Post on 06-Apr-2018
transcript
8/3/2019 Hayman Letter 2009
1/26
March2,2009
DearLimitedPartners:
WerecentlyconcludedourthirdyearofoperationsattheHaymanCapitalfundsandarefortunateto
havereturnedaboveaverageresultsforourlimitedpartnersduringaverytumultuoustime. Hayman
CapitalMaster,L.P.(theMasterFund)hasreturned+340%netofallfeesandexpenses*sinceits
inceptioninFebruaryof2006,whiletheS&Phasreturned 42.37%. Forthoseofyouwhohavenotbeen
withussinceinception,theMasterFundsannualreturnsfor2006,2007,2008and2009(yeartodate),
were+20.27%,
+216.64%,
+6.13%
and
+9.03%,
respectively.
These
results
are
the
product
of
many
sleeplessnights,intensegovernmentalaction,andcountlessdiscussionsamongourinvestmentteam
withregardtoourmacroviews. Whileitwouldberepetitivetorevisithowwehavearrivedatthispoint
inworldhistory,laterinthisletterIwilldiscussatlengthoneofthekeyfactorsthatwebelievewill
determineourfuturedirection. Needlesstosay,wehavefocusedonriskmanagementbystructuring
ourpositionswiththemostasymmetricrisk/rewardscenariospossible. Thiscommunicationmaybethe
mostimportantletterwehaveeverwritten.
Asound
banker,
alas!
is
not
one
who
foreseesdanger,andavoidsit,butone
who,whenheisruined,isruinedina
conventionalandorthodoxwayalong
withhisfellows,sothatnoonecanreadily
blamehim.Itisnecessarilypartofthe
businessofabankertomaintain
appearances,andtoconfessa
conventionalrespectability,
which
is
more
thanhuman.Lifelongpracticesofthis
kindmakethemthemostromanticand
theleastrealisticofmen.
John Maynard Keynes Consequences to John Maynard Keynes Does he have it right?
8/3/2019 Hayman Letter 2009
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fiat.[a.Latin'letitbedone';'lettherebemade']
Inshort,
fiat
currency
is
money
that
exists
because
an
authority,
government
or
custom
simply
declares
orforcesittobeassuch. TheAmericanHeritagedictionarydefinesfiatcurrencyas"papermoney
declaredlegaltender,notbackedbygoldorsilver." Ithinkoffiatcurrencyasbeingpapermoneywith
nointrinsicvaluewhichhasbeensimplydeclaredtobelegaltender. Uptothispoint,ithasbeenwidely
acceptedthatcurrencyormoneyisworththegoodsandservicesforwhichitisroutinelyexchanged. I
hopethisremainsthecase,butthinkthattheoddsareagainstit. Inthepast,Ihavestatedmybelief
thatthereisnotenoughmoneyintheworldtosoakupthetensoftrillionsofdollarsofdeleveraging
thatmustoccuroverthenextfewyears. Thiscouldnotbetruerthanitistoday. WhileIdonothavea
solution(and
maybe
it
does
not
exist)
to
the
problems
facing
us
today,
what
Ido
know
is
that
attemptingtoreleveramassivelyoverleveragedsystemisclearlyNOTtheanswer. The
disintermediationofriskisoneoftheprimarycausesofthecurrentproblemanditisNOTthesolution.
AlanGreenspansaiditbestwhenhewroteGoldandEconomicFreedomin1966(beforeheenteredthe
FederalReserveSystem;sincethen,hehasbeensilentonthesubject):
Theabandonmentofthegoldstandardmadeitpossibleforthewelfarestatiststouse
thebankingsystemasameanstoanunlimitedexpansionofcredit. Theyhavecreated
paperreserves
in
the
form
of
government
bonds
which
through
acomplex
series
of
stepsthebanksacceptinplaceoftangibleassetsandtreatasiftheywereanactual
deposit,i.e.,theequivalentofwhatwasformerlyadepositofgold. Theholderofa
governmentbondorofabankdepositcreatedbypaperreservesbelievesthathehasa
validclaimonarealasset. Butthefactisthattherearenowmoreclaimsoutstanding
thanrealassets. Thelawofsupplyanddemandisnottobeconned.Asthesupplyof
money(ofclaims)increasesrelativetothesupplyoftangibleassetsintheeconomy,
pricesmusteventuallyrise.Thustheearningssavedbytheproductivemembersofthe
societylose
value
in
terms
of
goods.
When
the
economys
books
are
finally
balanced,
onefindsthatthislossinvaluerepresentsthegoodspurchasedbythegovernmentfor
welfareorotherpurposeswiththemoneyproceedsofthegovernmentbondsfinanced
bybankcreditexpansion.
Intheabsenceofthegoldstandard,thereisnowaytoprotectsavingsfromconfiscation
throughinflation.Thereisnosafestoreofvalue.Iftherewere,thegovernmentwould
havetomakeitsholdingillegal,aswasdoneinthecasegold. Ifeveryonedecided,for
example,to
convert
all
his
bank
deposits
to
silver
or
copper
or
any
other
good,
and
thereafterdeclinedtoacceptchecksaspaymentforgoods,bankdepositswouldlose
theirpurchasingpowerandgovernmentcreatedbankcreditwouldbeworthlessasa
claimongoods. Thefinancialpolicyofthewelfarestaterequiresthattherebenoway
fortheownersofwealthtoprotectthemselves.
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TheUnitedStatesabandonedthegoldstandardonAugust15,1971,inanexecutiveordersignedby
thenPresidentNixon. Atthatmomentinhistory,theUnitedStatesdecideditwouldnolongerredeem
itspaper
dollars
for
gold.
It
is
an
interesting
point
to
ponder
the
United
States
has
been
operating
in
a
systemoflimitlesscreditcreationforONLY38years. 38yearsisnotanextensiveperiodoftimewhen
reflectingonworldhistory. Intheabsenceofourcurrency'smandatoryconvertibilityintoaprecious
metal(ormoreimportantly,afiniteresource),ourownFederalReserveBankhasbeentaskedwith
preventinginflation(orthedevaluingofourfiatcurrencybyprintingtoomuchofit).Generally,the
UnitedStateshasbeencreatingcreditandexpandingitsGDPandnationaldebtloadforthepast38
years. Interestrateshavecomedowntozeroandtheoldeconomicprincipleofdiminishingmarginal
utilitywasjustappliedtothelastincrementaldollarofcreditmarketdebt. Theproverbialinmateshave
beenrunning
the
asylum.
