Deleveraging in an Illiquid Environment

Pension fund sponsors were beginning to think that interest rates would stay very low for a very long time. No one expected a sharp increase in interest rates, and pensions began getting margin calls. The Bank of England had to step in because it was going to cause harm to its system. So what do you do if you're deleveraging in an illiquid environment? You sell the most liquid assets. And so we're seeing US government bonds, which are held in pension funds abroad being sold - even though deflationary pressures are mounting all over the place.