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.
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.