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Bondholders expect to get burnt -- it's part of the game

'They look like f**king eejits paying it off. This is a game, and they need to start playing it."

That's what one of the best financial brains I know told me when I asked him about us -- the taxpayer -- paying off private bank debt to bondholders, whether via the ECB/IMF/EFSF or not. This is a guy who knows private sector bondholders backwards. He has worked with them for years in mergers and acquisitions and he points out that haircuts are an accepted part of the game when things go wrong. And not only will the big private equity houses like Blackstone and KKR accept a haircut when things don't work out, they'll be back again to fund the next merger or acquisition. Because it's just part of the game. You win some, you lose some, but you don't stop playing just because you lose now and then.

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