Whose Debt Am I?

Tyler Durden's picture

From Peter Tchir of TF Market Advisors

First the EFSF had trouble raising money.  Then EIB spreads widened.  Then EXPT got crushed.  And now Germany struggled to raise money.

Is there a realization that all the quasi-sovereign debt and supranational debt is actually someone’s debt?  Is relying on implicit or explicit guarantees as a way to raise money indirectly over?  Guarantees do count.  AIG never “owned” any mortgages, all it did was write insurance or CDS contracts on them.  As investors get more concerned about sovereign credit and dig deeper, will some of these programs be tested?

So Whose Debt Am I?

Me and my “brother” have both received massive amounts of government bailout money.  We are due to get more.  Many never understood how we could have a public/private function, and only extreme policy wonks ever understood why both of us needed to exist.  We have had a Credit Event but didn’t restructure, still need more money quarter after quarter, and still don’t count against the debt ceiling limits because in spite of all of the government money, “technically” we aren’t fully guaranteed.  Combined we have over $1.5 trillion in debt.   We are Fannie and Freddie.

Until a month ago we were rated AA1 by Moody’s and now we are Ba1.  Our home is cold but full of oil.  Most people think our country will support us, but the country did set up a new export/import facility last week and our 5 year bonds dropped from 115 to 88 in a month.  Although profit hasn’t been our goal (we are cheap funding to enrich domestic businesses) we do spent time offering our rating to Wall Street firms that want to issue highly structured highly rated notes.  It keeps our funding extra cheap.  Our debt is at least $24 billion in total, but that may not include all the private placement structured notes we helped issue.  I am Eksportfinans (EXPT).

I am an insurance fund.  I don’t actually lend money, I just provide insurance on assets.  I am there to facilitate the housing industry.  I guess my two “siblings” for a lack of a better word, are better known than me, and have paid more out in bonuses, but I am not small.  I have to go to Congress (oops, did I say too much) and tell them that I may need billions of bailout money for my insurance portfolio.  My capital ratio is down to 0.24% instead of the mandated 2%.  You may not have heard of me, and I am small, but a few billion of capital will be needed and my insurance portfolio still won’t count as a US government obligation.  I have lasted longer than my private sector competitor PMI – which is well on its way to being dead.  I am the Federal Housing Administration’s Mortgage Insurance Fund.

I am AAA/Aaa rated.  I am great.  Recently the French wanted to increase my powers so I could rush to the rescue of Europe.  That has happened yet, but I expect my pristine credit rating will be used (or put to the test).  I have over $500 billion of debt outstanding.  I operate on a sliver of capital, make investments “towards financing capital projects according with the objectives of the [European] Union”.  As you can guess, we believe that the loans must be good, because when have politicians ever tried to direct money to bad or inefficient projects or provided capital far too cheap.  I know that most private investors would not make the loans we do, but that is because of our superior knowledge and formal process of requests that the “commercial” banks with a “profit motive” just cannot compete with.  Our 10 year bonds have dropped over 5 points in the past week, and our spreads have widened, but again that is because the market is wrong, and if our sliver of capital isn’t enough, we can surely rely on more money from our benefactors, because in spite of the fact that most of them are in trouble and are having difficulty raising money, they will surely want to ensure that I can continue to fund their pet projects and enrich the companies of their choice.  I am the European Investment Bank (EIB).

I too am AAA/Aaa rated.  My convoluted capital structure based on 3 tiers of guarantees (1 group guarantees but “steps” out, 1 group guarantees but has no hope of paying if called on, and 6 actual bona fide AAA guarantors [AAA for now]).  Spreads on existing debt have widened.  I have struggled to issue even a fraction of the $590 billion of risk I should be able to take.  I have travelled the world and the seven seas looking for money, but since I don’t actually have a product and am so far over my head, I had no success.  I believe that if we ever spend the time to decide what we are, we might be able to do what we are supposed to do, but let’s be honest, it is much more exciting to travel and meet heads of state than it is to read these endless pages of docs, most of which don’t let me do what I want.  I was scared that France was going to shift my power to the EIB, but I’m more comfortable now that they have the same problems we have so the politicians will keep us separate hoping no one figures out how similar we are, and how all of our debt really should count against the members.  I am the EFSF.

