"Bill Gross Warns About Liquidity In Next Crisis"

I think various journalists have been talking liquidity longer than M. Gross, reminding yours truly of the Revolution of 1848, Alexandre Auguste Ledru-Rollin, and the quote attributed to him:

"Il faut bien que je les suive, puisque je suis leur chef".*

Phrase historique prononcée à Paris - 1848EVEN.fr

From MarketBeat:

The markets have not been put under stress in years, Janus Capital 'sJNS +2.97% Bill Gross noted in his latest investment letter, and if and when that day comes, the  outcome may look very different from the last crisis.

The reason: thanks to legislation and lawsuits, regulators and central bankers may have fewer options in the next crisis than they did in the last.

“Investors and markets have not been tested during a stretch of time when prices go down and policy-makers’ hands are tied to perform their historical function of buyer of last resort,” he wrote. “It’s then that liquidity will be tested.”

In another of his folksy, rambling, occasionally uncomfortable pieces, Mr. Gross spends much of his time breaking down the liquidity profile of the so-called shadow-banking system (after an extended ode to the shower in his Laguna Beach home that skirted dangerously close to providing far too much information.) His main point is that the real-world effect of the Dodd-Frank law hasn’t necessarily been to make banks less risky, but that it merely transferred that risk, from the well-regulated, capital-cushioned banks to the world of mutual funds, hedge funds, and ETFs that make up part of the shadow-banking system.

Another firm that’s part of that shadow-bank world: Pacific Investment Management Co. Mr. Gross, of course, messily exited Pimco, the massive asset-management firm he co-founded, last September. He worked in a few mentions of his former employer amid the discussion of his concerns about liquidity.

Liquidity has been a red flag in the markets for some time now, ever since the 2008 financial crisis and the 2010 flash crash illustrated just how fast it can disappear. More recently, the unusually fast-paced selloff in the government bond market this spring raised the specter that a flash-crash type of liquidity-starved selloff could hit the bond market....MORE

*Schoolboy translation: "I must follow them for I am their leader."

Here's an imagined scene of Bill leading the journalists in an earlier (1830) French uprising:

Aux Barricades!, Dude.