- A revealing report on the mid-March financial crisis Archived Message
Posted by sashimi
on November 21, 2020, 10:09 am
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Nick Beams, 19 November 2020 (quote) According to the FSB report, the crisis was set off when foreign investors, primarily central banks, sold off almost $300 billion worth of US Treasury debt. "Market dysfunction" was then exacerbated by "substantial sales" of US Treasuries as speculative and highly-leveraged trades, based on taking advantage of the difference between the price of Treasury bonds and their futures, became loss-making. The large-scale unwinding of these trades, amounting to $90 billion during March, was "likely one of the contributors to a short period of extreme illiquidity on government bond markets," the report said. The storm lasted for a "short period" not because of any self-correction mechanism in financial markets but only as a result of the massive intervention by the US Federal Reserve and other major central banks that prevented a meltdown of the entire financial system going far beyond what took place in 2008. (/quote) -- Cont'd at https://www.wsws.org/en/articles/2020/11/19/fina-n19.html |
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