UK pensions hit with margin calls as gilts and sterling slide

Re:UK pensions hit with margin calls as gilts and sterling s... by triceratops on Thursday September 29, 2022 @08:20PM (#33029162)

Matt Levine about this on today's Money Stuff:

"I know this is bad but I find something aesthetically beautiful about it. If you have a pot of money [pensions] that is immune to bank runs, over time, modern finance will find a way to make it vulnerable to bank runs. That is an emergent property of modern finance. No one sits down and says “let’s make pension funds vulnerable to bank runs!” Finance, as an abstract entity, just sort of does that on its own."

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by boomboomsubban on Thursday September 29, 2022 @08:34PM (#33029287)

Surely nobody in the world of finance has been making money off of these pensions becoming vulnerable to bank runs. And even if there were someone profiting, they wouldn't have done so by choice, it just happened.

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by ISL on Thursday September 29, 2022 @09:44PM (#33029850)

From my read of Levine's explanation, it was really the promise of a greater pension outcome for a given amount of contribution. Whether the contribution was smaller or the outcome larger is kinda immaterial -- the managers were chasing yield.

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by kasey_junk on Thursday September 29, 2022 @09:56PM (#33029941)

And also accounting rules not really being well factored for the pension use case.

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by thfuran on Thursday September 29, 2022 @08:50PM (#33029426)

It's an inevitable consequence of Madoff's Third Law of Finance. There's just no getting around it.

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by mejutoco on Friday September 30, 2022 @05:09AM (#33032675)

I am not an expert but if someone managing a pension fund makes it less underfunded by using some of these instruments/techniques they might get a bonus for good performance, don't they? Or am I misunderstanding something.

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by iTradeWarez on Thursday September 29, 2022 @09:37PM (#33029804)

"aesthetically beautiful"

Jesus these people are sick

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by hedora on Thursday September 29, 2022 @09:39PM (#33029814)

I assumed it was meant in a "mushroom clouds are pretty" sort of way.

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by steve_adams_86 on Thursday September 29, 2022 @10:03PM (#33029989)

Yes, like a war machine is impressive and fascinating in its systems and parts, while the external effects are horrifying and appalling.

[ Parent | on HN ]

Re:UK pensions hit with margin calls as gilts and sterling s... by implements on Friday September 30, 2022 @03:10AM (#33031909)

Perhaps in a “Life finds a way” sense, too.

[ Parent | on HN ]