Saturday, December 3, 2011

Kyle Bass: ECB Will Print Post-Default

Kyle Bass is out with his latest letter to investors in which he makes the case that the market is incorrectly assessing the situation in the eurozone. He states

“we have all been programmed to think that we will always be saved from default in a post-Lehman world……EU members know that they will be required to print money in order to re-capitalize their systems. The $18 trillion dollar question for the EMU periphery is: Should they (ECB) print before or after a default? We think they print post-default as they come to the realization that printing pre-default without addressing the toxic debt problem would rewind the clocks back to the days of Von Havenstein and then you-know-who.”

Bass is referring to the Weimar hyperinflation and economic depression in Germany during the 1920s which is widely credited with catalyzing Hitler’s rise to power.


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