One of the main topics of discussion everywhere I go is, what will the next crisis look like; along with: Where will it come from; what will the market response be; and what will be the source of the volatility? There is always volatility during a crisis.

I have been saying in writing for some time that I think the next crisis will reveal how little liquidity there is in the credit markets, especially in the high-yield, lower-rated space. Dodd-Frank has greatly limited the ability of banks to provide market-making opportunities and credit markets, a function that has been in their wheelhouse for well over a century. Given the massive amount of high-yield bonds that have been stuffed into mutual funds and ETFs, when the prices of those funds begin to fall, and the ETFs want to sell the underlying assets to generate liquidity, there will be no buyers except at extreme prices.

My friend Steve Blumenthal says we are coming up on one of the greatest buying opportunities in high-yield credit that he has ever seen – and he has 25 years of experience as a high-yield trader. There have been three times when you had to shut your eyes, hold your breath, and buy because the high-yield prices had fallen to such extreme levels. That is going to happen again. But it is going to unleash a great deal of volatility in every other market. As the saying goes, when you need money in a crisis, you sell what you can, not what you want to. And if you can’t sell your high-yield, you end up selling other assets (like equities), which puts strain on them.

But that is not just my view. Dr. Marko Kolanovic, a J.P. Morgan global quantitative and derivative strategy analyst, has written a short essay called “What Will the Next Crisis Look Like?” and it’s this week’s Outside the Box. He sees additional sources of weakness coming from other areas, too.

Frankly, the lack of volatility is beginning to worry me a bit. Minsky constantly reminded us that stability begets instability. Stability is a pretty good word to describe the current markets – but such stability always ends in a “Minsky moment.” We don’t know when; we don’t know where it starts, but we know it’s coming.

There was a great deal of response, mostly positive, to last week’s Thoughts from the Frontline, “The Fragmentation of Society.” If you haven’t read it, you might want to. I hadn’t recognized the similarities between today and 1968 until I was reminded of them by Dr. Kolanovic and his essay. But having lived through that era, I do get it. I think the next financial crisis will also be a trigger for a social crisis, not unlike 1968 and its aftermath. Remember, part of the follow-on was the collapse of Bretton Woods when Nixon took the US off the gold standard in 1971. Economic crises have big consequences. I will be writing about some of the current pressures again this weekend.