A Looming Debt Crisis

It's a fact that excessive debt fuels financial crises, and by extension, recessions.

The 2008 Financial Crisis, for example, was rooted in over-leverage within mortgage-backed securities; The Asian Financial Crisis between 1997-1998 followed years of borrowing across foreign currencies; even the European Sovereign Debt Crisis was founded on member states unable to repay or refinance their government debt.

What the Saks filing reveals

The evidence is irrefutable. So, when I saw a major brand like Saks file for its Chapter 11 recently – proceeding other, major collapses late in 2025, vis-à-vis Tricolor and First Brands – digging into the numbers was a must.

The results, as readers can imagine, were unsurprising. $3.4bn in total debt obligations, compared to its last revenue posting of $1.6bn in Q2, is beyond over-leverage. It's a sign that the US economy and its constituent parts are teetering into old, bad habits.

Why bankruptcies are becoming commonplace

Jamie Dimon went on the record last year to call out the underlying "cockroaches" in our economy, and when the CEO of one of the largest lenders globally raises concern, regulators have to listen.

Bankruptcies – in fact, "mega bankruptcies", as this brilliant piece by Fraser Tennant calls it – are becoming commonplace in this current economic climate. Corporations have faced eroding customer demand from persistent high inflation, debt repayments tightening from infrequent Federal interest-rate cuts, and indeed, perhaps worst of all, loosened lending standards, giving debtors access to credit when they had no room to take it on.

What regulators and lenders must do

The fact of the matter is, we are staring in the face of a looming debt crisis. And without regulatory intervention, particularly of our more heavy-handed non-bank lenders and other private-credit providers, defaults will no doubt continue to cascade – posing serious threats to both those financial institutions and the global economy as we know it.

Saks is just the latest symptom of an economic prognosis that, where we currently stand, ends in crisis. Despite their more handicapped state, it's now critical that regulators actively monitor looming insolvency risks, lenders tighten their standards, and the Fed continues to hedge these trends with its more conservative approach.

Amidst geopolitical uncertainties, an increasingly risk-off investor sentiment, and a series of big brands making headlines for all the wrong reasons, we must remain on high alert. The current outlook ahead is far from positive – and it's on all constituents of our economy to enact a change.