Several readers suggest that I bet Andy Kessler about the U.S. government turning a profit on its bail-out. Here’s Kessler’s claim:

My calculations, which assume 50% impairment on subprime loans, suggest it is possible, all in, for this portfolio to generate between $1 trillion and $2.2 trillion — the greatest trade ever.

I’m happy to bet at even odds that taxpayers will lose money, not earn trillions. The only problem is nailing down the specifics. What is the cleanest way to measure the bail-out portfolio’s return ex post?

P.S. I’ve previously suggested a 10-year window – try to work with that. 🙂