Thanks to Robert Armstrong of the FT for the quote and  to the ECB for providing this handy table, which serves as a sort of glossary of how things can go wrong:

The thing that seems common to the stress events were that they weren’t triggered by a bank but are what everyone now calls “secondary banking”, where the banks are one stepped removed from the action.

There’s a lot of commonality about what has gone wrong and those involved in the LDI stress event can take some comfort that they weren’t alone in employing excessive leverage backed up by inadequate liquidity preparedness and contagion through herding.

I notice that one of the sessions at this week’s PLSA conference is entitled “LDI and risk management -what could possibly go wrong (next)” – a very good title indeed as the people at the session will undoubtedly be the people who at last October’s Conference were telling each other that nothing was fundamentally wrong with LDI.

The Government has worked out that the £4trillion of assets in pensions could save the UK’s ailing economy, it may also have worked out that the £4 trillion of liabilities, if continued to be managed as they were, could sink it.