Effectively, the BOE stepped in to limit the vicious circle of margin calls faced by pension funds because of the crashing values of the gilts.
Without the BOE intervention, mass insolvencies of pension funds, with about $3 trillion worth of assets—and thus most likely other financial institutions—could have commenced on that afternoon. It’s obvious that if one of the major financial hubs of the world, the City of London, would face a financial panic, it would spread to the rest of the world in an instant.
Is the global financial system about to break yet again?
Thanks to the Christmas movie with Jimmy Stewart, A Wonderful Life, most of us are familiar with how a run on a bank can happen. That is what mobs can do.
I've long felt that predicting markets requires psychoanalyzing mobs. Very hard to do. They can do great harm or they can be dispersed.
Central bank monetary policy is by definition a manipulation of the financial system(s).
Are the meltdowns intentional? That's an extraordinary claim for which there is precious little actual evidence. Far more likely constantly causing market disequilibria invariably gives rise to positive feedback loops that central banks simply cannot control.
Essentially. One truth of economics since before Adam Smith and "Wealth of Nations" is that the visible hand of government meddling is always confounded by the invisible hand of natural consequences to actions.
It's not just that economies are self-correcting when left to themselves. It's that economies are self-correcting despite the efforts of governments and central banks to postpone those corrections.
Thanks to the Christmas movie with Jimmy Stewart, A Wonderful Life, most of us are familiar with how a run on a bank can happen. That is what mobs can do.
I've long felt that predicting markets requires psychoanalyzing mobs. Very hard to do. They can do great harm or they can be dispersed.
To answer your question.
Yes.
It does seem rather unavoidable at this point. All the sins that were papered over in 2008 are coming to the surface again.
"Is the global financial system about to break yet again?"
PNK, is it being manipulated to a purpose since it appears inevitable?
Central bank monetary policy is by definition a manipulation of the financial system(s).
Are the meltdowns intentional? That's an extraordinary claim for which there is precious little actual evidence. Far more likely constantly causing market disequilibria invariably gives rise to positive feedback loops that central banks simply cannot control.
Thanks for the reply.
Simple abuse then?
Essentially. One truth of economics since before Adam Smith and "Wealth of Nations" is that the visible hand of government meddling is always confounded by the invisible hand of natural consequences to actions.
It's not just that economies are self-correcting when left to themselves. It's that economies are self-correcting despite the efforts of governments and central banks to postpone those corrections.
BRAVO