Jul 31

Related info:

- The Shocking Reason Putin Isn’t Worried About The $50 Billion Yukos Ruling:

“There is a war coming in Europe,” he said. “Do you really think this matters?”


- Top Financial Experts Say World War 3 Is Coming … Unless We Stop It (Washington’s Blog, July 30, 2014):

Nouriel Roubini, Kyle Bass, Hugo Salinas Price, Charles Nenner, James Dines, Jim Rogers, David Stockman, Marc Faber, Jim Rickards, Paul Craig Roberts, Martin Armstrong, Larry Edelson, Gerald Celente and Others Warn of Wider War

Paul Craig Roberts – former Assistant Secretary of the Treasury under President Reagan, former editor of the Wall Street Journal, listed by Who’s Who in America as one of the 1,000 most influential political thinkers in the world, PhD economist – wrote an article yesterday about the build up of hostilities between the U.S. and Russia titled, simply: “War Is Coming”.  In the article, Roberts notes: Continue reading »

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Dec 09

- Japan Press: “China-Japan War To Break Out In January” (ZeroHedge, Dec 8, 2013):

Following China’s unveiling of its air defense identification zone (ADIZ) in the East China Sea, overlapping a large expanse of territory also claimed by Japan, the Japanese media has, as The Japan Times reports, had a dramatically visceral reaction on the various scenarios of a shooting war. From Sunday Mainichi’s “Sino-Japanese war to break out in January,” to Flash’s “Simulated breakout of war over the Senkakus,” the nationalism (that Kyle Bass so notably commented on) is rising. Which side, wonders Shukan Gendai ominously, will respond to a provocation by pulling the trigger? The game of chicken between two great superpowers is about to begin has begun.

Via The Japan Times,

Five out of nine weekly magazines that went on sale last Monday and Tuesday contained scenarios that raised the possibility of a shooting war.

Continue reading »

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Dec 06

- Kyle Bass Warns When “Everyone Is ‘Beggaring Thy Neighbor’… There Will Be Consequences” (ZeroHedge, Dec 5, 2013)

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Apr 05

- Japan’s Debt Crisis Visualized (ZeroHedge, April 4, 2013):

In just a few short minutes, inspired by Kyle Bass, Addogram presents a short visual explanation of Japan’s debt problem. In the time it takes Ben Bernanke to print $13.7 million you’ll have a deep understanding of Aso, Abe, and Kuroda’s impending debt crisis.


YouTube

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Apr 05


YouTube

Description:

In this interview with investor Kyle Bass from Day 1 at AmeriCatalyst 6th of November 2011, in Austin, Texas, Bass discloses his discussion about the economic crisis with a senior from the Obama Administration. According to Kyle Bass the basic solution coming from this senior was: “We’re Just Going to Kill the Dollar”.

Killing the US Dollar in this context means keep printing more US Dollars in order to weaken the dollar to make exports cheaper through inflation. Massive inflation might be the answer for the Obama Administration, but in the process your purchasing power will be destroyed. And because the US Dollar is the world’s reserve currency the eventual impact of inflation would have an impact that would reach far beyond those holding US Dollar assets.

Thousands of paper currencies has come and gone over the years and there is no question if the dollar, or the euro for that sake, will have its value go to zero; the question is when?

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Mar 13

- Kyle Bass Warns “The ‘AIG’ Of The World Is Back” (ZeroHedge, March 12, 2013):

Kyle Bass, addressing Chicago Booth’s Initiative on Global Markets last week, clarified his thesis on Japan in great detail, but it was the Q&A that has roused great concern. “The AIG of the world is back – I have 27 year old kids selling me one-year jump risk on Japan for less than 1bp – $5bn at a time… and it is happening in size.” As he explains, the regulatory capital hit for the bank is zero (hence as great a return on capital as one can imagine) and “if the bell tolls at the end of the year, the 27-year-old kid gets a bonus… and if he blows the bank to smithereens, ugh, he got a paycheck all year.” Critically, the bank that he bought the ‘cheap options’ from recently called to ask if he would close the position – “that happened to me before,” he warns, “in 2007 right before mortgages cracked.” His single best investment idea for the next ten years is, “Sell JPY, Buy Gold, and go to sleep,” as he warns of the current situation in markets, “we are right back there! The brevity of financial memory is about two years.”

