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Kyle Bass On The End Of The Debt Super-Cycle

Tyler Durden's picture


"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:

Kyle Bass


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Tue, 11/20/2012 - 19:04 | 3000254 mjorden
mjorden's picture

Oh he smells it, and he wants it ... and he wants to invite all of his naysayers for leftovers ... 

Tue, 11/20/2012 - 19:19 | 3000296 RockyRacoon
RockyRacoon's picture

If Kyle is wrong then the problems have been fixed, or at least there is a credible plan to fix them.  I guess that leaves one alternative, eh?  I'm long nickels.

Tue, 11/20/2012 - 19:40 | 3000342 Pladizow
Pladizow's picture

Irrespective of rate, as long as you can borrow, its not over!

Tue, 11/20/2012 - 19:49 | 3000360 Michaelwiseguy
Michaelwiseguy's picture

Can I borrow a cup of sugar?

In other news;

TSA Issues Warning Over Opt Out And Film Week
Hints that local police can arrest protesters using cameras at checkpoints

Steve Watson
Nov 20, 2012

The TSA has officially acknowledged the Infowars Opt Out And Film week protest, and warned that despite the fact it is not prohibited to film at TSA checkpoints, local laws may allow police to intervene and prevent such activity.

On its official blog, TSA official Bob Burns notes:

“TSA has given passengers the option of opting out of imaging technology. If you choose to opt out, simply let the officer know you would like to opt out of the body scanner, and you will receive a pat-down instead.”

Burns then states:

“We’re also aware of the Opt Out and Film week, where some are planning on opting out of the body scanner and then filming their experience. TSA respects passengers rights to exercise freedom of speech as well as the rights of fellow travelers trying to get to their destination safely and without unnecessary delay. While the TSA does not prohibit photographs at screening locations, local laws, state statutes, or local ordinances may.”

Caught On Camera: Woman Goes Into Cardiac Arrest During Traffic Stop



Tue, 11/20/2012 - 20:20 | 3000434 Enslavethechild...
EnslavethechildrenforBen's picture

There are no politicians, that's a facade. There are only Bankers. That's our reality.

Tue, 11/20/2012 - 22:29 | 3000726 TruthInSunshine
TruthInSunshine's picture

The Government is losing the propaganda war badly. All of their headlines, memos, talking points & other bullshit, pumped out relentlessly through their official channels and the proxy main stream media (with every newspaper, cable station, network, magazine and radio station owned by 6 corporations), that allege that there's some sort of a "recovery, soft but sure," are now being dismissed even by the average sheeple (there's been a "whiff" or mild illusion of something remotely and temporarily resembling a stabilization only due to unsustainable, insane, batshit-crazy debt printing and federal reserve sponging/monetization of that debt, with the Fed now holding the illustrious title as one of the world's most toxic repositories/pustules).

The sheeple can no longer even passively ignore the massive spread between what they're seeing and experiencing in their personal lives and what is being parroted to them by the government and media.

The delay in taking the medicine this nation should have taken in the wake of the 2008 crisis will turn out to be an economic & social textbook historical lesson for the ages as to what NOT to do in the face of the massive structural economic crises the U.S. and global economy face today.

I only hope that the very painful chapter of American History about to unfold destroys any remaining confidence that holdout citizens, who still deposit trust & faith in the integrity & competency of benevolent government as their protectorate, may have in fractional reserve banking charlatanism and in the wisdom of allowing a banking/financial-military/defense-Wall Street plutocracy to be allowed to suckle to maturity from the taxpayer subsidized teat of the state and deeply capture the respective branches of government, and its various politicians, regulators and other appendages.

Tue, 11/20/2012 - 23:58 | 3001073 economics9698
economics9698's picture

I am calling this bitch, September 2013.

Wed, 11/21/2012 - 00:47 | 3001189 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

Gonna be fun to watch CNBC proclaim that "nobody saw this coming!"

Wed, 11/21/2012 - 00:46 | 3001184 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

the Japanese are good people.


Very obedient.  

Wed, 11/21/2012 - 08:55 | 3001552 economics9698
economics9698's picture

They have been killing radicals for centuries.

Wed, 11/21/2012 - 09:13 | 3001573 Big Slick
Big Slick's picture

! For PDF of the Hayman report, Google: "Central Bankers Potemkin Village" pdf "it seems to us"

The PDF you are looking for is the only thing that comes up

Wed, 11/21/2012 - 18:04 | 3003380 kalasend
kalasend's picture

Is that an obedient Japanese in your avatar picture?