The
only
institution
in
the
world
that
can
LEGALLY
counterfeit
the
U.S.
Dollar
issupposedtopolicetheunrulydebasementofourcurrency.
Leninwascertainlyright. Thereisnosubtler,nosurermeansofoverturningtheexisting
basisofsocietythantodebauchthecurrency. Theprocessengagesallthehiddenforces
ofeconomiclawonthesideofdestruction,anddoesitinamannerwhichnotoneman
inamillionisabletodiagnose.
John
Maynard
Keynes
Asacountry,wenowfacerunninga$1.5$2.0trillionoperatingdeficitinexcessofroughly$2.1trillion
ofgovernmentrevenue(ifwearelucky). IftheU.S.wereapubliccompany,notevenKenLewiswould
considerpurchasingus(atapremiumnodoubt). Asanattachmenttothisletter,enclosedistheUnited
Statesbalancesheetandincomestatement. Iencourageyoutolookthroughtheminorderto
formulateyourownopinionofentitlementspendingandgovernmentreceipts.Interestinglyenough,
afterquizzingsomeofthegreatassetmanagersintheworld,veryfewcouldevengetclosetoguessing
thegovernment
receipts
number.
Iguess
it
just
does
not
matter
anymore.
Tothebestofourknowledge,therehasonlybeen160,000metrictonsofgoldEVERminedintheworld.
At$950perounce,allofthegoldintheworldwouldbeworth$4.887trilliondollars. Ontheother
hand,weestimatethatthereisroughly$60trillionoffiatmoney(includingcurrencies,deposits,savings,
moneymarketsandCDs)intheworld. Giventhefactthatworldgovernmentsarecaughtwithsomuch
creditmarketleverageandlosses,webelievethattheywillintrueKeynesiancolorattempttoprint
theirwayoutofthismess. Ifthisoccurs,youhavetoaskyourself: Howmanyofpeopledoyouthinkit
willtake
to
begin
to
question
the
value
of
paper
currency
when
it
is
being
debased
in
an
attempt
to
save
worldgovernments? Ifasmallfractionofthemstopbelieving,wherewilltheygotopreservetheir
wealth? MyguessistheU.S.dollarandpreciousmetals.
The Bad News? The Rest of the World Looks Worse
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Ofcourse,anobserverwouldnotbeexpectedtoknowthisbasedontheforecastsandpredictionsmade
byglobal
economic
and
financial
bodies
such
as
the
IMF.
According
to
their
January
World
Economic
OutlookUpdate,theworldeconomywillgrowthisyearbyalmost0.5%despitethreeofthefourtop
economiesintheworldrecordingnegativeseasonallyadjusted,annualizedgrowthinQ42008of
between 6.2%and 12.7%. However,thisisthesamebodythatenteredintobailoutagreementswith
Hungary,UkraineandLatviawithGDPassumptionsvaryingbetween 1%and 2%for2009,onlyto
watchHungaryandLatviapost 12%and 23.6%annualizeddeclines,respectively,inQ42008GDP,
whiletheUkrainescrapedbywithamild 20%GDPcontractionyearoveryearinJanuary2009.
Surprisingly,considering
the
catalyst
for
the
current
crisis
came
from
the
U.S.,
and
the
majority
of
worldwideeconomicopinionhasbeendevotedtotheadmittedlysizeableproblemsfacingtheU.S.
economy,thescorecardsofarreflectsarelativelymilddownturncomparedtotherestoftheworld.
Acomparisonofreported4thquarterannualizedGDPdeclinesisinstructive. Shownbelow,
representativesfromWesternEurope,EastAsiaandEmergingEuropeareallcurrentlycontractingfaster
thantheU.S.
AnnualizedGDPGrowth(Q42008)
25%
20%
15%
10%
5%
0%
Source:Bloomberg,respectiveMinistriesofFinance.
WesternEurope
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repositoryoftheworldsmarginalindustrialcapacityatitlewehavehandedovertothetradesurplus
nationsofEastAsiaandEurope):
UnitedStatesYoYIndustrialProduction(1920Present)
IndustrialproductionacrosstheentireEurozoneisdecliningatitsfastestrateonrecord:
EurozoneYoYIndustrialProduction(exConstruction)(1986Present)
8/3/2019 Hayman Letter 2009
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EastAsia
MeanwhileinEastAsiatheconsumerstrikefromtheU.S.andothernetaggregatedemandeconomies
hashadadevastatingimpactonindustrialproductionandexports. InSouthKorea,industrial
productionandexportsaredecliningmorerapidlythanduringtheAsianfinancialcrisis:
GermanyYoYIndustrialProduction(1992Present)SwedenYoYIndustrialProduction(1991Present)
SouthKoreaYoYExports(1967Present)SouthKoreaYoYIndustrialProduction(1976Present)
8/3/2019 Hayman Letter 2009
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ThestoryisthesameinTaiwan:
Andintheworldssecondlargesteconomy(andcurrentlymostindebtedsovereignnation),azombified
Japanisstartingtoconvulseasindustrialproductiongrowthhitanalltimelowof20.8%yearoveryear
inDecember2008,andexportsarecurrentlyfallingoffacliff:
TaiwanYoYIndustrialProduction(1997Present) TaiwanYoYExports(1994Present)
JapanYoYExports(1986Present)JapanYoYIndustrialProduction(2004Present)
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GDP)toexpanditsdomesticconsumptiontoreplaceanannualized 28%Q4declineinU.S.retail
spending,thereisnosignthatitsevenheadingintherightdirection.
InJanuary,Chinareporteda 17.5%dropinexportsanda 43.1%dropinimportsyearoveryear. By
themselves,thedatapointsindividuallyreflectaremarkabledeclineintradevolumethatisonly
partiallyexplainedbytheseasonalfactors,buttogethertheyreflectthatinternaldemandforexternal
goodsandservicesisdecliningastheimport/exportgapexpandsratherthanshrinks.
ThisbringsustoourdoubtsaboutthequalityofChinascurrentgrowth. Theofficial6.8%yearover
yearQ4growthreleasedbytheChinesegovernmentseemsunsustainablewhenconsideredwiththe
figuresonChinesepoweroutput.