Click the image below for the full presentation (unembeddable):

The main thrust of the discussion is Bass’ thesis on Japan’s pending collapse – which we wrote in detail on here, here, and here – and while the details of this thesis should prepare most for the worst, it is the Q&A that provides some very clear insights into just what is going on in the world.

Starting at around 50:00…

Bass On Immigration Reform in Japan – hailed as a solution to the demographic problem – Bass says “Ain’t gonna happen. They need wage inflation and this will not encourage that. It’s an untenable situation.” Summing up his whole view on Japan – “I just don’t think it can be fixed.”

Question: When you look today in the capital markets at the tactical asymmetry that exists among the various financial instruments to take advantage of cheap optionality – what is that instrument?

I’ll give you guys a bit of an idea… we don’t talk about exactly what
we do – we tell you how much we love coke but we’re not gonna give you
the formula.

The AIG of the world is back – I have 27 year old kids selling me one-year jump risk on Japan for less than 1bp – $5bn at a time.

You know why? Because it’s outside of a 95% VaR, its less than one-year to maturity, so guess what the regulatory capital hit is for the bank… I’ll give you a clue – it rhymes with HERO…

Continue reading »

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Feb 10

Coming to a country near you … soon.

Got gold and silver?


Venezuela Launches First Nuke In Currency Wars, Devalues Currency By 46% (ZeroHedge, Feb  10, 2013):

While the rest of the developed world is scrambling here and there, politely prodding its central bankers to destroy their relative currencies, all the while naming said devaluation assorted names, “quantitative easing” being the most popular, here comes Venezuela and shows the banana republics of the developed world what lobbing a nuclear bomb into a currency war knife fight looks like:

  • VENEZUELA DEVALUES FROM 4.30 TO 6.30 BOLIVARS
  • VENEZUELA NEW CURRENCY BODY TO MANAGE DOLLAR INFLOWS
  • CARACAS CONSUMER PRICES ROSE 3.3% IN JAN.

And that, ladies and gents of Caracas, is how you just lost 46% of your purchasing power, unless of course your fiat was in gold and silver, which just jumped by about 46%. And, in case there is confusion, this is in process, and coming soon to every “developed world” banana republic near you.

and just as we (and Kyle Bass) have warned – this is what happens to the nominal price of a stock market as currency wars escalate… how do those US investors who flooded Venezuela with cash feel now? bringing back those VEF gains is going to hurt…

The chart above is a free lesson in nominal vs real: the hardest lesson for some 99.9% of the world’s population to grasp. One person who certainly knows how to devalue a currency in real terms is FDR, whose 70% devaluation of the USD courtesy of executive order 6102, is merely an appetizer of what is about to be unleashed upon the US.

From Bloomberg:

Venezuela devalued its currency for the fifth time in nine years as ailing President Hugo Chavez seeks to narrow a widening fiscal gap and reduce a shortage of dollars in the economy.

Continue reading »

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Feb 01

- Kyle Bass Tells ‘Nominal’ Stock Market Cheerleaders: Remember Zimbabwe (ZeroHedge, Feb 1, 2013):

Amid the euphoria of today’s crossing of the Dow’s Maginot Line at 14,000, Kyle Bass provided a few minutes of sanity this morning in an interview with CNBC’s Gary Kaminsky. Bass starts by reflecting on the ongoing (and escalating) money-printing (or balance sheet expansion as we noted here) as the driver of stock movements currently and would not be surprised to see them move higher still (given the ongoing printing expected). However, he caveats that nominally bullish statement with a critical point, “Zimbabwe’s stock market was the best performer this decade – but your entire portfolio now buys you 3 eggs” as purchasing power is crushed. Investors, he says, are “too focused on nominal prices” as the rate of growth of the monetary base is destroying true wealth. Bass is convinced that cost-push inflation is coming (as the velocity of money will move once psychology shifts) and investors must not take their eye off the insidious nature of underlying inflation – no matter what we are told by the government (as they will always lie when its critical). Own ‘productive assets’, finance them at low fixed rates (thank you Ben), and finally, on HLF, don’t bet against Dan Loeb.