Wed, 11/21/2012 - 05:45 | 3001375 Hobbleknee
Hobbleknee's picture

I hope so too, but it's more likely that they'll blame the collapse on overpopulation, or some other lie, and the sheeple will fall for it.

Wed, 11/21/2012 - 07:27 | 3001426 Ayn NY
Ayn NY's picture

Didn't we just have an election that proved you wrong. I wish people were waking up to the funny numbers, but they aren't. I think I read one poll that 56% trust Obama on the economy! It's FDR redux, just blame the misdeeds of the guy before you for the problem and double down on the bad economic policies that got us here to begin with. The sheeple bought that for four election cycles and we've never recovered from that. Face it, this is the new normal.

Wed, 11/21/2012 - 10:42 | 3001795 Common_Cents22
Common_Cents22's picture

agreed, America is becoming much more ignorant and stupid.   We will be rearranging deck chairs on the Ameritanic.   We might as well get the reset over with, and start anew.   Those who have put on their life jackets and have arranged their own life raft will have saved themselves.     Those who trust gubmit to save them, will ironically be the first to go.   Darwin always gets his due eventually.

Wed, 11/21/2012 - 14:35 | 3002722 timothyi
timothyi's picture

Seriously, you think Romney had the answers?  Or that his policies (whatever they were) would have been materially different from Obama's?  If Romneyt had been elected we would have failed a different kind of IQ test--the one that doesn't notice or care that someone is spouting blatant lies about easily checked facts.

Wed, 11/21/2012 - 17:59 | 3003370 e-recep
e-recep's picture

people with average iq cannot wake up even if they wanted too. you want them to understand the fiat ponzi? phew, good luck with that.

Wed, 11/21/2012 - 00:41 | 3001172 e2thex
e2thex's picture

In order to state that it's over, one needs to define "end."  No one to date has done that.

Wed, 11/21/2012 - 11:49 | 3002026 ATM
ATM's picture

Fiat currencies will end. 

When that happens just look to history for a long list of the kinds of collateral damage that will inflict.

Tue, 11/27/2012 - 21:28 | 3016126 masterinchancery
masterinchancery's picture

Borrow ammo? I doubt it.

Wed, 11/21/2012 - 08:56 | 3001553 Big Slick
Big Slick's picture

Long nickels too, and pre-'82 pennies.

Tue, 11/20/2012 - 21:30 | 3000669 archon
archon's picture

While all the attention is focused on the EU, "the end" quietly begins in Japan...

Tue, 11/20/2012 - 23:27 | 3000990 dtwn
dtwn's picture

Kyle Bass seemed surprised that events in Japan were happening as fast as they are.  I think Europe will implode before Japan though.  I think the market has to see that the Euro was in fact a failed experiment and has fragmented before it will accept that Japan will default.  I think the first domino is going to be Greece and/or Portugal.  I think that one of them will decide to leave the Euro because of social unrest/political change due to austerity.  Once that happens, perhaps they exit together as some sort of strategy.  I don't know anything about their international relations though. Ireland could also default around this time.  Then I think there will be a bit of market panic, with flight to the dollar, but followed by some 'stable period'.  Whether this is weeks or months, or even years I don't know.  But then due to the relationship between Portugeuse debt and Spain, it could be possible that Spain is the real domino, the real triger because of the size of its economy and its bank exposure.  I think Italy will then default in timing close to that of Spain.  I have difficulty determining what the trigger would be in Itally though because they don't seem to be owed much by PIGS if I'm interpreting this previous post.

In any case, Spains default would probably affect the UK, specifically if Santander were to go under as Santander has a lot of UK 'assets'.  Then if the UK is in trouble, France is going to be impacted due to debt exposure and the Euro will have essentially imploded.  It is around the time that the UK has trouble that I think the market will notice Japan and restructuring will eventually take place.  While all this is occuring I think there will be flight to the dollar (and commodities of course), however temporary, before the Keynesian endgame occurs in the US.

Perhaps that is an overly simplistic view, but thats kind of the order I see things happening.

