bond market vigilante Concepts

Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze · 31 Jul 2018 · 1,066pp · 273,703 words

hitter. But now I want to come back as the bond market. You can intimidate everybody.”13 In the 1980s and 1990s, the so-called bond vigilantes had their day in the sun. Ten years later they were still in the market. Indeed, the bond funds were bigger than ever. But, as

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hold trillions of dollars in government bonds? Would interest rates have to rise? Would this crowd out private investment? Would bondholders get jumpy? Would the bond vigilantes of the 1990s swing into the saddle, selling government bonds, driving Treasury prices down and yields up? In the spring of 2009, as the scale

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it was to engineer a solid recovery. In the event, Summers and the other skeptics were proven right. There was no run against Treasurys. The bond vigilantes were a spook. America’s households were rebuilding their savings. Mutual funds were shifting out of risky mortgage bonds. Everyone wanted Treasurys. These were the

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down the house and necessitated the bailouts. By 2009 confidence was still the problem. But now it was government deficits and the supposed threat of bond vigilantes that seized the headlines. Given actually prevailing conditions in bond markets at the time, the constraints this anxiety placed on fiscal policy were a triumph

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of precrisis centrist orthodoxy over the facts of the postcrisis situation. While the bond vigilantes never appeared, millons of jobless would pay the price for the failure to sustain fiscal stimulus. And the effects went beyond the labor market. The

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been aware, the market discipline on display in the eurozone had not “come without warning.” The ECB and the German government were deliberately courting the bond vigilantes who swarmed over Greece. If they wanted to ease the pressure, all the ECB needed to do was what the Fed, the Bank of England

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a future debt crisis.”15 As Paul Krugman remarked from New York: “It’s one thing to be intimidated by bond market vigilantes. It’s another to be intimidated by the fear that bond market vigilantes might show up one of these days.”16 As the squeeze continued, other motives revealed themselves. Shrinking the state, it

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was it? How were markets to know, and without knowing, how were they to react? Given the Fed’s hesitancy, one might have expected the bond vigilantes to take up the fight. There was profound hostility to Bernanke among the more militant investor crowd. In October 2013 Larry Fink, the CEO of

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in the eurozone but reducing the total stock of sovereign debt available for private investors by 265 billion euros, there was little reason to fear bond vigilantes. The deliberate default on the ECB’s bond holdings planned by Varoufakis was supposed to puncture this complacency. But, as was becoming clear, Tsipras shrank

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,” https://www.gpo.gov/fdsys/pkg/BUDGET-2011-BUD/pdf/BUDGET-2011-BUD.pdf. 22. IMF, Fiscal Monitor, Washington, DC, May 2010. 23. Editorial, “The Bond Vigilantes,” Wall Street Journal, May 29, 2009. 24. Scheiber, Escape Artists, 151; and Suskind, Confidence Men, 516. 25. Scheiber, Escape Artists, 150. 26. A. P. Lerner

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. Osborne, “The Threat of Rising Interest Rates Is a Greek Tragedy We Must Avoid,” Telegraph, December 21, 2009. 8. P. Habbard, “The Return of the Bond Vigilantes,” March 7, 2012, http://www.ituc-csi.org/IMG/pdf/1203t_bond.pdf; and S. Johnson, “Bond Fund Managers Brave ‘The Ring of Fire,’” Financial

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, “The Austerity Con,” London Review of Books 37, no. 4 (2015), 9–11. 15. Irwin, The Alchemists, 248–249. 16. P. Krugman, “More on Invisible Bond Vigilantes,” New York Times (blog), November 10, 2012. 17. N. Watt, “David Cameron Makes Leaner State a Permanent Goal,” Guardian, November 12, 2013. 18. ONS, “Statistical

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Dog Coalition, 278 BNP Paribas, 110, 144, 194, 210, 326 Boediono, 258–59 Boehner, John, 174–75, 182, 390–91, 467, 568 Bofinger, Peter, 288 bond vigilantes, 29–30, 284–85, 291, 348, 350, 481, 525, 585 bonuses, Wall Street, 292–93, 306 Bosnia and Herzegovina, 232 Bowles, Erskine, 583 Bradford & Bingley

Why We Can't Afford the Rich

by Andrew Sayer · 6 Nov 2014 · 504pp · 143,303 words

debtor is in difficulty, the creditor can force the debtor to sell off their assets. This practice of dispossession has been going on for millennia. Bond markets: vigilantes, bogeymen and banks Thank Heaven for the bond markets. They protect us all from the in-built fiscal excesses of democratic politics. (Charles Rowley, Professor

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business sector, and higher mortgage rates for prospective home buyers, generated enough political opposition to stop it going through Congress.65 Bondholders – sometimes dramatised as ‘bond market vigilantes’ – can simply bid up interest rates or refuse to lend anew. As James Carville, lead strategist for US President Bill Clinton famously commented, ‘I used