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Jan 20

- “Detonating The Japanese Debt Time Bomb” With Kyle Bass (ZeroHedge, Jan 18, 2013):

The hyper-correlation of Japanese stocks and the JPY have led many to believe that Abe’s miracle promise will be just the ticket to bring the nation’s two-decade slump to an end – a 2% inflation target is all you need. However, in a brief CNBC interview, Kyle Bass explains that not only are 99.9% of people wrong about the crisis (explaining the critical aspect of the abrupt turn of twenty years of the ‘procylicality of thought’ – that deflation is the norm), but Abe’s actions have actually brought forward the date of the “detonation of Japan’s Debt Time Bomb.

It is the Japanese institutions that own JGBs and they own them at meager rates of interest simply because of the ingrained belief in deflation; when the government begins to target 2% inflation, the swing in forward expectations (he notes to monitor inflation swap breakevens) will be the trigger for Japan’s implosion. Bass warns that “Japanese debt is around 24x central government tax revenue and when you sail into the zone of insolvency, nothing you can do will help,” though he realizes that calling the end of the 70-year debt super-cyle to a specific date is naive, he does expect the ‘bomb’ to explode within 18 month to two years. Continue reading »

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Dec 20

- An Hour In The Company Of Kyle Bass (ZeroHedge, Dec 19, 2012):

Last year’s AmeriCatalyst interview with Kyle Bass provided much more color than the normal 30-second soundbites that we are subjected to when serious hedge fund managers are exposed to mainstream media. This year, Bass was the keynote speaker and in the following speech (followed by Q&A), the fund manager provides 60 minutes of eloquence on the end of the grand experiment and its consequences. From Money Printing and Central Bank Balance sheets to Japan and the psychology of the current situation – which in many cases trumps the quantitative data – the question remains, “when will this unravel” as opposed to “if?”; Bass provides his fact-based heresy against the orthodoxy of economic thought “On The Financial Nature Of Things” extending well beyond his recent note. Must watch (there’s no football or X-Factor on tonight).

Make sure to stay tuned to the last 2 minutes when Kyle succinctly sums up our society…


YouTube

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Dec 13

In the last few years gold and silver bottomed out around Christmas.


- Gold – It’s Time (ZeroHedge, Dec 12, 2012):

Authored by Lee Quaintance and Paul Brodsky of QBAMCO,

Gold bugs can’t understand how the public can be so unaware, how highly intelligent policy makers can be so immoral, and how the mainstream media can be so incurious. We can’t understand why more men and women in the investment business haven’t joined some of the more successful ones that have come around to precious metals and have taken substantial positions in them for their funds and personal accounts. The list of high profile independent-minded investors that have come out of the proverbial closet is impressive and growing: Kyle Bass, John Paulson, David Einhorn, George Soros, Bill Gross and Paul Singer, to name only a few.
Continue reading »

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Nov 21

- Kyle Bass On The End Of The Debt Super-Cycle (ZeroHedge, Nov 20, 2012):

When you let the politicians run monetary policy, well, that is how it [ends]… All of the ingredients are there [for Japan now] for this vicious cocktail to fall apart” is how Kyle Bass concludes this broad and succinct recent interview. With total credit market debt-to-GDP globally around 350% (or ~$200 trillion), his thesis remains that many countries will reach their profligate endpoint soon (if not already in Greece’s case – where investors have already lost 90c on the dollar); but that managing around this current evolution is the single-hardest period for investing of the last few decades. The modest Texan notes it is naive to think he can call the end of a 70-year debt-super-cycle with any precision (as in mid-December’s Japan fiscal data and Abe’s election) but when you look at all of the inputs, he believes that Japan has crossed the proverbial Rubicon in the last two months and describes in this rather breathtaking clip how the end of twenty years of conjecture on what will happen to Japan will come to pass.