Wed, 11/21/2012 - 00:10 | 3001112 DYS
DYS's picture

I did a search and replace of your text of "I think" with "I'm totally fucking guessing"   and   "I don't know" with "I don't have a fucking clue".  Hilarity ensues;


Kyle Bass seemed surprised that events in Japan were happening as fast as they are.  I’m totally fucking guessing Europe will implode before Japan though.  I’m totally fucking guessing the market has to see that the Euro was in fact a failed experiment and has fragmented before it will accept that Japan will default.  I’m totally fucking guessing the first domino is going to be Greece and/or Portugal.  I’m totally fucking guessing that one of them will decide to leave the Euro because of social unrest/political change due to austerity.  Once that happens, perhaps they exit together as some sort of strategy.  I don’t have a fucking clue anything about their international relations though. Ireland could also default around this time.  Then I’m totally fucking guessing there will be a bit of market panic, with flight to the dollar, but followed by some 'stable period'.  Whether this is weeks or months, or even years I don’t have a fucking clue.  But then due to the relationship between Portugeuse debt and Spain, it could be possible that Spain is the real domino, the real triger because of the size of its economy and its bank exposure.  I’m totally fucking guessing Italy will then default in timing close to that of Spain.  I have difficulty determining what the trigger would be in Itally though because they don't seem to be owed much by PIGS if I'm interpreting this previous post.

In any case, Spains default would probably affect the UK, specifically if Santander were to go under as Santander has a lot of UK 'assets'.  Then if the UK is in trouble, France is going to be impacted due to debt exposure and the Euro will have essentially imploded.  It is around the time that the UK has trouble that I’m totally fucking guessing the market will notice Japan and restructuring will eventually take place.  While all this is occuring I’m totally fucking guessing there will be flight to the dollar (and commodities of course), however temporary, before the Keynesian endgame occurs in the US.

Wed, 11/21/2012 - 09:06 | 3001568 Big Slick
Big Slick's picture

'Unlike' you, DYS.

dtwn is offering personal opinion and educated guesses, yes.  But these commodities are at a dearth in the ZH comment sections - at least in any serious tone.  Where's your constructive commentary?

Keep writing, dtwn!

Wed, 11/21/2012 - 09:40 | 3001622 Landrew
Landrew's picture

I think you have it backwards. Why would the weak leave a system they rely on for funding? The Germans will be the ones that leave long before any failing nation.

Tue, 11/20/2012 - 19:04 | 3000255 Michaelwiseguy
Michaelwiseguy's picture

This is the group of real American Men and Women the GOP should be courting for a win in the next Presidential election.

Without any help from the mainstream media to get people off their ass to show up this happened, and this is why I new Mitt Romney and the GOP were going to lose;

Ron Paul Crowds at Rallies

Tue, 11/20/2012 - 19:52 | 3000372 LongSoupLine
LongSoupLine's picture

I don't disagree that Kyle Bass would be the cure in the political world, however have you seen the voting public?  They are mostly minority Americans whom love their Dancing with the Stars, ObamaPhones and SNAP life.  Truly fixing America will take revolution I'm afraid.

Tue, 11/20/2012 - 21:33 | 3000679 archon
archon's picture

There was a poll that showed about 90% of Obama voters believed that the middle class pays a higher tax rate than the top 1%.  If this is true, then it really is over, because you can't fix stupid.

Tue, 11/20/2012 - 22:19 | 3000818 mkhs
mkhs's picture

Wait a second.  Do you mean to say that Warren Buffeted's secretary pays less than the Warren?  Or maybe she is not middle class?  Yeah, that is probably it. 

Tue, 11/20/2012 - 23:30 | 3001004 Doña K
Doña K's picture

That may be true if you include income from investments, tax free municipal bonds and other shelters. Romney paid 14% overall.

The real question is the definition of middle class. In the US classes are defined by income. In other countries middle class and upper class is a combination of income and breeding. Put that asside, ask any politician to define the middle class parameters and you will get no answer.

Obama just defined the upper limit of $250K for a family, but not the lower limit. Which means that a family of two that make $249K in wages they pay a higher percentage than Romney. But a family of 4 who make $60k does not pay more. Americans with income of $40k also consider themselves middle class

Wed, 11/21/2012 - 11:12 | 3001899 Kobe Beef
Kobe Beef's picture

In the interest of truth, allow me to introduce the "Real American Class System":

Owner Class: you get paid via ownership of hard assets, businesses, stocks, bonds, printing presses & politicians.

Worker Class: you get paid for work, whether turning a lathe, programming a computer, answering a telephone, indoctrinating children, or reading a teleprompter.

