Comments by "Kevin Street" (@Kevin_Street) on "Pension And Mortgage Panic!" video.

The details of why pension funds are uniquely vulnerable to the current rise in interest rates aren't quite clear to me, but I get the general idea. The defined benefit pensions hedge against interest rate swings by buying derivatives (gilts), but the current rise in interest rates is greater than they were prepared for, so the pensions have been forced to burn through their cash reserves and many have been forced to sell their "gilts." The Bank of England has stepped in to buy Gilts, so they wont plunge in price any further and leave the pension funds with rapidly depreciating assets. The rapid fall of the Pound seems like a very loud signal from the market to the British government, that markets have no confidence whatsoever in Kwasi Kwarteng's economic plans. It's rather extraordinary to see something like this happen to one of the oldest financial systems in the world.
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