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Kyle Bass: The next 18 months will redesign the economic orthodoxy in the West

A rather tanned (must be a good summer in Texas) Kyle Bass gave a presentation at the Strategic Investment Conference. For those that don’t know Bass, he’s one of our favourite commentators on all things markets and economics, a couple of of his most recent presentations are:

Kyle Bass: This is how smart people get lulled into a serious debasement of the currency and hyperinflation – it’ll happen, it just takes time

Senior member of Obama Administration: We’re trying to kill the dollar

Highlights include:

  • The US have essentially recapitalised their entire banking system
  • The big three central banks continue to print wtih wreckless abandonment – Bass doesn’t see this changing anytime soon
  • Global market credit has expanded from $80tr to $200tn in 10 years.
  • That’s a growth rate in debt of 11% per year
  • Global population growth has been 1.2%
  • Real GDP has grown at 3.9%
  • Central bank balance sheets are growing at around 17%
  • This can’t happen forever
  • The next 18 months will redesign the economic orthodoxy in the West
  • There are 3 widely held views of Japan that turn out to be false;
  1. The current account helps to self-finance the deficit
  2. The Bank of Japan is not  debt
  3. Retail investor will always support the Japanese bond market
  • Japan’s current account is literally falling off a cliff
  • Their fiscal deficit will be north of 11%
  • This is a secular problem NOT a cyclical one – and it’s getting worse
  • Nationalism is on the rise in Japan – mainly focused against China
  • Exports to China have fallen by 45%
  • Japan is CLEARLY monetising debt
  • Japan is so desperate to get men to buy bonds the government has enlisted the help of girl band AK48 – “the worst girl band in the history of the planet”
  • Population of Japan is 25% over 60 and their total population is shrinking
  • More adult diapers than infant diapers sold in 2012
  • Everything points in one direction – it’s only a matter of ‘when’
  • Optimism bias means most people are getting this situation wrong
  • Japan will go from ‘everything is ok’ to ‘imminent collapse’ overnight – the change will happen very fast you won’t be able to get out of the way
  • The beginning of the end of Japan happened a few weeks and will now play out in 18 months to 2 years.
  • Bass’s advice to Abe – “Quit”

As always with Bass, must watch:

 

Link to this article: : http://www.goldmadesimplenews.com/interviews/kyle-bass-the-next-18-months-will-redesign-the-economic-orthodoxy-in-the-west-11014/

Posted by on Jun 19 2013. Filed under Interviews. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.
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