Parasite Class: you get paid for being born into a "disadvantaged group", birthing more, and voting democrat.


Forget income, as that is all subject to reporting, rigging, fudging, and change. Classifying via income stream is more appropriate, agreed?

Sun, 11/25/2012 - 13:44 | 3009888 Doña K
Doña K's picture


Wed, 11/21/2012 - 09:47 | 3001638 Landrew
Landrew's picture

Let US not be stupid, are we confusing tax rate with total tax dollars? Many of the 1% live on long term cap gains (I would if I could) paying 15%. Most of us in the middlle class pay between 25 -35%. So yes the middle class pays a higher rate and the 1% pay a higher % of the total tax dollars. Does that clear it up for you?

Wed, 11/21/2012 - 11:54 | 3002049 ATM
ATM's picture

are you factoring in estate tax?

Tue, 11/20/2012 - 19:08 | 3000261 fonzannoon
fonzannoon's picture

I wonder if he can talk his book into getting a developed nation to default.

Tue, 11/20/2012 - 19:37 | 3000337 kito
kito's picture

hes trying, hes trying............damn those japanese, they just....wont....die!!!!!!!!!!!!

Tue, 11/20/2012 - 19:45 | 3000351 fonzannoon
fonzannoon's picture

If Japanese woman marry men who own JGB's do they cheat on them with JGB vigilantees?

Tue, 11/20/2012 - 19:48 | 3000361 kito
kito's picture

no, the japanese women hire u.s bond owning gigolos..................

Tue, 11/20/2012 - 19:08 | 3000263 A Lunatic
Tue, 11/20/2012 - 19:10 | 3000270 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Get long floating rate bonds?

Or just buy as much nickle as your living room can hold?

Tue, 11/20/2012 - 20:17 | 3000418 peekcrackers
peekcrackers's picture

Holy paper humpers .. Bass buy japan ???

Never  can understand how ppl still think solid investment in I O U notes

built on enslament of tax payers

Tue, 11/20/2012 - 20:22 | 3000440 UP Forester
UP Forester's picture

You mean picking up 10 yen coins off the running bullet-train tracks is a bad idea?

Tue, 11/20/2012 - 22:26 | 3000841 mkhs
mkhs's picture

Who needs ten fingers?

Wed, 11/21/2012 - 14:38 | 3002740 timothyi
timothyi's picture

YCS - 2x inverse Yen.

Tue, 11/20/2012 - 19:16 | 3000287 Seasmoke
Seasmoke's picture

I don't think it will ever be over until negative rates go to 100

Tue, 11/20/2012 - 19:17 | 3000290 muppet_master
muppet_master's picture

end of treasury bubble?

I'll call it BEFORE it about sometime in middle of 2014 when 10 yr is at 0.5%

ZH says about kyle bass:

The modest Texan notes it is naive to think he can call the end of a 70-year debt-super-cycle with any precision


Tue, 11/20/2012 - 19:20 | 3000299 RockyRacoon
RockyRacoon's picture

ZH didn't say that about Kyle Bass.  Kyle Bass said that about Kyle Bass.  Watch the effing video.

Tue, 11/20/2012 - 19:22 | 3000301 fonzannoon
fonzannoon's picture

He is already considering going long the yen. So thats how good he feels about this. I just wonder how CNBS tries to rise above Japan defaulting in their propoganda.

Tue, 11/20/2012 - 20:36 | 3000477 GuyJeans
GuyJeans's picture

Ill have to re-listen but I though he said "yen devaluing" esp against usd and yuan, so I assumed going long to mean long the usd.  Why long the yen in a yen currency crisis?

Tue, 11/20/2012 - 20:59 | 3000565 fonzannoon
fonzannoon's picture

I understood it to mean he was interested in going long the yen after he rakes it in when they massively devalue. I am also a bottle of merlot in the hole....

Tue, 11/20/2012 - 19:28 | 3000314 Pretorian
Pretorian's picture

How about mentioning Japan unscheduled election this year with LDB coming back. Thats the first important thing he didnt mentioned.


Wed, 11/21/2012 - 00:13 | 3001111 BigInJapan
BigInJapan's picture

He did mention it.

He spoke of Shinzo Abe coming in as Prime Minister on Dec 16.


Shinzo "We will print to infinity" Abe.


He's had the job once before, and quit. Shinzo "I have to retire. The Prime Minister's job is too stressful" Abe.