5%
0%
5%
10%
15%
20%
25%
30%
MonthlyChinesePowerOutput YOY%Increase/(Decrease)
ChinaYoYImports(1995Present)ChinaYoYExports(1995Present)
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JustHowBigistheGlobalDebtTidalWave?
Weregonnaneedabiggerboat ChiefBrody,Jaws,1975Wehavespentthegoodpartof6monthscombingthroughtherestoftheworld'ssovereignbalance
sheetsandincomestatementsinordertounderstandjusthowmuchleveragewearereallyworking
with. Theresultsofourstudyarenothingshortofshocking! Itisnowcleartomewhywearewherewe
aretoday. ThecruxoftheproblemwasnotsubprimeorAltAmortgageloans,norwasitthisbankor
thatbank. Itwastheproblematthehighestoftheorder. Governmentsofcountriesaroundtheworld
allowedtheirbankingsystemstogrowunchecked. Thelimitlesscreditcreationaffordedbyfractional
reservebankingandfiatcurrencieshasgrownintoamassiveand,insomecases,untenableliabilityfor
thehostcountry. WhenIcelandfailed,itpromptedustolookdeeperintohowandwhyasovereign
governmentcouldgettothebrinkofdisasterandthenjumpin. OthersdismissedIcelandasasmall
fishingvillageof300,000peopleanda$19billionGDP.WhenwelookedinsideIceland,ithelpedbuild
thebasisforourcurrentunderstandingfortherestoftheworld. Icelandwasbrokenasacountrydue
t th i t ll i h df l f b k t t $200 billi f l R b th
ChinaYoYGDPversusOECD12MonthLeadingIndicatorIndex(1995Present)
8/3/2019 Hayman Letter 2009
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andJapantotal$86trillion(USD). Whilethenameshavebeendisguisedtoprotecttheguilty,the
followingsamplecapturescountriesofEuropeandAsia,aswellastheU.S.:
0%
10%
20%
30%
40%
50%
60%
70%
0x
5x
10x
15x
20x
25x
30x
35x
Cumulative MFIAssets&SovereignDebtasaMultipleofGovernmentRevenuesGovernmentRevenuesas%GDP
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
MFIAssetstoGDPNetSovereignDebttoGDP
8/3/2019 Hayman Letter 2009
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IconsiderProfessorKennethRogoff(ThomasDCabotProfessorofPublicPolicy,Departmentof
Economics,HarvardUniversity)tobeoneoftheworld'sforemostexpertsonsovereignbalancesheets
andthe
history
of
sovereign
defaults.
He
worked
with
Geithner
at
the
IMF,
Ben
Bernanke
at
Princeton,
andevenintroducedLarrySummerstohiswife. Hehaswrittenmanypapersonthesubject,andIfound
ThisTimeisDifferent:APanoramicViewofEightCenturiesofFinancialCrises(April2008)(see
http://www.economics.harvard.edu/faculty/rogoff/files/This_Time_Is_Different.pdf)tobeoneofthe
bestpiecesofworkonthesubjectofgovernmentsgettinginovertheirheadsandtheinevitable
consequencesthatfollow. WhatProfessorRogoffconcludesisthatcapitalmobilityandsubstantial
foreigninvestmentaretwooftheprimarydeterminantstotheconditionsthattypicallyprecede
sovereigndefault. Inpriorworks,suchas"DebtIntolerance"(2003),hetriestounderstandthe
thresholdlevels
of
debt
that
are
"sustainable"
for
many
emerging
economies.
When
we
applied
the
recentresultsofourworktotheconclusionsdrawnbyRogoff,theresultwassomethingthatnoneofus
haveeverimaginedcouldhappen. Ourworksuggestedthattherecouldbea"cluster"ofgovernment
defaultsoverthenextthreeyears(orpossiblysooner). Doyouknowwhatpercentageoftheworld's
sovereigngovernmentsindefaultedintheyear1934? Remember,thebrevityoffinancialmemoryis
remarkable.
PercentofCountriesinDefaultonorRestructuringtheirSovereignExternalDebt(18002006)
ResultoftheGreatDepressionandWorldWarII ResultoftheEmerging
MarketDebtCrisis
Source: CarmenM.ReinhartandKennethS.Rogoff. ThisTimeisDifferent:APanoramicViewofEightCenturiesofFinancialCrises. April16,2008.
Rogoffstatesthat:
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documentsothercrisesthatoftenaccompanydefault: includinginflation,exchangerate
crashes,bankingcrises,andcurrencydebasements.
IrecentlyhadtheopportunityandprivilegetomeetanddiscusswithProfessorRogoffourwork,and
aftercarefulconsiderationandreview,hewasverycomplimentaryofourresearchandintriguedbythe
considerationouranalysisgivestocontingentliabilitiesarisingfromMFIassets.
CompetitiveDevaluation Don'tGetRopeADoped!
Asaresult
of
the
world's
banking
systems
being
multiples
of
the
host
country's
GDP
and
many
multiples
ofgovernmentreceipts,thecountrieshaveonlyafewwaysthroughthis. Whatwehavewitnessedover
thepastfewmonthsisthatgovernmentsaroundtheworldhavedecidedtomaintainthestructural
stabilityoftheirbankingsystemsinordertopreservethetrustoftheirpeople. Basically,governments
aroundtheworldhavetosavetheirbanksevenifitmeansbringingthesovereignintoanuntenable
position. Themostlikelypaththattheworld'sKeynesianswilladoptisthemoneyprintingpress. Even
ourownBenBernankehasexhibitedhisloveforhisprintingpress. Inhisnowinfamous2002
"Helicopter"speech,Mr.Bernankestated:
Indeed,underafiat(thatis,paper)moneysystem,agovernment(inpractice,thecentral
bankincooperationwithotheragencies)shouldalwaysbeabletogenerateincreased
nominalspendingandinflation,evenwhentheshorttermnominalinterestrateisat
zero[.] Whathasthisgottodowithmonetarypolicy? Likegold,U.S.dollarshavevalue
onlytotheextentthattheyarestrictlylimitedinsupply. ButtheU.S.governmenthasa
technology,calledaprintingpress(or,today,itselectronicequivalent),thatallowsittoproduceasmanyU.S.dollarsasitwishesatessentiallynocost. Byincreasingthenumber
of
U.S.
dollars
in
circulation,
or
even
by
credibly
threatening
to
do
so,
the
U.S.
governmentcanalsoreducethevalueofadollarintermsofgoodsandservices,whichis
equivalenttoraisingthepricesindollarsofthosegoodsandservices. Weconcludethat,
underapapermoneysystem,adeterminedgovernmentcanalwaysgeneratehigher
spendingandhencepositiveinflation." (emphasisadded)
Now,thethingthatscaresmethemostaboutthatspeechisthefactthatMr.Bernankesays"at
essentiallynocost." WhenIlookbackintohistory,almosteveryexperimentwithfiatcurrencyhas
endedpoorly.
