*This article has been removed and reprinted due to errors.

Great reading here from Kyle Bass of Hayman Advisors.   The common sense of some people is simply astounding.  Bass exhibits an extraordinary ability to dumb down the highly complex topics of OTC derivatives, leverage and too big to fail. Unfortunately, the government and regulators completely fail to comprehend his simple points.  We continue along our merry way with little to nothing having changed since the global economy nearly went into meltdown in 2008.

The following is his testimony at Wednesday’s bank hearings.  It’s a must read.  If you haven’t already read his letters to investors from 2009 I highly recommend them here and here.   This one sentence nicely summarizes Mr. Bass’s thoughts (and my own):

Capitalism requires failure and bankruptcy as a consequence in order to guide behavior. As the old adage goes – “Capitalism without bankruptcy is like Christianity without hell”. If we cannot allow a firm to go bankrupt, then we should regulate its activities so that it cannot engage in the sort of risky transactions that put it at risk of bankruptcy.