Podcast Summary: Grant's Current Yield – “OBSCURING THE CYCLE”

Podcast: Grant's Current Yield
Episode: OBSCURING THE CYCLE
Date: November 10, 2025
Host(s): Jim Grant, Evan Lorenz
Guest: Dan Zwirn, Co-Founder of Arena Investors

Overview

In this reflective final episode of Grant's Current Yield, Jim Grant and Evan Lorenz host Dan Zwirn, CEO of Arena Investors. The conversation takes an incisive look at the current credit cycle, leveraging Zwirn’s decades of experience navigating specialty finance, distressed debt, and unconstrained investing. Through lively anecdotes and unfiltered analysis, the episode explores how opacity in markets and distorted incentives have shaped—and obscured—the true state of risk in modern finance.

Key Discussion Points & Insights

1. JP Morgan's Move: Crypto & Collateral

[00:27–01:30]

• JP Morgan has started accepting Ether and Bitcoin as collateral for loans.
• Jim Grant questions if this is “a sign in the credit cycle or just one of those things that keeps on happening.”
  • “I'm not sure about the terms... But is it a sign in the credit cycle...?” – Jim Grant [00:59]
• Evan Lorenz highlights shifting attitudes: “I remember Jamie Dimon, the CEO of JP Morgan, calling like bitcoin trash just a couple years ago, but now it’s trash you can borrow against.” [01:10]

2. The Cyclicality—and Obscuration—of Credit

[04:01–11:30]

• Dan Zwirn revisits comments on leverage masking and nomenclature obscurity in asset markets, particularly real estate and private credit.
  • “Everything cycles... that’s coherent with the way the human mammal is wired... What we've seen post-GFC is some obscuring of that cycle.” – Dan Zwirn [05:41]
• Since 2008, financial innovation and product marketing have delayed recognition of asset value drops. Latency between real asset devaluation and investor recognition is at historic highs.
  • “The innovation ... to obfuscate the realization of value diminution has been really broad and multifaceted.” – Dan Zwirn [06:25]
• Example: The private energy PE bust was not openly recognized until years after investments soured.

3. Trade Finance & Loss Concealment Tricks

[11:30–13:23]

• Evan probes how companies use trade finance and receivable facilities to mask incurred but unrecognized losses.
  • “Are there a lot of other companies who have incurred losses but not yet recognized through these kind of private credit facilities?” – Evan Lorenz [12:09]
• Zwirn affirms, sharing current examples of lenders enabling clients to “scoop assets out from under them” to delay loss recognition.

4. The Lending Dilemma: Moral Hazards and “Open Eyes”

[13:23–16:16]

• Grant questions the wisdom of lending to parties circumventing transparency.
  • “JP Morgan said he wouldn’t lend against all the gold bricks ... to someone he didn’t trust. Why would you undertake that transaction?” – Jim Grant [13:23]
• Zwirn responds with pragmatic realism:
  • “If I didn’t have X’s to do business with, I’d have nobody to do business with. Assets are what they are... are you doing it with open eyes?” [13:44]
• He distinguishes between “criminal with a capital C and lowercase c” and emphasizes pricing risk properly.

5. How Private Credit, Leveraged Loans, CLOs Are “One Business”

[16:16–18:46]

• Private credit and leveraged loans have merged in behavior, with both now playing to the lowest common denominator in risk.
  • “The notion that private credit is somehow less or different than leverage loans is really not real.” – Dan Zwirn [16:57]
• Reporting metrics diverge: agencies recognize defaults differently, contributing to opacity.

6. Private Equity, Insurance, and the Risks of Interconnectedness

[18:46–28:57]

• Evan notes PE’s move into insurance, sometimes reducing insurer surplus and raising risk concerns for annuitants.
• Zwirn explains motivations for alternative investment managers to acquire insurers:
  • “There are effectively permanent or near permanent liabilities that need to be invested and there’s an opportunity to... create real value for the insurer by investing well.” – Dan Zwirn [21:07]
• Properly managed, Zwirn believes this can be good; but warns bad actors can exploit regulatory fragmentation (“balkanization”) in insurance regulation.

7. Structural Aggressiveness and Systemic Risk

[28:57–30:29]

• Jim conjectures that PE infiltration of life insurance may encourage “aggressive investment techniques” and excessive leverage.
  • “One third of life companies... are now in the hands of private equity promoters... higher, faster, louder, more risk taking, less circumspection.” – Jim Grant [28:57]

8. Legacy Insurance: ‘Safe’ Is Not Always Safe

[30:29–33:27]

• Zwirn argues that old, small, family-owned insurers often allocate capital poorly despite a reputation for safety, e.g. by concentrating too much risk in single asset classes.

