Doug Noland - The Precipice

``It was a week of ominous developments among multiple key flashpoints. Let's start with commodities and EM, where the accelerating downward spiral is now rapidly reaching the status of "unmitigated disaster." ... It has rather quickly become equally desperate for financial operators holding risky corporate debt in a marketplace that has turned illiquid and increasingly dislocated. For the first time since the 2008 crisis, a public mutual fund (Third Avenue) this week halted redemptions. A Credit hedge fund (Stone Lion Capital) also halted redemptions. The concept of "Moneyness of Risk Assets" has been integral to my "global government finance Bubble" thesis. Monetary policy coupled with aggressive risk intermediation (certainly including fund structures and derivatives) created the market perception that high-yield corporate debt could be held with minimal risk (price and liquidity). With the Credit cycle turning, this misperception is being exposed.''