From his belief in the possibility of ongoing rate compression in developed nations and negative nominal yields in more than just Germany and Switzerland, Bass expounds on the structure of his fund (funding via low-duration ‘high’-yield vehicles along with a long-short equity book and the core ‘convex’ Japan credit book) and how his template is playing out… must watch


YouTube

and more detail in his recent letter to investors:

Kyle Bass

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Nov 19

If you listen to Gerald Celente World War III has begun quite a while ago.

Any attack on Iran is the ‘official’ beginning of WW III.


- Top Economic Advisers Forecast World War (ZeroHedge, Nov 18, 2012)

 

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Nov 18

- Protesting Spanish Cops: “Forgive Us For Not Arresting Those Truly Responsible For This Crisis: Bankers & Politicians” (ZeroHedge, Nov 18, 2012):

Yesterday, in what is an appetizer to the great 2013 convergence trade (that, between the now thoroughly dead Greek and the Spanish economy, which is rapidly getting there, of course), several thousand Spanish policemen took the streets of Madrid protesting the latest round of austerity, which included frozen pensions and the elimination of the Christmas bonus (they will have many more opportunities to protest not only the loss of any future upside, but the eventual cut of existing wages and entitlements). As RT reports, protesters blew whistles, shouted slogans, and carried anti-austerity banners as they marched through the city centre to the interior ministry. But perhaps the most telling message read on one of the slogans, was the following: “Citizens! Forgive us for not arresting those truly responsible for this crisis: bankers and politicians.”

And there you have the entire current clusterfuck summarized in one simple sentence: because as long as those responsible for the ongoing economic collapse, which will inevitably end in war as many have observed, Kyle Bass most recently, are not only not arrested but preserve their positions of power, any and all change will merely be cosmetic and any real change will only affect the bank accounts of the global middle class which are slowly but surely drained to zero. Continue reading »

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Nov 17

- Kyle Bass: Fallacies Such As MMT Are “Leading The Sheep To Slaughter” And “We Believe War Is Inevitable” (ZeroHedge, Nov 17, 2012):

Below are some of the key highlights from Kyle Bass’ latest, and as usual, must read letter:

On central banks and the final round of global monetary debasement:

Central bankers are feverishly attempting to create their own new world: a utopia in which debts are never restructured, and there are no consequences for fiscal profligacy, i.e. no atonement for prior sins. They have created Potemkin villages on a Jurassic scale. The sum total of the volatility they are attempting to suppress will be less than the eventual volatility encountered when their schemes stop working. Most refer to comments like this as heresy against the orthodoxy of economic thought. We have a hard time understanding how the current situation ends any way other than a massive loss of wealth and purchasing power through default, inflation or both. Continue reading »

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Feb 24

- ‘Gold Bullion or Cash’ Shows Buffett, Roubini, Krugman Mistaken; Faber, Rogers, Bass, Einhorn, Gross Correct (ZeroHedge, Feb. 25, 2012)

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Dec 29


YouTube Added: 20.12.2011

Description:

Kyle Bass at AmeriCatalyst 2011, which took place Nov. 6-8, 2011, in Austin, Texas.

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Dec 20

I’ve told you quite a while ago that Japan is in big trouble…

… and since Fukushima Japan is (politically, economically and environmentally) finished (unless somebody can turn traitors into honest people and radioactive particles into harmless substances).

