More than half of the worlds debt securities were, for all intents and purposes, considered risk-free. In 2006, that was nearly $5,000bn of assets.
The financial crisis had a lot to do with triple-A ratings being slapped on to subprime securities which didnt warrant them, we know that.
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[W]atch what starts happening from 2008 and 2009.
The AAA bubble re-inflates and suddenly sovereign debt becomes the major force driving the worlds triple-A supply. (...) Where ABS dissipated, sovereign debt stood in to fill the gap. And more.
Its one reason why the sovereign crisis is well and truly painful.
Its a global repricing of risk, again, but one that has the potential for a much larger pop, so to speak.