Expect an Economic Collapse to take longer than you think

I see a lot of people on this subreddit talking about a recession like it will arise in a SHTF (Shit Hits The Fan) moment. But the truth is that a SHTF moment will be a few months after the recession starts. The perfect example of a SHTF moment is when Lehman Brothers filed for bankruptcy on September 15th 2008. Mind you that the first contraction from that occurred in Q4 2007, almost a year beforehand. And in March 2008 Bear Stearns filed for bankruptcy. In fact GDP rose in Q1 & Q2 of 2008 as it just seemed like a temporary market correction and one-off bad occurrence. 

A total economic collapse will take a lot longer than you think. There are still people saying “Buy the Dip” in market circles right now. A market collapse happens because of Debt and Expenses, and not just because people believe that the market will go down. Debt needs to get paid, and this happens over long periods of time. Debt, be that corporate debt, mortgages, credit debt, margins, household debt etc NEEDS to get paid. When the debt can not be paid at a large scale those institutions holding the debt (usually banks) require faster repayments on other forms debt, increasing the premiums for other forms of debt. This makes defaults more likely and the cycle continues . 

If this debt collapse happens faster than people can pay into their debt, the banks go under. PERIOD. Everyone has some kind of expense they operate with. Everyone needs food, or rent, accessories, whatever; there is some baseline that borrowers (households and institutions who take on debt) must pay to “keep the lights on”. As these expenses keep coming in, some large institutions will file for bankruptcy. That will be the moment SHTF. 

An “everything collapse” means people can’t pay their mortgage not because they’re casually saving money but because there is no money to save. A stock market collapse happens not because investors are preparing for a recession, but because they have no money to invest and must pay back their debt. An “everything collapse” happens because corporate debt cannot be paid back. All of this puts pressure on banks and financial institutions to sell their assets, but no one is buying because no one can buy. 

Please understand that this takes time, maybe over years. Right now investors aren’t buying stocks because they’re scared of tariffs, not because they have no money. But if the stock market doesn’t catch up, every type of investor whose debt or expenses is too high will be forced to liquidate, selling at a low.

If you're expecting the SHTF moment to happen any day now you're wrong. My guess is that it will happen in Fall or even 2026. The recession can start soon, but it takes much longer than you expect for institutions to collapse.