It's real. The Yen is toast, as is the independence of the Bank of Japan.

Tue, 11/20/2012 - 19:28 | 3000321 Shizzmoney
Shizzmoney's picture

"When you let the politicians run monetary policy, well, that is how it [ends]"

Wait, Bernanke, The Great Chairman, is up for public re-election?

Tue, 11/20/2012 - 19:30 | 3000328 buzzsaw99
buzzsaw99's picture

after listening to him talk his book millions more people made deposits into their bank accounts as fast as they could.

Tue, 11/20/2012 - 21:35 | 3000690 archon
archon's picture

Millions of people putting gobs of money into their bank accounts is not a problem.  Millions of people all deciding to spend it all at the same time is a really big problem...

Tue, 11/20/2012 - 19:31 | 3000329 hmmtellmemore
hmmtellmemore's picture

He needs to ignore Japan and focus on France.

Tue, 11/20/2012 - 19:34 | 3000333 gjp
gjp's picture

How about the US, ultimate origin and biggest benificiary of our financial scamtastic world?

Tue, 11/20/2012 - 19:59 | 3000376 hmmtellmemore
hmmtellmemore's picture

The US and Japan have printing presses so things can be delayed there the longest.  I'm not saying that things won't hit the fan there, all I'm saying is that they will be last as money flees from places like France.

Tue, 11/20/2012 - 20:21 | 3000436 gjp
gjp's picture

Fair enough, agreed? But the printers won't let europe go either, I think.

Wed, 11/21/2012 - 17:40 | 3003341 hmmtellmemore
hmmtellmemore's picture

Hmm, good point.

Tue, 11/20/2012 - 23:30 | 3001005 dtwn
dtwn's picture

I agree it would be interesting to see what his analysis on France would be.  I think that prior to France though, that the focus shuld be turned toward the trio of Spain/Italy/UK, as I think that restructuring within this group will be the big trigger that will eventually lead to France.

Tue, 11/20/2012 - 19:32 | 3000332 gjp
gjp's picture

"when you let politicians run monetary policy ... This is how it ends"
Right, and it's so much better when 'sober', sophisticated bankers just take care of everything for us. Give me a break, the whole notion of fiat monetary policy and central bank independence is a joke. Fiat is just a vehicle for the politicians and bankers and yes, hedge fund managers too, to fleece the public. Call a spade a spade kyle.

Tue, 11/20/2012 - 21:22 | 3000643 Fred Hayek
Fred Hayek's picture

I suspect that Bass actually agrees with you. Ridiculing one side of the false dichotomy typically presented doesn't mean he's in favor of the other equally ridiculous side.

Tue, 11/20/2012 - 22:15 | 3000814 Snidley Whipsnae
Snidley Whipsnae's picture

gjp... did you read the letter? Bass cannot call a spade a spade and remain in the position of 'fudiciary responsibility' that he holds. He has to appear to be sane to the jokers that are still on the same page as the Keynesians. Not easy.

It's easy for us to spout off daily. Not so easy if you are in management of a large fund and wish to avoid getting your walking papers.

He says what is necessary in such a way as to avoid getting canned... and, he does a damn good job of it.

Tue, 11/20/2012 - 22:48 | 3000902 FutureShock
FutureShock's picture

No, wrong Bass went to Wall Street and schooled them on their business CDO models that increased forever and showed them what could happen, they said "thanks we got it" Hedge Managers fleece wall street who fleece the public and their own clients but Bass made the effort before he capitlaized. Also spoke to members of Congress who not their head and realize they can't do anything to help as they will not get elected.


Tue, 11/20/2012 - 19:38 | 3000340 ytraderx
ytraderx's picture

The bond market is in a bubble and it's going to collapse. The US has $222 trillion in unfunded liabilities. And the Fed can only buy so many Treasuries before inflation starts to spiral out of control. Treasuries are the most dangerous investment in the world right now. Check out this article:

Tue, 11/20/2012 - 19:44 | 3000348 PaperBear
PaperBear's picture

And silver is in a 140-year cycle, what symmetry.

Tue, 11/20/2012 - 19:46 | 3000352 icm63
Tue, 11/20/2012 - 20:18 | 3000430 CunnyFunt
CunnyFunt's picture

TBT is going nowhere fast.

Tue, 11/20/2012 - 19:47 | 3000358 GreatUncle
GreatUncle's picture

Debt super cycle, total load of rubbish.

