If these LDI schemes blow up at 4.7% Gilts won't they have to go back to QE to prevent rates going back above that level and trigger the CLO collapse? The real question is why were they using 7:1 leverage in the first place.
UK's finance system will explode... It all was deliberately pre-planned that way, by bringing their humanoid-looking reptile Lizard into this position... Greed is good, Profit is better Never mind how many have to bite the dust....
Are you a believer in Ben Bernanke, former central banker and noble prize winner and his belief in helicopter money to prevent a depression? https://www.elitetrader.com/et/thre...stem-and-the-curse-of-central-bankers.370287/
The pension funds? They could not meet the 10% return expectations by 1:1 bond leverage. So they levered up (higher risk = higher return in theory)... and everyone has been told for generations that nothing is safer than government bonds. Well... now the time of reckoning has come... There are many parallels to this and Long-Term Capital Management. Though this will hurt even more...
No. The guy that stated "Subprime is Contained" was utterly clueless. He didn't even know the shadow banks in 2004-2007 had completely usurped all the volume of mortgages. He's just another clueless academic who never worked a day in his life. Most large institutions are clueless. The defined benefit pension funds should be realistic and tell the public that the Politicians who promised 7% return ad infinitum were in fact lying. Of course that also means all the pension schemes are in fact pyramid schemes and the jig is up. Either accept a lot less returns or you could wait for the fund to go to zero in an upcoming margin call.