Posted on 10/02/2022 12:54:08 PM PDT by RomanSoldier19
y columns have turned rather apocalyptic of late, but for a valid reason. Just this week, we got confirmation that our financial system is, again, at the brink of collapse, when the Bank of England (BoE) was forced to enact, de facto, a bailout of the pension funds of the United Kingdom.
On Sept. 28, around noon, the Bank of England stepped (back) into the Gilt markets and start buying government bonds with longer maturities to stop the collapse in their value which could have caused the financial system to become unhinged. Pension funds were faced with major margin calls, which threatened to cause a rapidly cascading run on their liabilities as trust in their liquidity and solvency would have become questioned by a widening circle of investors and customers. 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 around $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. It looks that the global financial system was pulled from the brink of collapse, once again, by central bankers. However, this was only a temporary fix.
(Excerpt) Read more at theepochtimes.com ...
2023 looks to be ugly.
There is also Credit Suisse and that German bank I can’t think of right now. Their stocks are tanking.
Pension funds are supposed to insure themselves with common sense investing. 401ks are fully funded. Pensions funds cheat, fail and then get bail outs from hard working people.
ANYONE invested heavily in long-term bonds has been getting crushed. That’s mostly, pension funds. This could get ugly
The US fed is trying to kill China and Russian bad actors. This .75% increase every meeting is designed to take out non dollar players. I am guessing England had a heads up. The new government may not have the right people to play the game. But China and Russia are the actual targets. England may find that they are caught in the fall out. I am guessing the Fed will try to help them out somewhere.
Depends on midterms.
Ugly if Deep State loses.
Apocalyptic if it wins.
I’m okay with ugly.
Hi.
Chose one...
It’s going to be a great Christmas.
It’s going to be a bad Christmas.
Or, there’s not going to be a Christmas.
5.56mm
It will be a great Christmas because I only purchase books for gifts.
“2023 looks to be ugly”
Very likely, if history is any guide, we are now in October and back in 1929 it was a bad month for the markets and usually treated as the start of the Great Depression. That was proceeded by a London market crash in September, something that almost just happened a few days ago this year. Bank of England stepped in but did they fix things or just kick the can down the road?
“Depends on midterms.
Ugly if Deep State loses.
Apocalyptic if it wins.
I’m okay with ugly”.
That’s a good way to look at it and you’re right.
I’m nervous about the midterms because of who we’re up against. We can put absolutely nothing past them.
Probably Deutch bank. If they go down, look out.
Good post.
They can’t kick the can very far now. Soon, it will be impossible to kick at all.
Sam!
Tell me you never bought the wife a Mercedes for Christmas.
Go ahead...
5.56mm
Yep.
I believe UK pension funds have to be 40% invested in government bonds, and since the interest rate is so low on them, they used various derivatives to juice up the rate of return. But then UK bonds started collapsing and these pension funds had a huge margin call they couldn’t pay. So the UK was forced to buy bonds in the market to bail them out.
I concur with your optimism.
Why are pension funds buying bonds on margin?
Indeed.
I fear it.
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