Actually,
the
thing
that
disturbs
me
the
most
is
Bernanke's
academic
comfort
in
the
fact
thathisprintingpresshasenoughink. HisKeynesianideologyworksbestinavacuumoutsideofthe
realworld. Thefactthathethinksstealingmoneyfromthesaversinhiseconomyandconfiscatingit
throughthehiddentaxofinflation/currencydebasementshouldscareeveryone.
We are about to enter a time in which all of the world's central banks will break out the ink and start
8/3/2019 Hayman Letter 2009
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ApassagefromTheCreaturefromJekyllIslandbyEdwardGriffin:
Indeed,our
founding
fathers
intended
to
prohibit
the
Federal
Government
from
issuing
billsofcredit,considerthis...ThefirstdraftoftheConstitutionwascopiedinlarge
measurefromtheArticlesofConfederation. Whenitwastakenupforconsiderationby
thedelegates,therefore,itcontainedtheoldprovisionthathadcausedsomuchchaos.It
stated:"thelegislatureoftheUnitedStatesshallhavethepowertoborrowmoneyand
emitbillsofcredit." But,afteralivelydiscussiononthematter,theoffendingprovision
wasvotedtoberemovedfromtheConstitutionbyanoverwhelmingmargin. Voicingthe
sentimentofthemajorityofthedelegates,AlexanderHamiltonsaid: "toemitan
unfundedpaper
as
the
sign
of
value
ought
not
to
continue
aformal
part
of
the
Constitution,noreverhereaftertobeemployed;being,initsnature,repugnantwith
abusesandliabletobemadetheengineofimpositionandfraud.
Atthetime,GeorgeWashingtonstated,"Wemaybecomeagreatcommercialandflourishingnation.
But,ifinthepursuitofthemeansweshouldunfortunatelystumbleagainonunfundedpapermoneyor
anysimilarspeciesoffraud,weshallassuredlygiveafatalstabtoournationalcreditinitsinfancy."
Ifthe
Federal
Reserve
begins
to
purchase
large
quantities
of
newly
issued
Treasury
bonds
the
electronicequivalentoftheprintingpresswebetterholdontoourwallets! Thegoodnewsforthe
UnitedStatesisthefactthat,asapercentofGDP,itwillnothavetoprintnearlyasmuchasmanyparts
oftherestoftheworld.
WhatworriesmethemostaboutouranalysisisthefactthattheU.S.willhavetoissue$2.35trillion
newTreasuriesthisyear,andcollectively,Europewillhavetoissueevenmore. Today,ChinaandJapan
own65%oftheforeignownershipofU.S.Treasuries. HaveyouseenwhatishappeningtoChinaand
Japanlately?
It
does
not
seem
possible
that
there
is
anywhere
near
enough
money
in
the
world
to
buy
thatmanyTreasuries.
Tobeclear,webelievethattheU.S.(andinfact,theworld)isinanongoingdebtdeflationaryspiralthat
willlikelycontinueforsometime(possiblyyears). Therampantprintingofcurrenciesaroundtheglobe
isnot,inouropinion,likelytobeimmediatelyinflationary(inthecommonunderstandingoftheterm)
asleveragecomesoutoftheprivatesectorandassetvaluescontinuetodecline. Thegreaterconcernis
thepotentialinflationarytimebombthatgrowsasgovernmentscontinuetoborrow,printand
stimulate.What
happens
to
inflation
when
the
velocity
of
money
goes
from
zero
to
100?
Givenalloftheabove,weareveryconfidentintwopredictions:
1. TheU.S.isinrelativelybettershapethantherestoftheworld,andthedollarwillbeasafercurrency than virtually any other (and yes, that includes the Yen).
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BankDebtStillTooEarly
Wehave
spent
aconsiderable
amount
of
time
analyzing
the
bank
debt
markets
and
looking
for
investmentopportunities. Whilethisassetclasshasperformedwellsinceitslowsinthe4thquarter
2008,webelievethatnowisnotthetimetoenterthisspace. Weareconcernedaboutinvestmentsin
thisarenaforanumberofreasons:
S&Ppredictsthatapproximately23%ofallspeculativegrade,nonfinancialissuerswilldefaultinthiscycle. Webelievethispredictiondrasticallyunderestimatestheseverityoftheproblem
andtheactualnumberwilllikelyapproach50%. ImagineaworldwhereHALFofthese
investmentsfile
bankruptcy.
To
add
insult
to
injury,
we
believe
recoveries
will
be
well
below
historicalnorms,asevidencedbyrecentbankruptcyfilings.
ManyofthemoreliquidnamesarecorepositionsinCollateralizedLoanObligations(CLOs),whichareleveredpoolsofleveredbankloansusedtodisperseriskandgeneratesafe
returnsfromnotsosafeassets(weseenthismoviebefore,haventwe?). Webelievethatthe
ratingagencieswilldowngradeasmuchas40%ofallnoninvestmentgradecreditstoCCC
status. Thispointisextremelyimportant. Suchadowngradewouldtriggerafailureofover
collateralizationtestswhicharekeycovenantsinvirtuallyallCLOsandpotentiallytriggerEvents
ofDefault
in
many
of
these
pools.
The
unintended
and
dangerous
consequence
of
these
defaultswouldbeanevaporationoftheCLObidfromthemarketaccompaniedbyaglutof
supply,thusdrivingdowntheprice.
TherearevirtuallynoreasonablypricedDIPlenders(dependingonwhosesideyouareon),whichisforcingexistingloanstobeimpairedbeyondhistoricnorms(seetheLyondelldiscussion
below).
