The Ledger · Medium — two to fifteen years

GP-14 One more crisis of the 2008 class

Status: OPEN

From The Rational Prophet (Book Four of The Laws of Game Theory)

The bet

The bet: Credit spreads blow past the level that has marked every systemic crisis of the modern era, while a central bank opens emergency facilities above five per cent of GDP.
Win: The spread closes above 1,000 basis points on any day, and emergency facilities exceed five per cent of GDP in at least one G7 state, inside the same four-quarter window.
Lose: The band closes without both conditions being met in the same window.
Expiry: Fifteen years from publication.
Check it: The ICE BofA US High Yield option-adjusted spread, published daily and free by the St Louis Fed as series BAMLH0A0HYM2; the balance-sheet reporting of the Federal Reserve, the Bank of Canada, the Bank of Japan, the Bank of England and the Eurosystem.

In protocol form

Word for word from Appendix D of the book, the Prediction Protocol, where this bet is entered as The crisis. References to sections (§) are to that appendix.

Universe: the credit series in §3.9 and the G7 central banks: the Federal Reserve, the Bank of Canada, the Bank of Japan, the Bank of England, and the Eurosystem on its consolidated balance sheet, published by the European Central Bank, for Germany, France and Italy.
Source: the ICE BofA US High Yield option-adjusted spread (series BAMLH0A0HYM2, daily and free); central bank balance-sheet reporting. See §3.9.
Definitions: of the 2008 class means both thresholds inside the same four-quarter window — the series in §3.9 closing above one thousand basis points on any day, and emergency facilities above five per cent of GDP in at least one G7 state; a balance sheet as a share of GDP is total assets on the latest reporting date divided by nominal GDP for the latest quarter published, at an annual rate, and for the Eurosystem the GDP is that of the euro area. The Bank of England publishes its total assets only with a long delay, so its ratio uses the GDP of the quarter that contains its balance-sheet date. Emergency facilities are the lending facilities that a G7 central bank announces, when it opens them, as emergency or crisis facilities, measured by the amount outstanding under them on a reporting date, as the bank publishes it, as a share of GDP on the same basis as the balance sheet; a facility whose outstanding amount is not published counts as zero.
Baseline: the level of the §3.9 series and each of the five central banks' balance sheets as a share of GDP.

Baseline at publication

Reading date of record: 10 October 2026

What is recorded: High-yield spread (BAMLH0A0HYM2) · total assets as share of GDP: Federal Reserve, Bank of Canada, Bank of Japan, Bank of England, Eurosystem
Value at publication: Spread 3.15%, or 315 basis points, on 8 October 2026, the latest value published · total assets as a share of nominal GDP at an annual rate: Federal Reserve 20.7% (7 October 2026) · Bank of Canada 6.9% (7 October 2026) · Bank of Japan 90.7% (30 September 2026) · Eurosystem 36.1% of euro-area GDP (2 October 2026) · Bank of England 28.2% (30 June 2025, the latest total it had published, against GDP for that quarter); the others against GDP for the second quarter of 2026, the latest published (read 10 October 2026)

Author’s probability 90% that this bet scores HIT. Registered on 10 October 2026.

Sources

Not investment advice. The bet describes what the book expects to happen; nothing here is a recommendation to buy, sell or hold anything.

Last reviewed 10 October 2026