The good news & the really bad news

Projections imply that the U.S. will run deficits equal to 43.3% and 39.9% of expenditures in 2009 and 2010, respectively. History suggests that this is dangerous territory.

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By Kyle Bass

[UPDATE: This column is excerpted from an earlier draft of Bass’s October 2 investor letter, the full version of which is available here.]

The good news is the recession is officially over. And what a recession it has been. Real GDP has dropped 4% peak-to-trough, S&P 500 revenues have decreased 18%, and home prices have lost 31.3%

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