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Once rates/prices start on a ‘parabolic’ path of credit deterioration it’s often a force stoppable only by a check.
Not sure who/when writes the check, but odds are it will eventually happen one way or the other.
In this case there’s a good chance it happens after a form of default.
I don’t see any risk/reward currently in anything other than the dollar and cash and maybe US Tsy secs.
And I don’t have any idea how it all gets resolved in the eurozone, and I’m pretty sure no one else does either.
My proposal for a per capita distribution of 1 T euro from the ECB with finance ministry agreement will work operationally, economically, legally, and more or less philosophically, but I haven’t seen any indication of that type of discussion
5y default probabilities assuming 40% recovery (as of 2 Feb close)