Mostmarginalborrowerscontinuetoplaychickenwiththeirlenders,andmanyagentbanks(leadlendersinasyndicationprocess)aresimplypuntingthelossesdowntheroadforabetter
day,which
further
weakens
the
collateral.
ThepostureinWashingtonistosaveorcreatefourmillionjobs. Consequently,wethinkmostbankruptcyjudgeswillbeoverlysympathetictoborrowersandpushforgoingconcernsrather
thanliquidations(whichcouldactuallymakemoresenseincertainsituations).
Thesumofthepartsanalysiscommonlyusedinliquidationscenariostendtobeoverlyoptimisticwithregardtocurrentbankdebtpricing. Withnocreditavailabletofinancethese
businessesasgoingconcernsoutofbankruptcy,thebankdebtpricemustultimatelyreflect
whata100%equitypurchaserwouldbewillingtopayanumbermuchlowerthanhistorical
norms(seeTribunediscussionbelow). Thereturnsrequiredbyinvestorswillonlycontinuetoincreaseinthemediumterm.
ThetypicalCLOcanonlyholddefaultedcollateralforaperiodof2to3years. Unfortunately,webelievethisissimplynotenoughtimefortheeconomytofinditswayoutoftheproverbial
woods,andCLOswillbeforcedtosellilliquidreorganizedequityintoachallengingmarket.
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LyondellFrom$21BilliontoBankruptin385Days
LyondellChemical
Company,
amanufacturer
of
intermediate
chemicals,
was
acquired
by
Basell
AF
S.C.A.
onDecember20,2007,for$20.9billionincludingassumeddebt. Thebulkofthepurchasepricewas
financedwiththecombinationof$9.1billioninsyndicatedbankloans,a$7.9billionloanfromBasellAF
S.C.A.,and$800millionofassumedoutstandingunsecuredbonds. Thisimplies85%debt/capital,with
bankloansmakingupnearly44%ofthetotalcapstructure. During2008,Lyondellsoperationssuffered
withtheeconomicdownturn(thedamage,ofcourse,wasamplifiedbyexcessiveleverage)culminating
inbankruptcyfilingonJanuary8,2009. Thinkaboutthatforamoment: ittookonlyayearfora$21
billionleveragedacquisitiontoproceedfrompurchasetobankruptcy. Overthesametimeperiod,the
bidprice
for
the
Lyondell
syndicated
bank
loans
declined
57%
from
$1.00
to
$0.43.
Lyondells
weak
cash
flowoutlookrequiredsignificantDIPfinancingtofacilitatetherestructuringprocess. Thetightcapital
marketconditionsforcedLyondelltoacceptanonerousrollupDIPstructure(LIBOR+1000witha3%
LIBORflooraMINIMUM13%floatingrate)thatwilltransferasubstantialportionoftheeconomics
fromprepetitioncreditors(prebankruptcylenders)totheDIPlenders.Thisputstheprebankruptcy
banklendersinaveryunfavorablepositionunderarollupDIP,originallendersmustthrowgood
moneyafterbadbyputtingadditionalcapitalintothenewDIPfacilitytoprotecttheiroriginalbadloan.
Accordingly,tradingintheseniorsecuredbankloansbifurcatedintotwoclasses: (i)Stub,where
originallenders
did
not
agree
to
re
up;
and
(ii)
Roll
up,
where
original
lenders
threw
good
money
after
bad,desperatelyclawingforanenhancedrecovery. AsofFebruary23,2009,thebidpricesforthe
stubandrollupbankloansare$0.245and$0.570,respectively. Baseduponourexperience,most
WallStreetfirmsassume60%recoveryratestobethenorm.
TribuneBewaretheAllureofTrophyAssets
TribuneCompanyisamediaconglomerateconsistingofnewspapers,televisionstations,andownership
interestsin
the
Chicago
Cubs,
Wrigley
Field,
SportsNet,
and
The
Food
Network.
In
December
2007,
Sam
ZellacquiredTribuneCompanyina$14billionleveragedtransactionfinancedemploying$8.7billionof
seniorsecuredbankloans,$1.6billioninunsecuredbridgeloans,andtheassumptionofunsecured
outstandingbonds. TribuneCompanyintendedtoquicklyrepaydebtwithfreecashflowandproceeds
fromanassetsaleprogram;however,thecompanyfailedtodeliveronitscommitmentsasadvertising
revenuesandthecapitalmarketsevaporatedthroughout2008. InDecember2008,Tribunewasunable
tomeetadebtpaymentandwasforcedtoseekbankruptcyprotection. Overthistimeperiod,theprice
forTribunebankdebtsteadilydeclinedfrom$0.92inApril2008to$0.56inMay2008to$0.42in
December2008
to
$0.26
today.
Investors
in
the
bank
loans
were
enticed
all
the
way
down
by
the
supposedbreakupvalueofcertaintrophyassets.Unfortunatelyforthoseinvestors,themarketvalue
forsuchassetsisshrivelingduetopotentialbuyersinabilitytosecurefinancing,aswellasdeteriorating
assetqualityandcashflows. Inflatedofferprices,asinMarkCubansofferfortheChicagoCubsand
ScrippsofferfortheFoodNetwork,quicklyunraveledasinvestorsrealizedthatpricesforevenhigh
qualityassetsareunderpressureanddealsareincreasinglydifficulttoclose.
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U.S.Mortgages NotQuiteTimeYet
Manyinvestors
have
decided
that
now
is
the
time
to
buy
U.S.
mortgage
whole
loans
as
well
as
mortgage
securities. Whiletherewillbesignificantopportunityinthisspaceoneday,thetimehasnotquite
arrived. Therearelimitedexamplesofbondsthatwehavepurchasedintheportfoliotodate,butthe
circumstancessurroundingtheirpurchaseweremoreofimmediatedistresssales,andthereforethe
pricewasrightregardlessofthetiming. Weuseadraconianmodelonourassumptionsfor
delinquencies,rollratesanddefaults. Peopletendtoforgetthatwhilemanyofthesepoolsare
geographicallydiverse,theytypicallyhaveaparticular"slice"ofthesocioeconomicspectrumthatisnot
reallydiverseineachpool. Historically,joblosseshavebeenthekeyproblemformortgagesand
mortgagebonds.
