But who cares… I can earn the same, it’s just about risk-management. He is a jolly fellow and joking many times: You put a large sum close to riskfree and bet the interest at 1000 odds in a horserace. 2% interest times 1000 odds = 2000. Downside is your interest.

But risk free doesn’t exist any more. Everything has some creditorrisk in it.

He might as well put the money in his leveraged hedgefund (more probably).

if I’ve been paying attention to Hugh (and I have), this trade is short risk on sovereign CDS — not Greece etc, but the “it cannot happen here” countries like US/Germany/Japan/China… Hugh has been talking about Euro sovereign CDS risk and that the PIIGS will dismantle the Eurozone for years. He’s also been pushing the fact that debt deflation is equally as bad for the surplus nations, they are built for a Western World growing its debt (and demand) by 10-15% per year, and won’t meet budgets without it returning… IIRC, he was talking about German CDS early last year, and mentioned this type of ~1% risk, 50x return…