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Posted

As you know, Prem Watsa foresees deflation, based on the malaise that hit Japan two decades ago. Economist Richard Koo ( respected by Watsa) studies this malaise in detail in "The Holy Grail of Macroeconomics". Republicans may want to give it a read. Maybe they don't know what they think they know, about how to address our unemployment problem.

Posted

A play on the restructuring of these Greek bonds?  In a restructuring scenario, how much would Greece still be on the hook for?  50% of the old debt outstanding?  Do you get exchanged for some sort of Brady bond, with principal guaranteed by some German zero coupoon?  A 1 year 97% yield would imply in a restructuring you only get 3%, i.e. EU let's Greece wipe away all of their debt, and absorb all the pain in the banking system, which seems quite unlikely...

 

If a one year bond yields 100% (yield to maturity), that means that it is trading around 50% (most of the yield to maturity would be from getting paid par in one year).  So it implies roughly a 50-60% recovery rather than a 3% recovery.

 

-T-bone

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