3 ms·

The strategy was nuts. Pension funds were loaning gilts to banks, and then using the money to buy gilts which they then loan to banks, and then using the money

• jimnotgym 4y ago
  Is it nuts? If everyone believes that gilts are essentially risk free (certainly what I was taught as a trainee accountant) then it seems a fair strategy. One doesn't normally expect a government to deliberately devalue its own bonds, and drive its own debt prices higher (I say deliberately because Truss its intimating that, I don't really believe it. I think they made a spectacular misjudgement and are doubling down). This strategy only looks risky if you believe that there was a risk to the assett price. Otherwise it looks smart.
  • physicsguy 4y ago
    Gilts are relatively risk free, in that they’re backed by government to pay some value out at a time in the future. Derivative products based on the price of gilts where you might have to put up collateral are not.
• mejutoco 4y ago
  Your description reminds me of Evergrande.