See also:

- When All Else Fails, Change The Math: Japan To Fudge GDP Calculation, Will Add Up To 2% To GDP

- Of Imminent Defaults And Self Deception: Hedge Fund Manager Kyle Bass Prepares For The Worst

Flashback:

- Japan’s Demographic Time Bomb Officially Goes Off: World’s Largest Pension Fund Needs to Sell Japanese Bonds

- IMF: Japan’s Debt And Deficit ‘Are Not Sustainable’

- Japan’s Debt: $80.000 Per Person (Telegraph, July 2010)

- Japan Mulls Monetisation of Public Debt And Yen Devaluation By 30 Percent

- Analysts: Risk of Japan Going Bankrupt is Real


(Watch Kyle Bass from 2:45 into the video.)

- Sayonara Japan (CNBC Video, Dec. 16, 2011):

- A Quick And Dirty Look At Japan’s Nearly ¥1 Quadrillion In Debt (ZeroHedge, Dec. 19, 2011):

Scouring through the news screens, we nearly fell of the proverbial chair after reading the following Bloomberg headline paraphrasing a Nikkei report: “Japan May Buy Chinese Govt Bonds, Nikkei Says….Japan is seeking to diversify forex funds and strengthen economic cooperation with China by helping make yuan more international. Japan may purchase a total of $10b worth in stages.” Naturally, there are two interpretations: the ugly one is that Japan, the 3rd largest holder of US debt after the Fed and China, is considering gradually abandoning the dollar or, as the term is better known in polite circles “diversifying.” The second one, and the far more amusing one, is that Japan will somehow bail out China by providing the much needed credit money that will translate into GDP (at a sub 100% ratio of course, because as is well known by now the world has reached the stage where one unit of debt generates less than one unit of incremental growth). The reason why this is amusing is because as the chart below shows, Japan’s debt is now a hair’s width below ¥ 1…. quadrillion. And yes, ignore the fact that the demographic squeeze in Japan is already forcing households to proceeds to monetize the largely domestically held debt. So, we wonder, where will the JGB debt curve go next in the deflationary basketcase that is Japan? As for where it has been, see below.

Chart: BBG

And for those wondering when Japan will officially breach one quadrillion in debt (roughly $13 trillion in USD terms) here is AFP with the low down:

Japan’s public debt is expected to swell to a record $13.5 trillion as the government finances reconstruction efforts after the March earthquake and tsunami, reports said Saturday.

Japan’s debt is already the industrialised world’s biggest at around twice its GDP, after years of pump-priming measures by governments trying in vain to arrest a long economic decline.

Continue reading »

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Dec 03

Kyle Bass:

…what does this all mean? It means war.

And your governments prepare for that …

- Business Insider: The Media’s Blackout Of The National Defense Authorization Act Is Shameful – ‘IF THIS BILL PASSES IN ITS CURRENT FORM THE UNITED STATES WILL BE A MILITARY POLICE STATE’ (Video)

- Constitutional lawyer (Yale Law School graduate) & Founder Of Oath Keepers Stewart Rhodes: Senate Bill Declares War On Americans (Video)

- Wired: U.S. Senate Wants The Military To Lock You Up Without Trial

- Natural News: Occupied America: Senate Bill 1867 Would Allow US Military To Detain And Murder Anti-Government Protesters In American Cities

- FOX News: Freedom Watch – Judge Napolitano Interviews Rand Paul On Unconstitutional INDEFINITE DETENTION Bill S. 1867 (Video)

- InfoWars: Senate Bill Would Allow US Military To Indefinitely Detain Americans Without Charge Or Trial Anywhere In The World

- Mother Jones: Is the US Getting Domestic Indefinite Military Detention (Also For US Citizens And Legal Permanent Residents) For Thanksgiving?

… and so do the people …

- ABC News: Black Friday Best-Seller: Guns!


- Kyle Bass Explains The New World Order – Panel Presentation (ZeroHedge, Dec. 2, 2011):

Unlike the broad consensus of prognosticators who feel the road for the US is a decade or more, Bass sees a three-to-five year window for a credible solution to the debt saturation or else kicking the can will cease to have any impact. The reason for the proximity is the acceleration of what happens in Europe and Japan with that respective chronology his central view – which he sees a s critical in understanding for every money manager.

