- 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.
Tags: Bank of Japan, Ben Bernanke, Bonds, Collapse, Debt, Economy, Fed, Federal Reserve, Global News, Government, Kyle Bass, Politics
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?
Tags: Barack Obama, Economy, Fed, Federal Reserve, Global News, Government, Hedge Funds, Hyperinflation, Inflation, Kyle Bass, Obama administration, Politics, Quantitative Easing, U.S.
- 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…
Tags: AIG, Collapse, Economy, Global News, Gold, Japan, Kyle Bass
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.
Tags: Global News, Government, Hugo Chavez, Kyle Bass, Politics, Quantitative Easing, Stock Market, U.S., Venezuela
- 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.
Tags: Dollar, Economy, Global News, Kyle Bass, Stock Market
- “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 »
Tags: Bonds, Collapse, Debt, Economy, Global News, Government, Japan, Kyle Bass, Politics, Quantitative Easing
- 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…
Tags: Banking, Barack Obama, Ben Bernanke, Bonds, Collapse, Debt, Dollar, Economy, EU, Europe, Fed, Federal Reserve, Financial Crisis, GDP, Germany, Global News, Government, Japan, Kyle Bass, Obama administration, Pension, Politics, Quantitative Easing, Retirement, Social Security, Society, U.S., War
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 »
Tags: Bill Gross, David Einhorn, Economy, George Soros, Global News, Gold, John Paulson, Kyle Bass, Paul Singer
- 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
and more detail in his recent letter to investors:
Tags: Bonds, Collapse, Debt, Economy, Germany, Global News, Government, Japan, Kyle Bass, Politics, U.S.
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)
Tags: Economy, Global News, Government, Jim Rogers, Kyle Bass, Marc Faber, Politics, U.S., War, WW III
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