Robin Wigglesworth
Episodes
Notes
Masters in Business · Embracing the Bond Market: Masters in Business with Robin…
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How Much Debt Have AI Hyperscalers Issued?
Robin Wigglesworth says AI hyperscalers have issued around $500 billion worth of debt in the latest year, after about $200 billion the year before. He is not actually worried, because the borrowers are large, successful companies. YouTube still prints money. Amazon still prints money. Facebook and WhatsApp still print money. They could issue lots more.
A lot of money is going into AI, and the spending is increasingly debt financed and off-balance sheet financed. Historically, that pattern has not ended well. Rail was a capital-spending boom that ended badly in economic and financial terms and still brought a huge societal benefit for America, and so did all the cable that was laid. Rail and
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Why Did Gregor McGregor Invent a Country?
Robin Wigglesworth calls Gregor McGregor a delightful scoundrel who invented an entire country to sell bonds in the 1800s in England. McGregor is not a hero and should not be rehabilitated. His life is wild enough that a movie about him should already exist.
He fought in Venezuela, served as a soldier in the Napoleonic Wars, and then ran one of the most outrageous financial scams in history. He might have believed the country he invented. The scheme was a 19th century version of fake it till you make it: he was trying to will a new country into existence, and he was essentially incompetent. Nobody knows exactly what he believed, and the story is still incredible.
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How Well Did Bond Ratings Match Financial Crisis Losses?
Robin Wigglesworth was staggered to find that credit ratings looked pretty good once final losses from the financial crisis were counted out. Prices told a harsher story. Buyers trusted nothing, so even AAA tranches of CDOs tumbled, and lots of the synthetic deals blew up completely. The actual RMBS and CMBS markets tracked the grades much more closely.
AAA bonds in the RMBS and CMBS markets did take losses, and a grade supposed to be as good as gold should not lose money. Broadly, the ratings were not massively out of whack with the losses that showed up. The record comes from a lot of financial-crisis post-mortems gathered for a chapter on how it all played out.
Rating agencies can be wr
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What Did Macaulay Mean by Fabulous Debt?
Robin Wigglesworth says the book title Fabulous Debt comes from Thomas Babington Macaulay, who described Britain's enormous accumulation of debt as fabulous because the burden capitalized the country instead of leading it to ruin. After the Napoleonic Wars, England carried what is still pretty much the biggest debt-to-GDP burden ever seen in history, then grew out of it and came through completely fine.
Macaulay's polemical history of Britain pointed out that after war after war the British debts kept growing and growing. The burden did not impede Britain's wealth and growth. A vibrant bond market meant the bonds could be used as security for loans, and people could buy an income stream. Cr
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How Did Robin Wigglesworth Learn the Bond Market?
Robin Wigglesworth learned the bond market by covering Islamic bonds in his first job. Islamic bonds carry no interest rates in theory, yet each one walks, talks, and quacks like a fixed income bond.
The bonds are structured in a funky way. A buyer purchases the bond at a discount, the same way a zero coupon bond works, so interest is still there. The mechanism is a leaseback. A person wants a house. The bank buys the house and leases it at fixed payments for the next 20 years. At the end of the lease, the person owns the house.
Work after the first job moved into most of the rate space for Bloomberg, and Iceland was part of the beat. Iceland really blew up during the financial crisis. The