When in a modern society you bring forward spending by borrowing from the future you end up with a shed load of debt that should have been the stable spending for the next 50 years or more. This spending so encouraged and sought after by all the politicians was because without it the economic system would have ground to a halt long ago. The self destruct mechanism is where you borrow ever larger amounts "from the future" yet only service the interest through deflating debt away and you end up with a debt UXB and no way to disarm it.

Tue, 11/20/2012 - 19:58 | 3000383 hmmtellmemore
hmmtellmemore's picture

What does debt UXB mean?  And also, where are we all headed in your opinion?

Tue, 11/20/2012 - 20:22 | 3000433 CunnyFunt
CunnyFunt's picture

It's a Brit acronym for "unexploded bomb".

Tue, 11/20/2012 - 23:38 | 3001027 GreatUncle
GreatUncle's picture

Think the next comment explains what I mean about UXB.

You asked me for my opinion on where we are heading.


Where any artifically induced growth in the system will be cancelled out by inflation.

Wed, 11/21/2012 - 02:39 | 3001298 MsCreant
MsCreant's picture

You are very optimistic. Wish I could be too.

Wed, 11/21/2012 - 10:00 | 3001671 Landrew
Landrew's picture

I see no inflation in our future, only delfation.

Wed, 11/21/2012 - 17:42 | 3003344 hmmtellmemore
hmmtellmemore's picture

Many people have predicted dual deflation for bank reserves and inflation for consumers.  Something to consider.

Tue, 11/20/2012 - 19:51 | 3000367 Pancho Villa
Pancho Villa's picture

Japan has a huge debt/GDP and a huge pulse of Japanese will celebrate their 65th birthday between 2010 and 2015. Of all the developed economies, Japan's worries me most.

Japan's baby boom peaked about 10 years before the US baby boom. I'm watching to see what happens in Japan in the next couple of years because I think the US will be in about the same position in 10 years. US debt/GDP seems to be roughly following Japan's ratio, but 10 years behind.

Tue, 11/20/2012 - 22:39 | 3000872 Hayabusa
Hayabusa's picture

Pancho Villa... hit the nail on the head!  Watch Japan for a preview of coming attractions here in the U.S.

Tue, 11/20/2012 - 23:33 | 3001011 dtwn
dtwn's picture

I'd add watching the UK/France also for a preview of what's coming to the US.

Wed, 11/21/2012 - 10:02 | 3001680 Landrew
Landrew's picture

Sorry, the ratio is exactly the same now, the mix is different. We have far more private debt then they have public debt NOW.

Tue, 11/20/2012 - 19:52 | 3000368 blunderdog
blunderdog's picture

If we DO actually see negative NOMINAL bond rates, we'll have a potential new USian industry.

Large institutions may want to lease out space to warehouse pallets of FRNs. 

Maybe mining companies would be able to put those big empty holes back to productive use...

Wed, 11/21/2012 - 02:42 | 3001300 MsCreant
MsCreant's picture

I have so many lewd things to say...I don't know where to begin...

Tue, 11/20/2012 - 20:13 | 3000375 Radical Marijuana
Radical Marijuana's picture

I find these efforts of intelligent, well-informed people to be "realistic" to be relatively amusing to my macabre sense of humour. The perspective and the language that people like Kyle Bass bring to these issues, and use to talk about those issues, display an awesome irony, although, of course, they do not intend that.

Let us reconsider and recast what are the deeper social realities, with the language that these kinds of financial experts employ to try to talk about that. They are attempting to be more "realistic." They have good reasons to care whether their bets are going to match the real world. However, the BASIC WAY THEY TALK IS BULLSHIT!!!

The "seventy year debt cycle" is a 70 year fraud cycle.

The changing of the possible public control over central banks is the result of those banksters operating their runaway frauds to such an extreme degree that the public systems are being destroyed. Meanwhile, all of those public politicians come out of their traditions of being goofball puppets, who will NEVER talk about what was actually going on, and therefore, can not possibly offer any better solutions to those problems!

Almost all of the "investment" done by "investors" is based on taking advantage of money made out of nothing to gamble with. The central banks were the best organized gangs of criminals, that made and maintained the gaming house that the "economy" operates within!