In this extended interview at AmeriCatalyst, he points to the optimistic self-deception biases that leave people unable to comprehend the scenarios as they either lead to a really bad outcome or a nominally bad outcome. Using the Lehman moment as an example, Bass explains how we have been conditioned to believe there is always a backstop or savior…now those backstops at a corporate and sovereign level (central banks and the IMF for example) are being called into question in their roles (being seen for what they are – as just promises) and it is the chasm between what we want to believe and what does happen that is enormous and leaves the extreme volatility, risk-on/risk-off market the way it is.

Reiterating how critical the psychology of today’s situation, Bass goes on to debunk the optimism of globalization (at least for the Western world), destroy the myth of a 50% greek writedown solution, Japanese xenophobia and savings losses, structural versus cyclical implications for US equity deterioration, US deficits and housing‘s bottom, global debt saturation and how this tearing at the social fabric of the world will lead to – war.

Click image for video (no embed available)

This extended interview includes some of the following views (among many others):

On Greece:

For those who think a 50% write-down on debt will fix Greece, you have lost your mind. It is only a full wipe-out of the non-TROIKA-owned debt that is the only mathematical way for Greece to have any chance.

On the IMF and its role as global savior

He discusses in some detail Keynes and the IMF formation and the new world order he foresees as our era of the largest peacetime accumulation of global debt has no precedent (as it has historically ended in conflict or been created by conflict).

And how this debt saturation will inebitably play out:

Fundamentally, its about the social fabric of the world…what does this all mean? It means war.

And summarizing for every long-only talking head pitch-man:

This is not a cyclical rebound from a crisis we had two years and you should NOT be buying stocks because a P/E ratio is low relative to historical S&P behavior because the E is wrong. We are going to see declines and people don’t know how to position themselves for declines. We are at peak earnings now! Earnings only look good because if you take all the bad assets and put them on the public balance sheet.

We need to delever globally. We haven’t delevered. Just now we are seeing marginal delevering in Europe and all hell is breaking loose. An summing up:

Consensus is US low/slow GDP growth – no recession, US better than Europe, Europe mild recession, muddle through, go all in to Emerging markets as that’s where the convexity is.

The consensus is never going to be right.

I don’t get paid to be an optimist or a pessimist. I get paid to be a realist and the realist negative currently.

Don’t believe these governments when they tell you everything is going to fine. The day before Mexico devalued by 60% they denied that they would ever devalue. They can and will never tell you the truth. Find your own numbers.

More from Kyle Bass:

- Of Imminent Defaults And Self Deception: Hedge Fund Manager Kyle Bass Prepares For The Worst

- University of Texas Takes Delivery Of $1 Billion In Gold Bars After Cue From Hedge Fund Manager Kyle Bass, Storing It In New York Vault

“By failing to prepare, you are preparing to fail.”
– Benjamin Franklin

 

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Dec 01

Flashback:

- University of Texas Takes Delivery Of $1 Billion In Gold Bars After Cue From Hedge Fund Manager Kyle Bass, Storing It In New York Vault


- Of Imminent Defaults And Self Deception. Kyle Bass Prepares For The Worst (ZeroHedge, Nov. 30, 2011):

In his latest letter to LPs, Kyle Bass of Hayman Capital Management, offers his tell-tale clarity on what may lie ahead for Europe and Japan. With his over-arching thesis of debt saturation becoming more plain to see around every corner, Bass bundles the simple (and somewhat unarguable) facts of quantitative analysis with a qualitative perspective on the cruel self-deception that we all see and read every day about Europe.

Whether it is Kahneman’s “availability heuristic” (wherein participants assess the probability of an event based on whether relevant examples are cognitively “available”), the Pavlovian pro-cyclicality of thought, or the extraordinary delusions of groupthink, investors in today’s sovereign debt markets can’t seem to envision the consequences of a default.

His Japanese scenario is no less convicted, as we have discussed a number of times, with the accelerant of this debt-bomb being the very-same European debacle and his time-frame for this is set to begin in the next few months.

Hayman_Nov2011

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