“There are some ideas so wrong that only a very intelligent person could believe in them.” -George Orwell
In a recent widely distributed associated press article, Bond Market Bubble is Looking Fragile, Bernard Cohen correctly (remarkably) identifies the financial bottleneck threatening to once again freeze credit markets a la The Lehman Crisis.
Cohen paints the portrait of a bond market panic; the very sort that could easily trigger the type of crash that could “get away” from policy makers and morph into a full blown currency crisis.
And it then proceeds to miss the entire point all together. It’s no wonder they are called the Associated Press.
Early in, he frames a difference -mainstream investors who ‘poured trillions into the bond market over the last 5 years. This is opposed to the “fund managers and regulators” who are fretting over there not being enough buyers when everyone decides to sell at once.
It implies responsibility of the mainstream investor versus the prudent manager and regulator. He describes a situation known as “liquidity risk” and some bond pros are scrambling to prepare for it.
Portfolio managers are hoarding cash. BlackRock, the world’s largest fund manager, is suggesting regulators consider new fees for investors pulling out of funds. That distinction is a crucial one. Modern propaganda is most effective because it uses our natural deference to authority – the more obscure the better.
This post was published at Silver-Coin-Investor on Oct 09, 2014.
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