”Wall Street On Parade” website focuses on the role of BlackRock, the world’s largest asset-management company ($10 trillion), in the derivatization of pension fund investments—the famous liability driven investments (LDI) funds that have triggered the British bond crisis. “According to BlackRock’s website, it manages ‘over $400 billion in LDI assets globally.’ According to media reports, other LDI managers include Schroders and Legal & General Group.” (Emphasis in original.)
One investment promoted by BlackRock is “Treasury stripping.” Wall Street on Parade explains:
“A pre-existing long-term U.S. Treasury Strip is one of the most volatile debt instruments there is in a period of rapidly rising interest rates. Unlike a Treasury note or Treasury bond that pays interest semi-annually (which can be reinvested at higher rates as rates move up), a Treasury Strip pays no ongoing interest payments. A Treasury Strip has a fixed date of maturity and is sold at a discount to the full face amount. If leverage was being added to these already volatile instruments, that would go a long way in explaining the distress in U.K. pension funds.