To
date,
the
majority
of
delinquencies
and
defaults
have
been
caused
by
firms
that
madeloanstopeoplethatcouldnotimmediatelymakeamortgagepayment. Whentheunemployment
ratehits1012%andthejoblessrateapproaches20%intheU.S.,mortgagepriceswilltakeanotherstep
lowerduetothenextwaveofdefaults.
MarktoMarketAccounting Don'tAsk...Don'tTell Really?!?!
Inthepastyear,therehasbeenalotofdebateaboutmarktomarketaccountinganditsaffectonthe
balancesheetsoffinancialinstitutions. Thecriticsofmarktomarket,whowantitsuspendedordoneawaywith,havestatedthatduetothecurrentcreditcrunchandlackofliquidityinthemarketplace,
certainassetsarebeingmarkedatartificiallylowvalues. Thisiscommonlyreferredtoastheliquidity
discount,orsaidanotherway,theportionofthetotaldiscountduetofactorsotherthanprojectedloss
ofprincipalduetocreditriskorthecurrentinterestrateenvironment. Thealternativetomarkto
marketiseithertoletcompanieskeepsecuritiesontheirbooksatcostorusemarktomodelwherethe
companiesthatownthesecuritiesusemanagementsbestestimatesonfuturecashflowstodetermine
thevalueofthesecurities. Trytonameonemanagementteamtodatethathasoverestimatedlosses.
Criticsofmarktomarketseemtooverlookthatthemarketpricesusedtodeterminefairvaluereflect
whereanactualbuyerandsellerhaveagreedtotransactinanorderlyfashion. TheSECandtheFASB
haveissuedguidancestatingthatdistressedassetsalesandilliquidorirrationalmarketsdonothaveto
beusedtodeterminethefairvalueofacompanysassets. Incaseswherealiquidmarketdoesnot
exist,thereisalreadyabuiltinmechanismforcompaniestovaluetheirassetsbasedonsomedegreeof
judgment,butusingasmuchmarketdataaspossibleandwithdisclosureonmanagementsestimates.
Ifanything,weshouldbepushingforamorerobustversionofmarktomarketthateliminatesthe
abilityof
companies
to
shift
assets
that
they
dont
wish
to
mark
to
market
into
the
illiquid
buckets,
or
socalledLevel2and3assets. Level2and3assetsarethoseinwhichcompanieshavetheabilityto
valueassetsatlevelsotherthanmarketbyusingclearlypricesorquotedpricesforsimilarassets. Take
LehmanBrothersforexample,asofMay31,2008,theyhadtotalassetsof$639.4billion,totalliabilities
of$613.2billionandtotalstockholdersequity(includingpreferredstock)equalto$26.3billion.
L h t t l L l 2 d 3 t f thi d t bi d $203 2 billi It
8/3/2019 Hayman Letter 2009
17/26
Ifyoulookatreasonswhythemarketispricingmostassetsbelowpar,itisnotduetoliquidityorthe
creditcrunch. Thesimplefactremainsthatuntilthebroadermacroeconomicconditionsimprove,credit
lossesand
defaults
will
continue
to
increase.
Looking
back
on
the
past
two
years
worth
of
trading
data,
themarkethasnotbeenpunitiveenoughinitsassumptions. Itwasnotlongagothatthesamepeople
blamingmarktomarketaccountingfornotreflectingtrueassetvaluewouldhavesaiditwasimpossible
foraAAAratedbondtohaveprincipallosseventhoughmanyweretradingatsteepdiscounts. Inthe
markettoday,thatoutcomeiswidelydeterminedtobeinevitable. Whilewearecertainthatmarkto
marketaccountingisnotperfectanditwillovervaluesomeassetsandundervalueothers,itisveryclear
thatthemarkethasbeenaheadofthecurvethroughthiscycleandcontinuestobethebestestimateof
ultimatevalue. MoodysclaimsthatnoneoftheirAAAratedbondshaveevertakenacapitalloss. What
theyfail
to
mention
is
that
they
downgrade
AAA
securities
to
lower
ratings
before
capital
losses
occur.
ItisworthpointingoutthatwemarktheMasterFundsinvestmentstomarketeveryday,andwereport
performancebasedonthosemarkstoyou,ourlimitedpartners,everymonth. Wedonotmanipulate
thepricingofourinvestments,nordowehaveanydesiretodoso. Wouldyouinvestwithusifour
returnswerebasedonourownassumptionsofwhatwethoughtsomethingshouldbeworthrather
thanwherethepositionscouldbesoldtoawillingbuyer?
CreditDefaultSwaps TheyareNOTtheVillainintheRoom
WithallofthediscussionlatelyinregardtoCDS,Ithinkitistimetoofferaneasysolutiontofixingthe
problemforgood. Weareanactiveparticipantinthismarketplaceandwouldliketoshareourthoughts
withyouonthesubject. CDSisanenigmatictermusedtobaffleeventhosewhoinvestwiththemin
theirportfolios. Whenanyoneusesthetermswap,Iamsureitturnsoff99%ofthepeoplereadingor
listening. CreditDefaultSwapsaresimplybondoptions.Thereisareferenceobligation(thebond),afinite
time
frame,
and
consideration
exchanged
between
parties
(well
sometimes...and
this
is
the
problemthatneedsfixing). Wedon'thearabouttheequitiesoptionmarketplaceasbeingdisruptive
orsystemic.Wedon'thearaboutthefuturesoptionsmarketplacecausingdepressionsormarket
meltdowns.Whydoyouthinkthatis? TheanswerissoeasythatIcan'tbelieveitisnottalkedabout
more. TheplayersintheCDSmarketplaceplaywithdifferentrules. Ifyouareasellerofopenended
risk(i.e.thepersonsellingtheinsuranceagainstdefault),youhavebeenabletodosowithZERO
INTITIALCOLLATERALREQUIREDifyouwereadealerorsayahugeinsurancecompanywithapristine
creditrating(AIG). So,thereturnsandtheleveragewereinfinitetotheseplayersaslongasthecontract
nevermoved
against
them.