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’, http://www.cresc.ac.uk/sites/default/files/The%20Conceit%20of%20Enterprise.pdf. 59 Charles Rowley’s Blog, http://charlesrowley.wordpress.com/2012/05/10/bond-market-vigilantes-rule-across-the-eurozone/. 60 Hilferding, R. (2010) Finance capital, London: Routledge, ch 7, http://www.marxists.org/archive/hilferding/1910/finkap/ch07.htm. 61

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.5%, who dominate bondholding, got half of all the interest payments by the Federal government going to households. See Canterbery (2000). 62 Stevenson, T. (2012) ‘Bond market vigilantes turn on Italy’, Telegraph, 12 November. 63 Time (1989) ‘Top 10 tax dodgers’. She was imprisoned for tax evasion. http://content.time.com/time/specials

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Street Journal (2011) 30 September, http://online.wsj.com/article/SB10001424053111904332804576538363789127084.html. 66 Cited in Canterbery (2000). 67 Stevenson (2011). 68 Krugman, P. (2009) ‘Invisible bond vigilantes’, New York Times, 19 November 2009; see also Wolf, M. (2010), ‘Why the Balls critique is correct’, Financial Times, 2 September, http://www.ft.com

Crisis Economics: A Crash Course in the Future of Finance

by Nouriel Roubini and Stephen Mihm · 10 May 2010 · 491pp · 131,769 words

a less-than-friendly reminder that unless advanced economies start to put their fiscal houses in order, the rating agencies—and in particular, the dreaded “bond vigilantes”—will bring them to heel. That prospect puts many advanced economies in a bind. The recent crisis and the ensuing recession have led to a

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off taking the pain now rather than running the risk of defaulting on their debt. Though the United States and Japan will likely avoid the bond market vigilantes for some time to come, they too may one day incur their wrath. The United States continues to run unsustainable current account deficits and has

Shutdown: How COVID Shook the World's Economy

by Adam Tooze · 15 Nov 2021 · 561pp · 138,158 words

: any talk of bond market panic. In 2010, against the backdrop of the Greek crisis, it had been easy to conjure up the specter of bond market vigilantes. In 2020, one might have thought that the outsize deficits and the knife-edge Brexit talks would have spooked financial markets, but nothing of the

Wall Street: How It Works And for Whom

by Doug Henwood · 30 Aug 1998 · 586pp · 159,901 words

demand for slower growth would be political dynamite — just the kind of fight a not-feared-on-Wall-Street Democrat would shy away from. The bond-market vigilantes have won. Postscript. This book is being prepared for publication two-and-a-half years after that diary was written. Growth continued to be strong

Capitalism: Money, Morals and Markets

by John Plender · 27 Jul 2015 · 355pp · 92,571 words

on the benefits of market constraints on self-serving politicians’ and bureaucrats’ freedom of action. It also looks forward to the activities of so-called bond market vigilantes, modern institutional investors such as pension funds, insurance companies and hedge funds that shun government debt markets and so force up interest rates when they

Paper Promises

by Philip Coggan · 1 Dec 2011 · 376pp · 109,092 words

. Indeed, that is what happened in the 1980s when real interest rates were very high, as investors reacted to their losses of the 1970s. The ‘bond market vigilantes’ would keep errant governments in line, and head off an inflationary rebound. By itself, this was a crucial difference from the Bretton Woods era. Capital

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government bonds; the nominal value of their holdings was repaid but the real value (purchasing power) deteriorated greatly. As they spotted this was happening, the bond market vigilantes mentioned in Chapter 6 naturally reacted by demanding a higher interest rate on bonds to compensate them for the risk. James Carville, an adviser to

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). The system had thus created a very wealthy group of investors who were effectively uninterested in the price of, and return from, their investments. The bond-market vigilantes had been swamped. There was a savings glut that forced up asset prices. The result was an odd system that seemed to suit both sides

Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis

by Anatole Kaletsky · 22 Jun 2010 · 484pp · 136,735 words

set by private investors in a competitive market. These investors are supposedly focused on the risks of inflation and government bankruptcy. They are often called “bond market vigilantes” because they can override the decisions of bureaucrats and take ultimate control over financial conditions. These issues are discussed further on pages 215-218 when

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push overnight rates down to zero was widely denounced as an inflationary debasement of the dollar, but Treasury bond yields, instead of rising as the bond-market vigilantes had expected, dropped almost immediately from 3.9 percent to 2.1 percent. For a remarkably frank admission by one of the world’s top

When the Money Runs Out: The End of Western Affluence

by Stephen D. King · 17 Jun 2013 · 324pp · 90,253 words

of mispricing within financial markets, undermining long-term growth prospects. Most obviously, quantitative easing has allowed governments to avoid being penalized by the so-called bond market vigilantes. We have ended up with both incredibly low interest rates and incredibly large amounts of government debt. In the modern era, only Japan has previously

More: The 10,000-Year Rise of the World Economy

by Philip Coggan · 6 Feb 2020 · 524pp · 155,947 words

term. Investors would also act as a source of discipline on spendthrift governments, demanding higher yields before lending them money. Politicians began to fear the “bond market vigilantes”. The asset management industry matured in this era. Fund managers look after the money of individuals and institutions, and offer the benefits of diversification. By