--- title: Other Signs of the Apocalypse description: Are we seeing signs of another financial crisis? Explore the eerie similarities between 2008 and today's AI-driven market risks. image: https://blog.citydifferentinvestments.com/hubfs/Signs%20of%20the%20(1).png --- [![City Different Investments](https://blog.citydifferentinvestments.com/hubfs/raw_assets/public/Custom%20Coded/images/CDI-Logo.svg "City Different Investments")](https://citydifferentinvestments.com/) Menu - [Home](https://citydifferentinvestments.com) - About - [Our Story](https://citydifferentinvestments.com/our-story/) - [People](https://citydifferentinvestments.com/people/) - [Our Commitment](https://citydifferentinvestments.com/community-commitment/) - [Careers](https://citydifferentinvestments.com/community-commitment/) - [Strategies](https://citydifferentinvestments.com/strategies/) - [Fixed Income](https://citydifferentinvestments.com/strategies/fixed-income/) - Municipal Bond - [Short-Term](https://citydifferentinvestments.com/strategies/fixed-income/short-term-municipal-bond/) - [Limited-Term](https://citydifferentinvestments.com/strategies/fixed-income/limited-taxable/) - 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I know I’m a bond guy, and we’re predisposed to see glasses as half empty. BUT, I’m starting to worry even more than I did in August that the markets are starting to rhyme with 2008. [Back in that August post](https://blog.citydifferentinvestments.com/market-rhyming), we noted the many parallels between today’s markets and those of 2007–2008.  ![Copy of JVE acquisition blog (12)](https://blog.citydifferentinvestments.com/hs-fs/hubfs/Copy%20of%20JVE%20acquisition%20blog%20(12).png?width=1600&height=500&name=Copy%20of%20JVE%20acquisition%20blog%20(12).png) ![Screen Shot 2025-10-27 at 9.10.42 AM](https://blog.citydifferentinvestments.com/hs-fs/hubfs/Screen%20Shot%202025-10-27%20at%209.10.42%20AM.png?width=611&height=239&name=Screen%20Shot%202025-10-27%20at%209.10.42%20AM.png) One key difference we highlighted: we hadn’t yet seen signs of excessive leverage. Well… in my estimation, that’s changing (and *fast*). The shift in my thinking came while reading Andrew Ross Sorkin’s new book, *1929*. As he’s been promoting it, he’s raised some uncomfortable parallels that stuck with me. I’ve always been a fan of ARS’s work — *Too Big to Fail* remains one of the best breakdowns of the 2008 crisis, and *Billions* is a favorite show of mine. Each gave me a favorite quote (though the *Billions* one of them isn’t printable here).  In *Too Big to Fail*, when AIG executives were panicking over how to post collateral for the government loan, one older exec asked, “What about the vault?” — referring to the room holding bearer bonds they could use as collateral.  It’s a great reminder of how much hidden leverage existed then… and how easy it was to miss. Today’s version of that hidden leverage might be sitting inside the AI boom. Barron’s [recently nailed it](https://www.barrons.com/articles/nvidia-microsoft-openai-circular-financing-ai-bubble-5d9a4e7c?gaa_at=eafs&gaa_n=AWEtsqc0UPHW0Z3BqMdig-8mQMxQkeSOf25itjVSQQimBDZkSzfkQ4W7D0CV&gaa_ts=68efbe1e&gaa_sig=9KFmFAMsj2IhlJ0SWs2-6_qMdavqW-JHhVJu3N5hmMpWP5j9WbjfO67comIekwOtHJYbUKXAD69fK9BJ7igdCg%3D%3D) with the headline: *“Nvidia, Microsoft, and OpenAI: This Chart Captures AI’s Circular Financing.”* “Since Nvidia [agreed last month](https://www.barrons.com/articles/nvidia-stock-price-openai-deal-9764eb1b?mod=article_inline) to invest $100 billion in its customer OpenAI, investors and analysts who follow artificial intelligence have awakened to that industry’s [circularity](https://www.barrons.com/articles/nvidia-ai-openai-coreweave-data-centers-af7a9f70?mod=article_inline).  [Nvidia](https://www.barrons.com/market-data/stocks/nvda?mod=article_chiclet) puts money into OpenAI. OpenAI and its data center partners buy chips from Nvidia. Other circles encompass [Microsoft](https://www.barrons.com/market-data/stocks/msft?mod=article_chiclet), [Oracle](https://www.barrons.com/market-data/stocks/orcl?mod=article_chiclet), and the data center firm [CoreWeave](https://www.barrons.com/market-data/stocks/crwv?mod=article_chiclet%22%20%5Ct%20%22_blank)**.**  The circles remind some on Wall Street of the wash trades [between venture capital-backed start-ups](https://www.barrons.com/articles/SB952731611195093506?mod=article_inline) before the first internet bubble burst 20 years ago—or the guy who asks you to lend him a $20 bill so he can buy you a beer. [AI skeptics](https://www.barrons.com/articles/openai-amd-deal-nvidia-ai-01f3dee8?mod=article_inline) are chortling. Since a picture is worth a thousand words, see below:  ![](https://blog.citydifferentinvestments.com/hs-fs/hubfs/undefined-Oct-27-2025-03-07-24-6564-PM.png?width=936&height=661&name=undefined-Oct-27-2025-03-07-24-6564-PM.png) Sources: Barron's If that doesn’t make you pause… it should. Things are starting to look familiar. My memory of 2007–2008 is still vivid — funny how certain kinds of pain stick with you. I always thought humans were wired to forget pain (otherwise, childbirth wouldn’t happen more than once). But in finance, some pains never fade.  During the crisis, derivative exposure was so widespread and opaque that no one understood who was on the hook for what. The result? Capital markets froze.  I remember sitting next to a money fund manager as she tried to figure out which municipal bond insurer was about to lose its AAA rating.  Not pleasant times. Back in our original blog, we said: “Most post-mortems on the Great Financial Crisis boil it down to two culprits: too much **market risk** (duration mismatches, leverage, liquidity illusions), and **credit risk** that looked manageable until it suddenly wasn’t. The packaging changed... but those two variables were always at the core.” AI’s circularity seems to wrap both of those risks into one neat, shiny package. Financial markets are endlessly inventive when it comes to repackaging risk — which is exactly why they need guardrails. Then again, what do I know? Like I said, I’m just a bond guy… we’re born waiting on the other shoe to drop. --- ***IMPORTANT DISCLOSURES*** *The information contained in this communication has been designed for general informational, illustrative, and educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security. 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