Went to the liquidity risk discussion at PRMIA's New York chapter a few months back, shortly before GM was downgraded to junk status. I had meant to write about it at the time, but computer problems and the hassles of moving from Blogger to Moveable Type and then WordPress interfered. In hindsight, though, here's what I found interesting: 1. Everyone in the room knew that GM was about to be downgraded.
2. One of the speakers said that his firm had surveyed pension managers and hadn't found a single fund with hard limits on non-investment-grade bond holdings. Therefore, he believed that fears of a selloff triggered by a GM downgrade were overblown.
Which makes me wonder: Why did articles posing this scenario continue to appear up to and through the actual downgrade? It's as if the press was unable to see beyond the disaster narrative.