The prospect of escalating dysfunction in the Treasury market collapse was horrifying. A “safe” asset that could no longer be easily sold, or could be sold only at a fluctuating discount, was no longer a safe asset. It ought to have been unthinkable to even ask that question about U.S. Treasuries. And if the implosion of the financial system was not bad enough, Bank of America strategist Mark Cabana spelled out the wider implications. As he warned in mid-March, if the Treasury market stopped functioning, it was “a national security issue.”
