The global economy is terrified of the consequences of high oil prices, but a separate banking crisis may be here already.

For years economists have warned about the rise of so-called shadow banks. These are private businesses that take in investments and loan out money. But because they don’t take deposits from the general public, they are not regulated as strictly by the government. The shadow-banking system is also dark and murky—not in the sense that it is enmeshed with the criminal underworld but that it doesn’t have to report its activity as much as regular banks do.

The rise of shadow banks is a direct result of the 2008 financial crisis. To stop a repeat crisis, governments put complicated regulations on banks. To get around these regulations, money surged into these shadow banks.

Private credit funds are one of the most important parts of this system. They pool money from investors and loan it to businesses. The amount of money invested in private credit assets has grown from $4 trillion in 2008 to $16 trillion today, according to the Telegraph. But other shadow banking institutions invest in government bonds, mortgages, cryptocurrencies and often more complex investment vehicles.

Now they are so big that a crash could bring down the “normal” banking system. And the first crashes have already happened.

Market Financial Solutions (mfs), one of these shadow institutions, collapsed last month. It specialized in investing in buy-to-let mortgages and other property-based lending in the United Kingdom. After bankruptcy, it is being investigated for fraud; its founder and chief executive, Paresh Raja, reportedly fled to Dubai, while many of his colleagues fled elsewhere.

Barclays and Santander, two of the UK’s biggest banking companies, could lose $1.3 billion in the collapse. Was mfs alone in breaking the rules? Or is shadow banking hide more skeletons?

The scale of the losses in the two mainstream banks also surprised investors. How much money from mainstream banking giants has been invested in potentially dodgy firms? Deutsche Bank reported that it has invested $30 billion in private credit. United States banks have loaned around $300 billion to private credit providers, and British banks $230 billion.

The big question is, is mfs a one-off or the first domino to fall?

One very bad sign is that Apollo Global Management, one of the world’s largest alternative asset managers, announced this week that investors could not pull their money out. If it hadn’t, it would have lost over 10 percent of its funds as investors ran to the exit. Its shares are down 24 percent since the start of the year. And it is not alone.

• BlackRock’s $26 billion hps Corporate Lending Fund has refused half of the requests from investors to withdraw cash over the first quarter of 2026.
• Ares Strategic Income Fund has limited withdrawals.
• Even before mfs went under, Blue Owl, one of the largest private credit institutions, stopped allowing investors to withdraw their cash all at once, instead promising to pay in installments.
• Moody’s downgraded another of these private funds, fs kkr Capital, to junk status on Monday.

Mark Brunson, head of Germany’s Federal Financial Supervisory Authority, warned: “Financial companies here in Germany are closely linked to foreign private debt markets” and “sooner or later there will be an explosion.”

The issue isn’t just knock-on effects from mfs. Private credit lent heavily to software companies—the industry soaked up a fifth of all private credit loans—and business service companies. That now looks like a really bad investment. Artificial intelligence is a jack-of-all-trades, replacing a lot of specialized software.

Many funds were also burned when Tricolor, which makes subprime auto loans, and First Brands, which makes car parts, collapsed last year. “Where there is one cockroach, there are likely to be others,” warned JPMorgan ceo Jamie Dimon at the time.

“The key question for markets and the real economy is: Are we only dealing with cockroaches … or are we already dealing with termites?” asked Mohamed El Erian from Allianz.

Throw in the high oil prices and stock market declines of the last few weeks, add “stagflation”—high inflation and low growth, making it very hard to invest—and you have a recipe for disaster.

The 2008 financial crisis unfolded over a couple of years. Subprime lenders started to go under in 2007. Two of Bear Stearns’ hedge funds collapsed that summer. But Bear Stearns itself didn’t hit its crisis until March 2008, and the Lehman Brothers filed for the largest bankruptcy in American history in September 2008.

Andrew Bailey, governor of the Bank of England, is just one of many warning that private credit could play the same role that subprime loans played in that crisis. He is one of many warning that, though it may not be 2008 all over again, it could be 2007.

While it’s too soon to know if the dominoes are already toppling that will soon make banking giants tremble, we know another crash will come. They always do. We have a crisis, we change the rules, but greedy mankind finds ways around the rules, new methods of getting rich quickly, which prompt a new crisis.

Trumpet editor in chief Gerald Flurry, alert to some special dangers posed by the next financial crisis, warned about the threat posed by shadow banking 10 years ago. He wrote:

The [International Monetary Fund] has sounded the alarm. The Federal Reserve admits there is a problem. Traders, economists and financial experts are realizing that all this hidden, risky betting could blow up in our faces.

That is exactly what is going to happen. And when it does, it is going to have major effects throughout the world, even to upset and reshape the geopolitical structure of international relations!

I strongly believe that the most powerful effect of this grave threat is going to emerge in Europe. That is just what Herbert W. Armstrong foretold would happen.

Mr. Armstrong wrote that a major banking crisis in America “could suddenly result in triggering European nations to unite as a new world power, larger than either the Soviet Union or the U.S.”

Europe’s banking regulators see that if a shadow-banking crisis happens, they’ll be caught up in it. After the 2008 crisis, they are determined to never again put themselves in a position where their financial stability is shattered by a crisis that begins in the Anglo-American banking system. They’ll create their own system—and the only way they can do that is to unite.

Mr. Armstrong warned about the rise of the Holy Roman Empire. As he did, he spoke to others heavily invested in this system, like Otto von Habsburg, a member of the Habsburg dynasty who became a member of European Parliament and worked for European unity. He believed Europe’s Habsburg heritage could help it come together. Mr. Armstrong agreed and told him that a financial crisis would be the catalyst.

Mr. Armstrong based his warning on Bible prophecy. Revelation 17 discusses an empire of a union of 10 kings resurrecting the religious empire of old. Revelation 18 describes this empire dominating the world’s economic system. These 10 separate kings will “have one mind” (Revelation 17:13).

“That’s an incredibly challenging undertaking,” wrote Mr. Flurry. “But it is going to be done. In fact, it is taking place even now before our eyes. Mr. Armstrong had profound insight in specifically forecasting that the catalyst for this dramatic unification would be a massive financial crisis that starts in America and ripples out from there.”

That crisis will be here very soon. It may have begun already.

Now is the time to understand what is coming and what you need to do about it. Our free book The Holy Roman Empire in Prophecy will help you understand the power rising in Europe, what it means for you, and how you can respond.