July 12, 2012

Kyle Bass thoughts on Japan

These are recent thoughts of Kyle Bass from the SALT Conference Panel

Kyle Bass believes that the bottom in the USA housing market will be reached soon. The possible time-frame according to him is between 12 and 18 months.

Regarding Bass’s most popular thesis” “Japan”, he says that today more diapers are bought for adults in Japan than for children. Kyle Bass compares Japan to Bernie Madoff and points out that Ponzi schemes work until there are no more buyers and money coming in - you can make promises and there won't be any issues as long as you don't have to follow through. Japan has made much promises but the fact is that the interest rates to service its debt consume half of the government revenues. This reveals how big the debt is.

As a matter of fact, Japan is already monetizing a lot of debt so it's just a matter of time before the market starts to get out or the currency crash.

Kyle Bass admitted to making a mistake in 2009 by not anticipating all the printing by the sovereigns.
Today the manager of Hayman Capital advocates as best investments: long non-agency MBS credit while shorting Europe and Japan. Kyle Bass also said that Greece would be "ungovernable" very soon.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.