Guest Post: The Interconnective Web of Global Debt

Tyler Durden's picture

Via John Aziz of Azizonomics blog,

It’s very big:

Andrew Haldane:

Interconnected networks exhibit a knife-edge, or tipping point, property. Within a certain range, connections serve as a shock-absorber. The system acts as a mutual insurance device with disturbances dispersed and dissipated. But beyond a certain range, the system can tip the wrong side of the knife-edge. Interconnections serve as shock-ampli ers, not dampeners, as losses cascade. The system acts not as a mutual insurance device but as a mutual incendiary device.

A mutual incendiary device sounds about right.

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moskov's picture

are those Ben Benanke's pubic hairs?

AlaricBalth's picture

I am Joe's clogged arteries.

hedgeless_horseman's picture



I have completed the meta-analysis of the graphic: Shit flows downhill and payday is on Friday.

ParkAveFlasher's picture

To properly continue the metaphor, this graph should be rolled top to bottom into a cylinder with the specific rule that the top now needs to be larger (growth) however the bottom must keep matching the colored widths (interest). 

And that my friends is the shell of the snail, the golden ratio, the ever-swelling mobius strip, Operation Twist, etc.

francis_sawyer's picture

I thought muppets were hand puppets...

duo's picture

If the money the US lends to itself is shown, it would cover up all the rest of the lines.

LMAOLORI's picture



This is a global ponzi scheme

Look at China (keeping in mind they buy our debt)

122% of Total Economy Debt

Are Chinese Banks Hiding “The Mother of All Debt Bombs”?

The Social Security Trust Fund btw is the largest holder of U.S. debt although the Fed is really trying hard to catch up or has caught up this year by monetizing all obama's spending after promising Congress they wouldn't. Japan and the other countries percentages are also in this article.

The TRUTH About Who Really Owns All Of America's Debt

AldousHuxley's picture

Reason why incest is outlawed is that narrow gene pool makes the population susceptible to being wiped out when new diseases are introduced.

Interconnected system increases efficiency but is more risky. Black swans can bring the whole system down.

Nature knows this
Sun you knew this
Only arrogant economists will ignore this

SheepleLOVEcheddarbaybiscuits's picture

What a tangled web they have weaved.....

imbrbing's picture

They look skittle colored

Jena's picture

Those are taps for pour paints used by Paul Jenkins (he was the guy they used for the art in "An Unmarried Woman" with Jill Clayburgh and Burt Reynolds.  Alan Bates played him in the film).  Big huge canvases, 8' high X 10' long.

WhyDoesItHurtWhen iPee's picture

Genetic code for skittle pooping Unicorns.

glenlloyd's picture

check kiting writ large

rotagen's picture

Title should be "twice removed from reality"  .. the wizard's boogieman.... not just nationwide, Im bad, I'm global, I'm the scapegoat.

vast-dom's picture

i hope we're not alluding to the pure gibberish of the "antifragile" taleb nonsense?

prains's picture

phase one complete, bwahahahahahahahahahahahahahahah  (evil laugh followed with pinky finger to corner of mouth)

metastar's picture

The more you pay in taxes, the more you earn (or steal in the case of banking). So, you would be happier.

And the Fukushima radiation tan would look oh so sexy on Ann Coulter.

gjp's picture

Look at that great big sucking pig on the bottom right.  But it's Europe that's broke, right?

Toolshed's picture

C'mon now, we're not fat...........we are just big boned.

NoDebt's picture

Vampire squid, indeed.  Lots more than 8 testicles.  I mean tentacles.  Well, probably a lot more of them, too.

Dr. Engali's picture


The more they overthink the plumbing, the easier it is to stop up the drain.


~Montgomery Scott~


For all you non-Star Trek geeks he is the engineer on the U.S.S Enterprise NCC 1701

geno-econ's picture

Yes, but we can all sleep at night because $600 Billion + in Derivatives diversifies all that  risk. That is what Greenspan has told us and he has always been right,  Right?  Pass me a sleeping pill.

Tom_333's picture

Very radical measures will have to be enacted to change any of this.Very radical....Until then Ponzi as usual.

Seasmoke's picture

Is it cut the red , or is cut the blue ?


buzzsaw99's picture

i say god damn god damn the pusher man

TrumpXVI's picture

I just LOVE those kinds of graphs.

They really allow one to quickly and succinctly digest ALL the information.

francis_sawyer's picture

Lucy in the Sky With Diamonds...

Ralph Spoilsport's picture

Hieronymus Bosch meets John Maynard Keynes.

Inthemix96's picture

If you look real close, you can see a brightly coloured unicorn behind the UK's slot.

And if I am not mistaken, its having a shit all over the blue spaghetti.

OMG's picture

Head of NRA is giving em hell! 


Disclosure not a memeber of any organization supporting anything at all.

Supporting & protecting  myself is my agenda.



Downtoolong's picture

But, surely Wall Street can distill this all into one summary index and then write another trillion or two in OTC derivatives to hedge it all away. There's got to be some schmuck at AIG who will hold the bag for a bonus of a measly million or two.

OneTinSoldier66's picture

Global Trade: Good


Global One World Government with piece of paper promise from a politician(debt) as it's currency: Bad

Titus Flavius Caesar Vespasianus Augustus's picture

Apologize for posting off-thread here, gents but I want to take this opportunity to say:


I really, really, really fucking hate and despise the legions of ballwashers on Krugman's blog.  These people seem to think that there is no higher calling in life than being assimilated by the Progressive Borg.


