Once upon a time there was a family of three bears, a mama bear, a papa bear and a baby bear. This family of bears lived in a quiet cottage in the woods.
One day, waiting for their porridge to cool, they decide to take a leisurely walk in the woods, as bears are known to do. While they are out on their walk, a little girl named Goldilocks, who happens to be playing in a field nearby, discovers their house, and also the porridge inside, which, let’s be honest, is not really porridge, but a metaphor for the collective savings of the three bears, which they wisely keep under their mattress for fear of an economic collapse.
Being curious, and an expert burglar, Goldilocks managed to break into the three bears’ house, though she later claimed the front door was left “wide open.” Once inside, she examined the first bowl of “porridge'” (a metaphor for U.S. Treasuries). “This porridge is too cold!” she exclaimed.
So she whipped out her cell phone and ordered the Federal Reserve to take some kind of policy action to to try and force this “cold porridge” out of the hands of domestic holders and into the equity markets where returns would look great, even to bears, as long as the bears don’t notice that the returns are due solely to the devaluation of their paper currency.
Moving on to the second bowl of “porridge,” which is clearly gold, Goldilocks noted, “This porridge is too hot!”
So she dumped it onto the open market, even going so far as to sell gol… er, “porridge,” that she doesn’t even own and can never ever possibly physically deliver in order to make it unattractive to bears.
Finally, she moved to the third bowl of “porridge,” which in this case is a metaphor for some U.S. dollars that the baby bear kept under his mattress to use as “writing paper.”
“Ahhhhh,” Goldilocks said. “This porridge is just right.”
Then, she abruptly fell asleep in the baby bear’s bed. (Editor’s note: Certain metaphorical acts committed by Goldilocks, such as raising taxes, browbeating foreign trading partners for structural deflation, etc. have been omitted for the sake of brevity.)
As she was sleeping, the three bears came home. “Someone’s been eating my porridge,” growled the papa bear.
“Someone’s been eating my porridge too,” growled the mama bear.
“And someone’s been messing around with my paper and used it all up!,” cried the baby bear.
Just then, Goldilocks woke up, saw the three bears and screamed. “Help!,” she cried. “Print more money!” she demanded. “Buy something… anything!” she screamed.
But it was too late.
By 10:30 a.m. the corporate debt market had locked up and forced selling by overleveraged hedge funds was filtering into commodities and equities.
By 11 a.m. the first round of trading curbs kicked in, but this had a perversely ill effect of withdrawing even more liquidity and bids from the market.
By noon the Federal Reserve had called a special meeting with Wall Street’s money center banks to see which, if any, could remain operable through the end of the week.
Goldilocks, meanwhile, was vilified in the press for her reckless breaking and entering and total disregard for good porridge.
The bears felt vindicated, but not particularly good. After all, in a real bear’s market, no one wins — not even the bears.