Risk-free may create risk

Several big asset managers, including Bill Gross, talk about the problem of the current negative rate situation. The bonds with negative rates are all considered to be less risky or even risk-free. Such state may force investors to look for some longer period investment, which could worsen the liquidity of the financial market. When the liquidity worsens, there will be a supply shortage in the market. The costs of financing from the financial market will be much more expensive. Some businesses may fail to refinance themselves and fall to bankruptcy, especially the smaller businesses. When the smaller businesses become more likely to fail due to the illiquidity issue in the market, the big businesses become even more attractive and gain bargaining power. So the wealth gap between the big businesses and the small ones widens. The big businesses will increase their gearing levels as borrowing becomes extremely cheap, and finally become potential bombs in our economy as they carry too many debts.