I am also AAA/Aaa.  Only about 50 people in the entire world can say my full name, and even fewer can spell it.  I am known only by my corporate bond ticker, which is good because I have issued $460 billion of debt.  Our mandate is to “operate as a promotional bank”.  If that doesn’t sound like profit is our motive, then you are absolutely correct.  I do have to admit, that I wasn’t entirely correct when I said we are only known by our ticker, I have heard rumors we are also referred to by Wall Street as “giant stuffee” which sounds harsh, but I think something must be lost in the translation.  We compete with the Landesbanken, who even we are confused what they do and how much government support they actually have, or why they exist, and if we are called “giant stuffee” they are often referred to as “uber stuffee” which makes us jealous.  It is very difficult to figure out how much government support the Landesbanken would get, but we are confident we have the full support of our country on our $460 billion of debt, but also that it shouldn’t count as country debt.  I am Kreditanstalt fuer Wiederaufbau (KFW).

I am a supranational that has not yet raised debt but it looks more and more likely that we will in the future.  We have a currency but no paper money.  I am a lawyer, but fit right in.  Without a doubt I am the strongest personality in international finance and the cameras love me.  I am convinced that our bonds would be rated AAA, though I have been told that since our guarantees come from countries that on average are below AAA and the funding would often be in currencies that aren’t there domestic currency, that our bonds may not achieve AAA.  People just don’t understand the good we do, and that good should be accounted for in our rating and yield for future issues.  It may seem “strange” that we are issuing bonds with guarantees because our member nations don’t have the money or don’t want to provide the money directly and this guarantee structure gets around it so nicely, I am annoyed that rating agencies and investors see through it so easily.  I do wish there were some problems in more exotic locales because I have been to all the European capitals so often it just doesn’t make it fun, and most of them annoyed me in my prior job – which although I am a laywer, was also in finance.  With potentially over $385 billion of money I can call on from member nations, I am sure I can use that money to raise our profile.  I am the IMF.

I am very small and even I don’t know why I exist.  I do something similar to at least one of the other guests, but guess my mandate is more “foreign” rather than domestic.  I only have $40 billion in debt, so I am the least of anyone’s problems, though I have seen a trend, where my backers overlap with the backers of EFSF, EIB, IMF, and KFW.  I am the European Bank for Reconstruction and Development (EBRD).

I think I exist, but am not actually sure.  A few weeks ago, it seemed like I was going to exist, but now that is in question.  If I am lucky and do actually come into existence, I will have $120 billion of money or guarantees or something to perform my function.  In my case, the weak form of guarantee doesn’t seem to be fixing the problems as my assigned recipient continues to see its credit spreads widen.  At the same time, the “donors” are reluctant to provide actual money in the belief that the markets can be fooled into thinking the guarantees work to solve the problem, but don’t count against them.  It doesn’t really make sense to me, but let’s be honest, I just want to be created and there are lots of powerful investment banks happy to have me join the family.  I am the Dexia bailout.

I hope this list isn’t just the tip of the Iceberg, but most of these entities have a very similar profile.  Very small actual capital but guarantees, or capital calls, or drawing rights, or merely implicit guarantees from basically the same group of nations.  Germany, which seems clean on its own debt, has KFW, the Landesbanks, and lots of European obligations on top of it.  The EXPT situation is testing the resolve of Norway.  That is particularly interesting since Norway itself seems in great shape, so letting EXPT dangle like this should be a warning to investors in other “supra” and “quasi” nationals.  I think EXPT bond are probably cheap here, but Norway is in a relatively strong position.   The super committee failed to do anything, and we move along, but at some point things like Fannie and Freddie may put pressure on our debt. 