They
would
simply
collect
premiums
without
ever
posting
collateral
or
puttingmoneyupfortherisktheyweretaking. TheWallStreetfirmslikeBearStearns,Lehman,and
AIGalltookcompleteadvantageofthisandleveredthemselvesmorethanever. Ifthereweretobea
ruleinthefuturethatREQUIRINGALLPARTICIPANTStoplaybythesamecollateralrules,themarket
wouldshrinksignificantlyandtherewillnotlikelybeanothersystemicissuesurroundingthem. Ifall
l h d t l b th l thi k t l ld h NEVER t th i it i t d
8/3/2019 Hayman Letter 2009
18/26
IamsureIwillupsetWallStreetfirmsandinsurancecompaniesandalloftheotherparticipantsthat
liketheoldsystemofpostingnocollateralandhavingthemarketplaceopaquesotheycouldfleecethe
unwaryparticipants.
It
is
time
to
have
an
Adult
Skate
only
from
now
on.
EventheSageofOmaha,WarrenBuffet,wroteinhis2008lettertohisshareholders:
Atyearendwehadwritten$4billionofcontractscovering42corporations,forwhichwe
receiveannualpremiumsof$93million. Thisistheonlyderivativesbusinesswewrite
thathasanycounterpartyrisk;thepartythatbuysthecontractfromusmustbegoodforthequarterlypremiumsitwilloweusoverthefiveyears. Weareunlikelytoexpandthis
business
to
any
extent
because
mostbuyersofthisprotectionnowinsistthatthesellerpostcollateral,andwewillnotenterintosuchanarrangement. (emphasis
added).
ToOurInvestorsandFriends:
ManyofyouareawareoftheJointStatementreleasedonFebruary25th(awhole4daysand11%agoin
thefinancials)bytheFDIC,Treasury,FederalReserve,OCC,andtheOTS. Init,theyassuredusthat
currently,the
major
U.S.
banking
institutions
have
capital
in
excess
of
the
amounts
required
to
be
consideredwellcapitalized. Iguessweareallgoodagain. Whatisallofthistalkabout
nationalizationifthebanksarewellcapitalized? WhydidtheFederalReserveandCongressagreeto
backstop,injectorguaranteecloseto$9trillionofsupportiftheyareallwellcapitalized?
Considerthis: iftheTier1riskbasedcapitalrequirementsforU.S.banksis6%,thenthedefacto
amountofbalancesheetleverageisapproximately16x,atbest. Ifyouwereinvestingusing16x
leveragecominginto20072009,howoutofbusinessareyou? TheanswerisCOMPLETELY. The
majorityof
our
banking
system
is
INSOLVENT,
and
that
is
the
problem.
With
the
repeal
of
the
Glass
SteagallAct(whichwasoriginallyputintoplacein1933)in1999,depositoryinstitutionsweregiventhe
abilitytospeculateandinfinitelylevertheirbalancesheetsthroughderivatives. Congressallowedmajor
U.S.moneycenterbankstogettoolevered.WENEEDTOSEPARATECOMMERCIALBANKSFROM
INVESTMENTBANKS. Inthefuture,ourdepositoryinstitutionsshouldnotbeabletospeculateinthe
uberleveredderivativesmarkets.Theyshouldbegoodoldfashionedbanks(backtothebasics). When,
andifthateverhappens,thenextquestionshouldbe:howmuchleverageisprudentatthesebanks? Is
16xleverageprudent? Wethinkthe36pagelistof679nowgovernmentownedcompanies(e.g.banks)
suggestsotherwise.
OnceyouhaveadeepunderstandingofhowtheU.S.andworldbankingsystemswork,itgivesyoua
senseofhowbadthingsreallyareandmaybecome. Sofar,theFederalReserveandtheTreasury's
bestandbrightesthavedecidedthatthebestwaytogetthroughthisistoaddmoreleveragetoan
overlevered economy The TALF program is attempting to restart the securitization market Wait a
8/3/2019 Hayman Letter 2009
19/26
Foryourwealth,youmustthinkabouttheenormityofthisproblemaroundtheworld,andwhatthe
likelygovernmentalresponseswillbe. Ibelievetheyonlyhavetwopathstowalkdowneventually. One
isto
money
in
an
attempt
to
paper
over
their
losses
(pardon
the
pun).
This
path
can
only
lead
to
massivedebasementofthefiatcurrencyinourwalletsandbankaccounts,whichisakintothem
stealingitfromsavers. Thesecondpathistomoveallofthebadprivateassetstothegovernmentor
publicbalancesheetsandthendefaultontheirsovereigndebt. Theworldneedsadooverandthis
wouldbethecleanestwaytorebuildingtheworld'sfinancialsystem. AsmuchasIwouldliketothink
thereisanotherpathtosalvationthatdoesnotincludeenormouspain,thereisjustnootherwaywhen
youlookatallofthenumbers.
Assome
of
you
are
aware,
the
Hayman
franchise
expanded
in
2008
to
be
comprehensively
positioned
to
protectandcreatewealthduringtheglobaleconomicmeltdown. Specifically,wecreatedamunicipal
bondfundasarelativelysafeplacetostorecapitalandearnahealthysingledigit,taxfreereturn. We
alsocreatedaresidentialrealestateprivateequityfundfocusingondistressedinvestmentsandDIP
financings. Therewillbeatimetoownrealestate,andwebelievethattherewillbephenomenal
opportunitiestobuyincheaplyasthemarketcontinuestobefloodedwithoverleveredanddistressed
residentialprojects. Wearecarefullyandpatientlycombingthenationalrealestatemarketsoweare
preparedtoactwhentheseopportunitiesarise. Thefundtargetsreturnsinthehighteenstolow
twentieswith
little
to
no
leverage.
To
date,
we
have
executed
one
DIP
financing
and
bid
on
over
$1
billionworthofdistressedtransactions. Giventhedirectioninwhichtheglobaleconomyisheadedand
theloomingworldwidefiatcurrencydebasement,weareconfidentthatatsomepoint,realestatewill
provetobeaveryvaluableassetclass.
Forthoseofyouthathavenotknownmeformorethanacoupleofyears,throughoutmylifeIhave
beenaveryoptimisticperson. Idonothaveanyneedor,forthatmatter,desiretoremainnegative
abouttheworld. Asafiduciary,ImustgatherandassimilatethedatathatIseek. Imustthen(withmy
team)formulate
an
opinion
with
regard
to
that
data
as
well
as
hundreds
of
other
social,
political
and
gametheoryinputsinordertodevelopourthesistofirstprotectandsecond,earngoodriskbased
returnsonyourcapital. Therewillbeatimetogetbullish(myguessismanyyearsfromnow),andat
ourinvestordinneronApril1st,Iwilldescribeonesuchbullishinvestmentwewillbemakingin2009.