Whatever one might argue about the merits of deficit spending, shouldn't it be obvious to these folks that we've had super massive spending increases over the past decade, and that our inept Congress, left to its own devices, would happily engage in a Cal Ripken-like streak of budget deficits without addressing debt, or prosecuting the fucktards of finance?


What is the answer if there's another, more serious global downturn in 5 years - is the answer always and only printing and spending? 


What's especially maddening is these people seem to set up a paradigm wherein they can never be proven wrong and no evidence will be seen as contraindicating their debt-based prescriptions.


In sum - Krugman and his state-loving, ballwashing blog followers are, as John Stewart once said to Tucker Carlson - ruining this country.  


It's not cute, and they must be fucking stopped.


Rantus terminum.

BlueStreet's picture

Not too late to add rice and beans to the x-mas list. 

Oquities's picture

NRA director Wayne LaPierre is knocking it out of the park right now.

sbenard's picture

It's only logical that it is impossible to have independence and interconnectedness simultaneously. How could we have been so foolish?

ATM's picture

The unwinding of this mess is what the Mayans were talking about when they ended their calendar. The Age of Debt is now over. Long live the Age of Equity (after the required world war, destruction, famine, pestilence and death).

After that everything ends up OK.

AndrewJackson's picture

There goes zerohedge again. Don't you guys know that after netting all contracts the actual outstanding risk is $.02. This business of claiming trillions and quadrillions of derivative exposure is all nonsense. /endsarc

nonclaim's picture

You joke but $.02 as recovery rate sounds about right.

pragmatic hobo's picture

... with such complex network of interconnection, is it possible that some emergent behaviour similar to intelligence arise from the network? Do you think perhaps the reason we, ok many of us, are debt slaves is not because of our own behaviour but due to the debt-network working to enslave us? Perhaps our very own existence is in fact a simulation driven by the debt-network, aka the matrix? now, ... where did I put that red pill.

Quinvarius's picture

That is why I never order a large spaghetti.  The chances of all those complexly interwoven noodles becoming self aware and eating me instead grow exponentially with size.

americanspirit's picture

So, how much of that money being lent is generated by the creation of goods and services and how much is simply notational - being printed electronically and manually. Also, this chart displays money flowing through "legitimate' channels. It would be interesting to see a comparable chart showing money flows from drugs, weapons, and sex. The difference of course is that somebody actually has to produce drugs, weapons and sex to create money - nobody has to produce anything to produce notational money. Then there is a third chart - the shadow economy flows around the world. For the most part shadow economies deal in real transactions - goods and services for cash - but what does that flow of cash actually look like?

The real danger lies in the chart as depicted - these flows are to a great extent not based on real productivity but on government fiat. In other words, they exist only as promises to pay, with promises piled upon promises piled upon more promises. Plus secret agreements never to ask to be paid in anything but more promises. Let one major promising party default, and ask to actually be paid or, worse yet, demand gold or silver in payment, and the shock will cause the system to begin unraveling. Now THAT would be an interesting graphic.

yogibear's picture

Ever see what happens when a backhoe meets network connections?

forwardho's picture

Unfortunately yes, broke through an unmarked fiber-optic trunk line. Two seconds of pull, 28.000 lost service. Thank God for insurance, the bill was astounding.

CPL's picture

Cool presentation though.

kevinearick's picture

(Ooops, there goes the market again; they never learn.)

Equal Rights & Inclusion, Under the Law

That my friend is the face of a tyrant, above the law. What’s truly funny is that the majority has normalized itself to think its behavior is, at some point in time, going to be acceptable, by hook or by crook, to the minority creating all the economic profit to offset the majority’s losses. 

The majority has its servants kidnap the minority’s kids for the purpose of extorting a 90% tax, spends a few million per on the mistake, and then records it as G, leveraging the result with monetary expansion to destroy its tax base, and, finally, is appalled to find its economy collapsing and all the recorded wealth in its pension plans evaporated. Stupid f-ing lizards.

So, I had this habit in elementary school of solving all the problems in the math book within a few weeks, and turned them into the teacher, just to see the expression on her face, to know what I was dealing with. Anyway, my fourth grade teacher is ready and waiting for me. She rips up my handwritten homework and tells me that I will follow along with the class and only do the problems prescribed, as prescribed, by her decree.

For each chapter, I turned in a copy of the original, with all problems solved, the rest of the year, which revealed all the ‘errors’ in the publisher’s text, which she followed, running the entire class errant. I was in the principal’s office pretty much every day, until he excused me from class all together. In other words, F-U, which, ironically, was the academic and conduct grade I received for the subjective parts of the class, but, under the then version of no child left behind policy, she had no choice but to advance me. The next year, I got an advanced copy and had it ready on the first day of class.

With the institution of early childhood education, you only have about two years to get your children geared up, when the majority will realize that your kid is going to be a whole lot more intelligent than their kids, but that is still plenty of time if you are prepared. They are not just coming after your guns…which, with a decent education, are unnecessary.

In case anyone is interested, in due process, what you want to do is publish your free speech moderation algorithm and compare it to your evolving objectives, modifying the former accordingly, and do the same with your objectives and your goal, jumping out randomly as necessary, which will give you the event horizon. You will ultimately have a distribution, an event horizon of event horizons. But what does a racist, sexist, whatever-ist laborer know about enterprise architecture? There was a time when I helped all comers in my physical life, but I am here, am I not? There is no law that can force me to tell you what is coming, or its underlying algorithm. Once we go full AC, there will be no escape for DC, until the next modernization.

Sparkey's picture

Congratulations Kevin I've Often pondered this subject never realizing exactly what it was, that is until I read rour post, thanks to you, I think I finally understand! Are you teaching at a University? With a few teachers like you perhaps I could graduated!