It is time to be careful, because as all this debt is really sovereign debt in one form or another (I think I got close to $3 trillion pretty easily) and as rating agencies focus on it, expect downgrades, since the backers have deteriorated, and as investors focus on it, expect pressure on spreads of these entities, and the countries with the biggest obligations and commitments to them.

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transaccountin's picture

APMEX 1 oz Silver Bars .999 Fine Silver for $0.99 over spot 24 Hours Only


Oh regional Indian's picture

Awesome tone and third person play in the article.

And such a pertinent Q. And a simple answer.

Wool = Shearable debt! End of Story!



MarketTruth's picture

Apmex is just ok. Real buyers get physical through COMEX and take delivery or through Tulving. Gainesville Coin is another option for smaller buyers.


BigJim's picture

...Real buyers get physical through COMEX and take delivery

Not if they had accounts with Lind-Waldock, they don't.

CPL's picture

Pease stop with the spam...

slaughterer's picture

WTF is up with HYG this morning?  If equities follow HYG...

GeneMarchbanks's picture

I am confused...

As those ships around Syria continue to move, expect rating agency bullshit to become irrelevant.

Carlyle Groupie's picture

The reality is that Israel cannot survive any longer without the water from the Yarmouk River. It shares it with Syria and now like everything else the US gets sucked in to fight Israels battles to liberate more resources.


Israel's mandate; Kill America's youth.

"Restore The Draft, Israel Is Demanding It"

Masters of deception:
2002 Israel-Syria “Treaty of Peace”

Use of Weapons's picture



Paid troll - Blocking in effect.

knight99's picture

I am no ones debt. I am shiny and pure. I have been used for 5000 years and never lost my value.


Hmm...'s picture

This is simply not true.


(edit: added this chart):


Gold hit a high in 1979/80 and then lost value (edit): every year for  for 20 years, hitting a nadir in 1999. This is true with gold vs almost all major currencies (obviously euro didn't exist).

unless you are arguing that Gold value remained constant, and it was the US Dollar and other Fiat that strengthened over those 20 years? 

Gold has excellent qualities and excellent reasons for ownership.  no reason to make up stuff.

I will also mention that gold lost it's value back in the old Conquistador times when huge galleons of it came to Spain, stolen from the New World.  However, that will not happen again and thus we need not worry about it.

LawsofPhysics's picture

Spoken like a typical academic.  Tell me fucknut, has anyone holding physical ever starved?  Gold's purchasing power has remained more consistent than anything else, even when your Conquistador's showed up back in Spain.  By the way idiot, there was less than half a billion people around back then too, now we have over 7 billion (how much has gold production increased again relative to the population, yeah I thought so) Your comments are beyond stupid.

tj3's picture

Spoken like a true wife beater.

TruthInSunshine's picture

Spoken like Bernank's little drummer boy.

You're ignoring, at minimum, 3,000 years of history.

Good luck with that "Gee, I think I'll bet on a 3000 Year MA reversal here" wager.


"In the absence of the gold standard, there is no way to protect
savings from confiscation through inflation. ... This is the shabby
secret of the welfare statists' tirades against gold. Deficit spending
is simply a scheme for the confiscation of wealth. Gold stands in the
way of this insidious process. It stands as a protector of property
rights. If one grasps this, one has no difficulty in understanding the
statists' antagonism toward the gold standard."

-- Alan Greenspan



margaris's picture

Mmh, spaceships mining those precious asteroids out there?

scatterbrains's picture

or how about a william bonzai adaptation of the Allstate ins. commercial with that guy strapped onto the side of a debt train going off a cliff with a big shit eating grin on his face.

jcaz's picture


TruthInSunshine's picture

In the larger picture, any and all debt that results and is imposed as a result of fractional reserve banking practices is the chain & shackle of anyone who a)  provides goods or services, and/or b) pays taxes now or who will in the future, and/or c) has deposits at any Federal Reserve 'capitalized' bank.

That's whose debt it is.