Regards,
J.KyleBass
ManagingPartner
HaymanAdvisors,L.P.
8/3/2019 Hayman Letter 2009
20/26
Net results reflect the deduction of operational expenses, management fees and incentive allocations (estimated when
applicable), but do not include side pocket investments (if any). Net results reflect investor returns for an investment
made at the Funds inception without any subsequent contributions or withdrawals. Actual investor results may varydue to, among other things, the timing of contributions or withdrawals and feeder level expenses. Performance
information for 2006 is from the Fund's inception on February 14, 2006 through December 31, 2006.
The information set forth herein is being furnished on a confidential basis to the recipient and does not constitute an
offer, solicitation or recommendation to sell or an offer to buy any securities, investment products or investment
advisory services. Such an offer may only be made to eligible investors by means of delivery of a confidential private
placement memorandum or other similar materials that contain a description of material terms relating to such
investment. The information and opinions expressed herein are provided for informational purposes only. An
investment in the Hayman Fundsis speculative due to a variety of risks and considerations as detailed in theconfidentialprivate placement memorandum of the particular fund andthis letter is qualified in its entirety by the more
complete information contained therein and in the related subscription materials.Nothing contained herein
constitutes financial, legal, tax, or other advice. This may not be reproduced, distributed or used for any other
purpose. Reproduction and distribution of this letter may violate federal or state securities laws.
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UnitedStatesFederalGovernmentBalanceSheet(NotSeasonallyAdjusted)
Source:FederalReserveLevelsReport2008
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Q3 9800Change 0003Change 0308Change 0708Change
%ofTotalFinancialAssets 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 0.0% 0.0% 0.0% 0.0%
Gold,SDRsandOfficialForeignExchange 11.4% 7.9% 8.0% 7.1% 8.5% 8.8% 8.9% 5.7% 5.5% 5.5% 4.4% 3.5% 0.8% 4.3% 1.1%
Checkable
Deposits
and
Currency 5.2% 15.7% 4.7% 11.0% 7.9% 8.6% 3.6% 6.0% 5.3% 8.6% 36.2%
0.5% 3.9% 27.6% 27.6%TimeandSavingsDeposits 1.1% 1.0% 1.2% 1.7% 4.6% 0.4% 0.4% 0.2% 0.3% 0.4% 0.3% 0.2% 0.8% 0.1% 0.1%
CreditMarketInstruments 49.7% 46.6% 53.1% 44.6% 46.1% 43.5% 45.3% 44.7% 45.0% 43.6% 29.6% 3.3% 9.6% 13.9% 14.1%
AgencyandGSEBackedSecurities 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
OtherLoans&Advances 31.3% 23.6% 25.1% 20.2% 19.9% 18.7% 18.8% 17.5% 17.3% 16.1% 10.6% 6.2% 6.4% 8.1% 5.5%
Mortgages 10.1% 13.9% 15.0% 12.5% 12.7% 11.7% 12.4% 12.7% 13.0% 12.7% 8.4% 4.9% 3.2% 3.3% 4.3%
ConsumerCredit(StudentLoans) 8.4% 9.1% 13.0% 11.9% 13.4% 13.1% 14.1% 14.6% 14.7% 14.9% 10.6% 4.6% 0.0% 2.5% 4.3%
TradeReceivables 5.0% 4.1% 5.5% 5.8% 5.4% 8.1% 10.1% 11.5% 11.4% 10.8% 7.1% 0.5% 2.7% 1.1% 3.8%
TaxesReceivable 4.8% 6.9% 8.3% 13.1% 10.7% 14.5% 14.9% 15.3% 16.2% 15.4% 10.4% 3.5% 6.3% 4.1% 5.0%
MiscellaneousAssets 22.7% 17.9% 19.3% 16.5% 16.7% 16.2% 16.8% 16.4% 16.3% 15.6% 12.1% 3.5% 3.1% 4.0% 3.5%
%ofTotalLiabilities 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 0.0% 0.0% 0.0% 0.0%
SDRCertificates 0.2% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0.2% 0.0% 0.0% 0.0%
TreasuryCurrency 0.4% 0.5% 0.5% 0.6% 0.6% 0.5% 0.5% 0.5% 0.5% 0.4% 0.4% 0.1% 0.0% 0.1% 0.0%
CreditMarketInstruments 82.8% 81.7% 79.4% 78.7% 79.3% 79.1% 79.4% 79.4% 79.2% 78.0% 80.0% 3.5% 0.2% 0.8% 2.0%
SavingsBonds 4.1% 4.1% 4.3% 4.4% 4.3% 4.0% 3.7% 3.5% 3.3% 3.0% 2.7% 0.2% 0.3% 1.3% 0.3%
OtherTreasurySecurities 78.1% 77.0% 74.4% 73.6% 74.5% 74.6% 75.3% 75.6% 75.5% 74.7% 77.0% 3.7% 0.2% 2.3% 2.3%
BudgetAgencySecurities 0.6% 0.6% 0.6% 0.6% 0.6% 0.5% 0.4% 0.4% 0.4% 0.4% 0.3% 0.0% 0.2% 0.2% 0.0%
MultiFamilyResidential Mortgages 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
TradePayables 1.4% 1.6% 1.7% 1.8% 1.7% 3.0% 3.0% 3.4% 3.3% 4.4% 3.4% 0.3% 1.2% 0.5% 1.0%
InsuranceReserves 0.7% 0.8% 0.9% 0.9% 0.9% 0.8% 0.8% 0.7% 0.7% 0.7% 0.6% 0.1% 0.1% 0.2% 0.1%
MiscellaneousLiabilities 14.3% 15.3% 17.4% 18.0% 17.5% 16.6% 16.3% 16.0% 16.3% 16.5% 15.6% 3.1% 0.9% 1.0% 0.9%
Nonmarketable Securities heldbyPensionPlans 14.2% 15.2% 17.3% 17.8% 17.2% 16.0% 15.5% 14.9% 14.9% 14.5% 13.3% 3.1% 1.3% 2.7% 1.2%
Other 0.1% 0 .1% 0 .2% 0 .1% 0 .2% 0 .6% 0 .8% 1 .1% 1 .4% 2 .0% 2 .3% 0.0% 0.4% 1.7% 0.3%
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