of Libertarian Money 101, and utter bollchocks.Nobody has a greater belief in fiat currencies than Central Banks, but they are holding more gold because they are acutely aware of the current ructions in global markets, and they know the dollar’s role is global trade is evolving (ie devaluing and will lessen), and gold is a store of value. Simple as. Fiat money works. Simple as. Nothing in life is perfect – but some things work because they work. Central banks are holding gold because they know uncertainty and instability may roil markets – and they are being brutally realistic about how the world order is changing, and changing fast.However, if there is one thing I am sure about, it is the street is not listening to dull, boring, predictable central bankers.. they should, but seldom do. What does get the market’s attention as dramatic moments of hi-drama and plunging red lines on the charts – by which time it’s definitionally too late!In times of rising uncertainty, the big issue that scares the smarter minds in markets most are consequences. If one thing breaks… what else will fail in its wake?

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