The actual path we are on was that the banksters were the best organized gangs of criminals, which were able to covertly take control of public governments. Their system them became more and more runaway triumphant frauds! Those systems grew and grew, until now there are no longer any private players that are big enough to still control it. There has developed an awesome ouroboros of incorporated robbery, that has eaten itself! The accumulating "success" of the best professional liars and immaculate hypocrites dominating civilization creates their own paradoxical developments of final failure from too much of their "success."


The central feature of these historical developments was the assassination of politicians that could not be bribed or intimidated. Around that, there was layer after layer of bribery and intimidation of politicians, aided and abetted by more and more control over the mass media. Thus, there was the gradual growing of the triumph of organized crime controlling the government, which then controlled the rest of economic activity.

The core achievement was getting counterfeiting by privately owned central banks LEGALIZED. From then on, all other investment decisions become more debt based. In the background, as well, since that kind of fiat money system depends on the power of taxation to force that fiat currency to become the legal tender throughout the whole society, investment decisions become more and more based on tax considerations.

Between both aspects of the runaway triumph of organized crime covertly taking control of governments (namely, the debt based, money made out of nothing, and the tax based, enforcing money made out of nothing as the legal tender) those considerations eventually overwhelm every other aspect that should be part of the economic decisions being made in a market. The alleged "free market" of "capitalism" adapts to more and more become runaway organized crime, within which money is made of out nothing, and the taxation of that flow is the main thing that keeps it going, and directs where it goes.

Since the money is backed by murder, and the debt controls are based on the death controls, the problem with the public politicians, who are supposed to be responsible for representing the sovereign will of their people, is that they become nothing more than goofball puppets, working according to the directions of the best organized gangs of criminals, who have formed a shadow government, and who end up becoming more wealthy, and more powerful, than the governments which become indebted to them, and thus, controlled by them.

The real flow of control was from the covert death controls, on throughout the overt death controls. Meanwhile, most people get completely brainwashed, mainly through lies by omission, to not understand that, and to not want to understand that. Therefore, again, and again, and again, the people's representatives, employing the sovereign powers of those people, as manifested by the police and army, back up the privatization of the planet, through runaway triumphs of financial frauds.

As these runaway frauds reach their turning points of final failure from too much "success" for too long, it continues to be practically the last thing discussed in the public space that the public needs to understand that they should run the murder system, so that they actually run the money system. Instead, the public pays for the shattering insanity of their systems.

The language that an intelligent and well-informed individual like Kyle Bass employs is BACKWARDS. The amusing thing is to watch how he is being forced to become more "realistic," in order to do his job, BUT, he can never become sufficiently realistic, since he has to continue to use presumptions that are BACKWARDS!

To turn things around requires seeing that the central banks became the best organized gangs of criminals, that took control over the political systems. The genuine solutions require that "the people" understand that, and thereby take back control over being the best organized gangs of criminals, that thereby take back control over "their" money system, and the economic activities which that money system mediates.

Tue, 11/20/2012 - 22:12 | 3000803 DirkDiggler11
DirkDiggler11's picture

A long winded bunch of bullshit. Why did you bother to post this? To hear yourself talk ? You offered no real assessment of what parts of Kyle's logic you think is flawed, and you offer no solutions to what you are bitching about, and it took you 13 fucking paragraphs to spit out virtually nothing. Go copy and paste your re-heated bullshit somewhere else. I want the 5 damn minutes of my life back that I wasted reading your ass vomit.

Tue, 11/20/2012 - 23:14 | 3000932 Radical Marijuana
Radical Marijuana's picture

Well, Dirk, my main objection to the logic of Bass is his view that politicians interfering with central banks is a bad idea. The existence of privatized central banks, able to legally counterfeit the world's money supply, is the one of the worst ideas there has ever been!

The first step would be to audit and end the Federal Reserve Board. However, to attempt to do that is to attempt to take on a gang of trillionaire mass murders, who currently dominate practically the whole world, with an organized systems of lies, backed up by violence, which lies and violence were legalized, because that system took control of the puppet politicians. Those are actually the MOST IMPORTANT POLITICAL IDEAS! I bother to research and post these issues because they are the most important political problems that exist today.

Here is a collection of many videos, most of which have been featured on Zero Hedge before regarding that history, and WHY understanding the history of money is vital to understand WHY those systems have reached debt insanity levels.

When Bass starts off by saying that the world is about 200 trillion dollars in debt, almost three times more than the total world's GDP, you should ASK WHO HAD THAT 200 TRILLION TO LEND? The answer is that private banks made it ALL OUT OF NOTHING AS DEBTS!