Arguably, I could extend this analysis and credibly argue the debt is owned by anyone born (whether they ever do a, b or c above or not) into an alleged 'sovereign' nation, as the debt is merely a burden on the incentive to want to do anything productive, as each unit of productivity one contributes is taxed at a higher rate (I'm not just talking income taxes here, but the overall scheme of paying interest to the Money Masters - aka Fractional Reserve Banking Lever Pullers), and even represents a crushing disincentive that represses all economic activity.


end da fed's picture

and anyone who is going to be born

CPL's picture

Actually it now gives a decent presidence to not paying taxes period.  When someone else makes promises with your money and time it's usually called theft.  When the theft turns out to be legitimate but when the theft turns into a giant scam that breaks.


Hmmmm, anyone else here feel like giving a thin red dime to these pricks?

Seer's picture

The "debt" belongs to the SYSTEM (the growth-based system).  System collapses and the debt is gone...

The System IS a BUBBLE!

mayhem_korner's picture



"Sovereign debt" has a nicer ring than "deferred pillaging."

oogs66's picture

deferred pillaging is awesome :D

Seer's picture

Or "future entrapment."

But, yeah, "deferred pillaging" is great.  Reminds me of when I first heard "deferred maintenance" to describe a deteriorating home.  The games we play with words...

ZeroPower's picture

Best paragraph about the EIB i've ever read. European inv bank is nothing more than a charity program by the bureaucrats for their cronies. 

oogs66's picture

it seems strange that within europe they need half a trillion for projects private companies or banks wouldn't finance

GeneMarchbanks's picture

It's a way to secure a 'marketplace' especially for countries who have yet to join. Look where their 'investment' goes:


ZH had it right, EUs version of the IMF...

ZeroPower's picture

Absolutely. I suppose making a profit is NOT within the EIBs mandate!

DutchDude's picture

So many suits, claiming they will mend a broken system by lending more paper... all the same;

It's like putting a silk pillow over a chair filled with dogshit. It might sit comfortable for a while, but you still have to clean the chair AND the pillow in the end... Or put another silk pillow over the shitstained one... ah, you get the idea...

Seer's picture

Surely you're not suggesting that "the very brightest" have sold us a sack of shit, are you? </sarc>

But, had we not ignored all this for all this time, that there could NOT be infinite growth, we wouldn't be in this situation.  We bought the lies.

DutchDude's picture

True True... however, can you blame the people for not knowing that what has not been told?

Most people have absolutely no idea what the hell is going on in the world, as long as the have jobs, mortgage and spending money they have a modern life.

It was the jobs of the governments to tell them it is based on a ponzi scheme and act to improve it; that's how representative democracy should work; people select persons who know shit to govern their country. They failed in doing that and now the whole game is falling apart. Blaming it on the people is reverse representative democracy... don't think that's fair imo.

Bolweevil's picture

I was ignorant, but now I'm found. Thanks Tyler. Happy Turkey to you and your mom.

MachoMan's picture

Blaming the people in general, to some degree, is perfectly acceptable.  All forms of democracy (government) require a vigilant watch and cannot function with general political apathy.  This metric is in conflict with real economic prosperity, which necessarily increases political apathy of the masses...  Thus effectively sowing the seeds of its own demise...

This isn't the first time this has happened...  people start paying attention when the ship starts listing, not when the captain is running full steam into a field of ship sinking icebergs.

The people KNOW what will happen, we're just not in a position to care.  Whether it's taking out helocs on a house that's been appraised by rainbow shitting unicorns or trampling people to get that tickle me elmo doll, people just don't give a fuck...

and then things get so bad they can't be politically active because...  we're too busy worrying about survival...  there is a range for government to work...   

Seer's picture

First, let me clarify my above point.  I state things not so much to lay blame at people, but, rather, SYSTEMS.  The System is predicated on growth, therefore it was doomed to fail from the get-go.

