If there is some quality assets wrapped in PE debt, doesn't that mean that PE will get unwound, and the assets will operate independently again? The main problem with GFC loans was that there wasn't quality to back them, hence toxic assets.

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In a free market, yes but as it stands today I don’t think so. The debts being repackaged are of some of the companies that are going under, not a big problem today because that number is still small but maybe cataclysmic if it grows larger