The concept of a “back-door bazooka” is based on a recent policy change made by the European Central Bank (ECB). We all know debt levels around the globe are high, but when does the level of debt become unsustainable? Kyle Bass, of Hayman Advisors LP, studied sovereign debt levels, the size of a country’s banking system, and government revenues to identify where debt levels cross over into “unsustainable” territory. The video below references Mr. Bass’ research, which identifies problem countries and the importance of their balance of trade.
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We expand on the concepts of central bank intervention in: