Look, it is the bond holders that allowed the US debt limit to increase beyond the limit of the bond. The bond holders must take the hit, they created this.
Bonds
first derivative : linear Convexity
Second derivative : Curved Convexity
Third derivative: Options, Futures
The first two derivatives have complex but understandable underlying mathematics.
The third derivative's mathematics is hidden in a opaque package.
Forth and fifth derivatives are based on the opaque third derivative.
It is not know how many levels of derivatives were based on the third derivative instead of the transparent underlying bond. ETFs, LBOs, and funds fall into this category.
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If we move money to pay the bond holders for a temporary time we will lose our AAA credit rating. Credit: Bloomberg
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And we have to do this by friday.
I have told you this for many years now. The grim reapers are coming. As they whack our AAA to AA- then all those packaged products will fail. The reason is that there are many improper packages that will exceed the value of the bond.
Good luck
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