Comments on: The horrifying AAA debt-issuance chart http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Danny_Black http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28725 Wed, 20 Jul 2011 04:30:21 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28725 KenG_CA, something is either AAA or not. Again AAA does not equal risk free nor does it mean there is no fluctuation in price before maturity. What percentage of AAA bonds have actually defaulted?

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By: FelixSalmon http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28673 Tue, 19 Jul 2011 02:33:13 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28673 @Kiffmeister — is there a database of outstandings by current credit rating?

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By: SSarson http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28644 Sun, 17 Jul 2011 04:31:01 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28644 Could the buyside come from the increased need for pension funds to have long term assets?

With ageing populations and increasing pension liabilities these funds might have been running out of suitable assets to buy. As they cannot make loans, then the banks securitised their loans so that pension funds could buy them. Then they had to be rated AAA because of pension fund rules.

Bit of a chicken and egg thing, or I might be talking pure drivel.

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By: MGCC http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28641 Sat, 16 Jul 2011 22:34:10 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28641 Dunno about the chart data. 1990 issuance of almost zero AAA debt, including sovereign? The US budget deficit in 1990 was almost $280B, which would show up on a graph denominated in Trillions.

And in 2008 the US Budget deficit was about $1.3T, of the total shown here of just under $2.0T. The rest of the world’s sovereign issuers was just 1/3 of the global total?

US budget year runs Oct – Sept, and the figures above are for calendar years, so that might throw things off a little. But the data doesn’t look right. Which doesn’t mean the data is wrong, but it might mean the data doesn’t mean what you think it means.

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By: wpw http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28639 Sat, 16 Jul 2011 17:51:19 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28639 I don’t buy this “overcaution” line either. More like an inability to conceptualize risk when something has never happened, at least within recent memory. I just finished reading Tony Judt’s Postwar, written before 2005, and he discusses at great length so many of the problems of Greece, Italy, Spain, Belgium and others that the markets are finally worrying about today. The debt problems are not something that just magically appeared in the past year or two, like a black swan. The risks have been with us for years but markets chose to ignore them. That is less overcaution than willful ignorance.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28636 Sat, 16 Jul 2011 16:25:49 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28636 Danny, the greedy, negligent parasites were the ones peddling the junk as AAA, or buying it with other people’s money, because they were going to get big bonuses for their imaginary profits. The people now trying to claim they were too stupid to invest were just too stupid to invest. Two different groups, scammers and suckers.

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28635 Sat, 16 Jul 2011 15:09:09 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28635 KenG_CA, by “greedy, negligent parasites” you mean investors right? The same people now trying to claim they were too stupid to invest?

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28633 Sat, 16 Jul 2011 15:04:33 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28633 I’m glad I’m not the only one calling Felix out on his pinning the 2008 crisis on “overcaution: – Yves Smith responded to that point with an entire post:

http://www.nakedcapitalism.com/2011/07/f elix-salmon-misreads-aaa-bond-demand-to- say-overcaution-caused-crisis.html

Come on. Felix, this isn’t like you to make excuses and re-direct criticism for greedy, negligent parasites. Time for an update.

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28626 Sat, 16 Jul 2011 09:56:41 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28626 Triple A are not “safer” than other investments. There is one thing and one thing only that triple A says and that is that the issuer of the obligation is very very likely to meet the terms of the obligation, ie make the right coupon payments on time and return the promised principal on time. It says absolutely nothing else about other risks. You hold Zimbabwe bonds and Mugabi prints worthless money to pay them then that is still AAA as long as he making his coupons. The idea that AAA is ultra-safe is a hold-over from the fixed rate bond issuance of the gold standard era, where the major risk was credit risk.

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By: Danny_Black http://blogs.reuters.com/felix-salmon/2011/07/15/the-horrifying-aaa-debt-issuance-chart/comment-page-1/#comment-28624 Sat, 16 Jul 2011 09:45:58 +0000 http://blogs.reuters.com/felix-salmon/?p=8975#comment-28624 Foppe, corporations could borrow much much more cheaply in the market than from banks. It is just locking in of ultra-low rates. The real question is why buysides are buying this debt….

Kosta0101, what makes you think China is “saving”? They are buying the debt to manage their currencies.

Kiffmeister, Bloomberg…

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