And the greedy bastards found it inconvenient.
Any pup in finance knows the perils of illiquidity. After you've been around a while it should be ingrained. Here's an email I sent to a savvy market watcher last April:
I really appreciated the "good stuff" in your email yesterday. It means something when a person reading one's stuff gets it. You know markets.Sometimes when I find myself thinking about something like how much to budget for cash drawdowns in a short stacked hedge, to avoid a Metallgesellschaft (answer: a lot, your lines of credit disappear when you need them), I wonder how many people understand or even care about this esoteric hoo-haw.So I go read Aristotle's Politics, Book I, part XI para. 3 about Thales the Milesian's use of options in 350 B.C. and I remember that people do care and they have for quite a long time.
Here's an example we posted in August. It's from a popular history for crying out loud, William Manchester's "The Arms of Krupp":
'Liquidity is expensive but illiquidity is much more so, because it destroys the very existence of a firm"
I don't remember if it was Johannes or Ernst, it was a long time ago that I read Manchester, quoting one of the Schroeder boys on the insolvency of Krupp. That line has stuck with me. Here's the book.
What the Citigroup and Merrill managers did beggers belief.