Bass: Japan Will Default in 3-4 Years, U.S. To Follow in 10-12 Years.

Kyle Bass, fund manager, will testify later today: Japan will either default or devalue its currency in 3-4 years. The U.S will follow in 10-12 years.

He says he will testify the following:

1- Derivatives, nothing has changed
2- Leverage, banks are capitalized by 6%, as high as 25X leverage today. Nobody can manage this amount of leveraged portfolio
3- Fannie and freddie are in suspended animation, they had 95X leverage, they will lose $300-450B. That will be the hit to the tax payer.