9. Where Are the Risks—and Opportunities—Now?

[33:27–36:19]

• Dan Zwirn uses a “barbell” analogy:
  • Right side: Invest in assets where value diminution is obvious—distressed debt, busted private credit.
  • Left side: Invest as a new lender in less competitive areas or where previous funders have backed away, e.g. asset-based lending, specialty finance, new issue commercial mortgages.

10. Distressed Debt Pipeline—But at What Price?

[36:19–38:09]

• The distressed opportunity set is as large as ever, but price discovery is thwarted; bad assets aren’t marked or sold at reasonable discounts:
  • “I see a company... I'm supposed to pay 30 or 40 cents for that and magically it seems to be indicated at 85 cents... But if ... you’re not on the white list... or on the blacklist.” – Dan Zwirn [36:39]

11. Speculative Excess & The Incentive to ‘Keep the Party Going’

[39:12–41:12]

• The episode explores “exuberance” in financial engineering—high leverage ETFs, speculative assets, etc.
• Zwirn underscores the perverse incentives:
  • “Nobody... has any other incentive other than to keep this party going or... stretch out the amortization of the issue for as long as possible.” [40:18]
  • The “slow train wreck” may unfold over decades, absent a major exogenous shock.

12. Will Easy Money Always Bail Out Leverage?

[41:28–45:07]

• Evan asks if a 2008-style Fed easing would again bail out holders of risky debt.
  • “Yes, pretty much. Yes. It would be incredibly helpful to not just private equity, but to owners of financial assets... bought them pre, late 21 at rates ... close to zero.” – Dan Zwirn [44:24]
• But this comes at the cost of further debasing fiat currency:
  • “Why is this egg sandwich costing me $17?... You’re going to see continued debasement of the fiat for sure.” – Dan Zwirn [44:24]

Notable Quotes & Memorable Moments

• On cycles and denial:

  “What we’ve seen post-GFC... is some obscuring of that cycle, right? Because the cyclical nature of alternatives and investments generally doesn’t really cohere with ‘I want to sell investment product every day.’”
  – Dan Zwirn [05:41]

• On incentives in finance:

  “Show me an incentive and I’ll show you an outcome. And nobody in this picture has any other incentive other than to keep this party going...”
  – Dan Zwirn [40:18]

• On masked distress:

  “The pipeline [of distressed deals] is as big as it’s ever been—only growing—the price makes no sense, zero sense... no one wants you to have the information.”
  – Dan Zwirn [36:39]

• On regulatory arbitrage:

  “Insurance is balkanized in its regulatory environment... so that balkanization and that heterogeneity has invited in people who are able to be more thoughtful for sure... but also it may invite in some folks who are clever enough to do bad things.”
  – Dan Zwirn [27:06]

• On lending standards and risk:

  “There’s a difference between... criminal with a capital [C] versus lowercase c. We’re going to look at that person’s history... we might price it in.”
  – Dan Zwirn [13:44]

Timestamps for Important Segments

• JP Morgan and Crypto Collateral – [00:27–01:30]
• Obscuring the Credit Cycle – [04:01–11:30]
• Trade Finance & Loss Masking – [11:30–13:23]
• Lending Dilemmas & Ethics – [13:23–16:16]
• Private Credit/Leveraged Loans Convergence – [16:16–18:46]
• Private Equity in Insurance – [18:46–28:57]
• Risks of Aggressive Investment in Insurance – [28:57–30:29]
• Legacy Insurance Asset Allocation – [30:29–33:27]
• Current Credit Market Opportunities – [33:27–36:19]
• Distressed Debt: Opportunity vs. Pricing – [36:19–38:09]
• Speculative Excess & Market Incentives – [39:12–41:12]
• Central Banks, Rate Cuts, and Bailouts – [41:28–45:07]

Conclusion

This episode offers a penetrating perspective on how financial cycles and distress are increasingly clouded by creative accounting and regulatory arbitrage. Dan Zwirn’s unconstrained, candid commentary gives listeners both a warning and a playbook: opportunity abounds for the careful, skeptical investor—but so does danger for those seduced by today’s “frothy, higher, faster, louder” market dynamics.
The conversation closes on the note that, just as in past cycles, incentives guide outcomes—and that the next crisis, when it comes, will likely have roots in corners of the system no one saw coming.

Original, unvarnished, and true to the voices of Grant, Lorenz, and Zwirn.