It’s easy for me to sit back and take pot shots at the hedge fund gurus calling for a repeat of the 2008 crash. Spouting words about markets never repeating the previous crisis is kind of cheap. If I am so sure history won’t repeat, why don’t I offer an alternative theory?
Well, at the risk of embarrassing myself, here it goes.
The biggest risk out there is not credit. It is not the monster short VIX speculative position. It is not CDX leverage.
The true DANGER AHEAD lies in the universal belief that treasuries (and other sovereign fixed income) offer a perfect hedge versus risk assets.
