Kyle Bass: “All the asymmetry in the world lies in Japan”
November 24th, 2011
Kyle Bass talks a great deal of sense in this HardTalk interview with the BBC’s Sarah Montague (whose apparent inability to understand much of what Bass is saying only partially mars the session). The 24 minute 30 second interview was first aired on the BBC on Saturday November 19th, 2011.
Bass, founder of Dallas-based Hayman Capital Partners, initially made a name for himself by betting against the subprime CDO market in the US in 2006, before latching onto the nascent European sovereign debt crisis in 2008. Following a meeting with Harvard economics professor Kenneth Rogoff about sovereign balance sheets, Bass piled into credit default swaps (CDS) on the sovereign debt of fiscally-challenged eurozone members such as Greece before most other investors became aware of the risk these nations might default. Bass’s investment approach is chronicled in Michael Lewis’s recently published book Boomerang: The Meltdown Tour.
If the abridged summary from BBC’s Hardtalk interview with Kyle Bass that we published yesterday was not enough for those seeking sense, truth, and direction, then the full 24’30” interview will quench that desire. Reflecting on the similarities of his subprime perspective, he provides a crucial context for the debt-laden world of sovereign debt that he is now hedging. Shrugging off the somewhat snarky ‘nefarious short-sellers’ angle of questioning, he simply and elegantly points out how massively asymmetric the bet was, how the asymmetry in Europe has disappeared now, and all the asymmetry lies in Japan. From the 14-minute mark, describes the demographic disaster, destroys the savings myth of the land of the rising sun, and brings into focus how Italy’s rapid demise should be a forewarning for the debt-servicing of Japan. Ending up on the Fed’s printing and the need for guns and gold, there’s a little here for everyone!
“Buying gold is just buying a put against the idiocy of the political cycle. It’s That Simple”
At the end of the interview, Bass told Montague that “capitalism without bankruptcy is like Christianity without hell”. This is a direct quote from Frank Borman, former chief executive of bankrupt Eastern Airlines.
Short URL: https://www.ianfraser.org/?p=5395
Posted by Ian Fraser
on Nov 24 2011. Filed under Blog.
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