That's his point. There is no conceivable way that even a large fraction of that debt is AAA. What instead appears to be happening is a vicious circle:

* The finance industry engineers new ways to massage riskier debt into AAA products

* The market eagerly devours all the new AAA debt, building new business models and expanding previous ones based on the increased availability of risk-free products, thus

* Sparking demand for more AAA debt.