"The people KNOW what will happen, we're just not in a position to care. "

No, I don't believe they do.  If you understood the real urgency then you'd have taken action (like most here have).  The "don't care part" has more to do with a mindset of trying to work within the very system that has you locked in and going over the cliff.  There's apathy toward fixing it, as there should be, because it's not fixable!  To me it's a matter of everyone thinking everyone else is to blame, and that others will be "outed" in time to save their asses (from plunging over the cliff).  No, it's the lazy position, instilled in society by TPTB (captured rats in the cage).  One can always take action.  The System, however, is pretty harsh when you try to leave it.  Hard to get oneself to gnaw off one's leg in order to escape the trap.

One way or another people are going to be exposed to a lot of pain.  May the forces have mercy on us...

Snidley Whipsnae's picture

I have a central bank that prints money to buy bonds from my treasury dept and my central bank loses money holding them on balance sheet. My treasury takes IOUs back from my central bank to keep my central bank from going broke. My arrangement resembles two drunks leaning on each other so neither one falls down. Today, with its 50-to-1 leverage and investment in volatile securities, my central bank looks more like a poorly run hedge fund than a central bank. Who am I?
I am the US Government.


Seer's picture

Follow me said the blind man to the deaf man...

Sudden Debt's picture

I pay taxes so....



cossack55's picture

I hold over $120 trillion in debt for the US alone.  I am broke. I am the US middle class.

GeneMarchbanks's picture

That makes no sense. How can you be broke and middle class?

bill1102inf's picture

Its not what you have, its what you APPEAR to have.

Snidley Whipsnae's picture

"That makes no sense. How can you be broke and middle class?"


Make that 'former middle class'... a change of perception takes time... and change is right up there with death on the list of items that people fear most.

This might be a little help for those trying to cope... including me.

"Looking out at the road rushing under my wheels —

Looking back at the years gone by like so many summer fields.
In '65 I was seventeen and running up 101
I don't know where I'm running now, I'm just running on ...

In '69 I was twenty-one and I called the road my own
I don't know when that road turned onto the road I'm on.


You know I don't even know what I'm hoping to find ...
Running into the sun, but I'm running behind...
?Jackson Browne
Seer's picture

Jackson Browne gets you an up arrow by default :-)

If I could I'd give you another one for the "perception" comment.  Most people are so firmly a creation of their "position," their job that they'll defend that to the bitter end, even if it means a premature end.

The faster I run the behinder I get.  People starting to get it that we need to slow down? If you don't know where you're going you shouldn't be trying to get there in such a hurry!

rufusbird's picture


"That makes no sense. How can you be broke and middle class?"

New house, underwater, two new cars underwater, Hign income, no savings. No equity period.

Coldfire's picture

Liquid. Solid. Gold.

jiggerjuice's picture

I am your student loans, and am impossible to write off via bankrupcy as the "law" stands in its current form. I am about a trillion bucks, and I was mostly birthed by Franklin Stupiversity and ITT Technical Nonsense. Also, none of the deadbeats that wandered into my joint are going to get jobs for 200k a year as barbers or chefs. I am bigger than all of the credit cards in America - you know, the 15 cards per person average? Even bigger. Oh but don't worry, I'll get paid via tax return clawbacks and a lifetime of peonage. Zug zug.

LawsofPhysics's picture

Got physical?  You better, the vast majority of the "debt" is a fraud.  People are about to find out precisely how much of the "law" possession is.  As it turns out, possession is all that matters moving forward.

TruthInSunshine's picture

All true, which is why FDR confiscated gold, and why none other than Alan Greenspan RECENTLY wrote that:

Greenspan: Gold is a Currency, Euro “Breaking Down”

fonzanoon's picture

I was with you right up to the downgrades. There will be no downgrades. The ratings agencies will begin to seriously look at Antarctica in the next few weeks. That is my call. Out of nowhere they will drop it's rating 3 notches and keep a negative outlook. If it does not pull itself together very soon they will be forced to downgrade them again. Everybody keep a close eye on Antarctica.