Bass appears to be a much better than average professional money manager. However, the PROBLEM is that he operates from INSIDE that system, and takes it for granted. It is that system as a whole which is the PROBLEM, and which therefore is destroying itself, by having created so much debt that the debt slavery system it made and maintained has, by the numbers, become DEBT INSANITY, which will probably end in world war, and martial law.

Of course, my dear Dufus Dirk, you are entitled to ignore those social facts, of insane runaway debts, likely leading to social collapse, and assert that I wasted your time by pointing those out. You sound like another mainstream moron, Dirk, with nothing but insults to sling around.

Tue, 11/20/2012 - 22:53 | 3000909 Hayabusa
Hayabusa's picture

Look everyone Radical Marijuana thinks outside the box - he must be smokin some good shit!  Although I do not agree with

backward take on Kyle Bass's logic, I do agree with the bulk of his post.  IMHO at least he sees things as they are in regard

to our monetary system and the gangs that run it... into the ground.  I think a lot of people are incapable of thinking outside

the box and sifting through all the bullshit... this guy seems to have no trouble in that regard.

Tue, 11/20/2012 - 23:06 | 3000929 FutureShock
FutureShock's picture

Bass is smart enough to get on the death list I suppose.

1. He was not asked how to fix it, the EU can't be fixed, he says re-structure and that means default. Once he said it is easy to fix the US but no politician would even consider what needs to be done or get re-elected.

2. He is a fiduciary not a politician or a spokeperson for the debt growth ponzi scheme we all live in. His job is to get yield for his clients with the world at hand, not inform people about fractional reserve banking. The highest level politicians out there should be ending the fed, and the sheeple have no clue, education is a waste of time and at this point as the end game is comming.

Though many or your words are not incorrect, Bass and people in reality are above your "backward" cries


Tue, 11/20/2012 - 23:35 | 3001019 Radical Marijuana
Radical Marijuana's picture

Yeah, Futureshock, you are RIGHT!

I read Alvin Toffler's book, as in your name, back in 1970, when it first came out. The exponential growth of the total debts of Americans, and pretty well the whole world, has been the main fulfilment of all the rest of the exponential growth curves that his book pointed out back then.

Chapter by chapter, Future Shock went through how everything one looked at was on a runaway exponential growth curve. At the same time, another book was the Limits to Growth. Both combined appear to have been generated by the same kinds of intellectual elites that generally made and maintained those problems in the first place. As far as I can tell, the only "practical" and "realistic" solution that those elites have prepared for is war and martial law.

Each individual participant is in a runaway "tragedy of the commons" ... which was another early essay like those two books. The privatization of the planet is making that overall problem actually worse, not better! As far as I can tell, there is NOTHING that anyone can do but make things worse. The only differences are the rates at which we make things worse. The fundamental social pyramid system is the problem, and nobody exists outside of that enough to be able to do anything about it.

I might attempt to "think outside of the box" but obviously I must still live within it, along with everyone else. The only vain fantasy is that we MIGHT be able to better catalyze a limited collapse, IF we better understood what was happening, and IF, IF, IF that collapse was limited enough.

The exponential growth of debt, reaching the level of debt insanity, is what most of the articles on Zero Hedge are about, and this is one of the few Web sites where I find any deeper understanding of that process. However, since that is the case, there is currently nothing that can be expected other than more and more insane runaway making more money out of nothing, as debts, without end, until whatever, whenever ... which will probably murder me, and many, many other people ... but which nevertheless is theoretically important enough to attempt to understand.

Tue, 11/20/2012 - 23:40 | 3001035 dtwn
dtwn's picture

For fuck's sake, Kyle Bass is not the enemy here.  He's just a guy that made some money because he had an idea that was counter to market psychology at the time.  He was correct before, people seem to like his ideas (his last letter got 220k reads in 3 days apparently), and he's just giving his opinion about what is going on now.  He's just basically telling us what he sees based on whatever data he's looking at.  If he's so backwards, what's your grand thesis?  The data's out there.  There's no agenda here on Bass' part other than to make money off of what he sees in the system.  

Wed, 11/21/2012 - 00:09 | 3001108 Radical Marijuana
Radical Marijuana's picture

Yes, dtwn, I was just using Bass as a kind of "whipping boy."

We are living in a Bizarro Mirror World where everything is backwards, on level after level of the infinite tunnel of deceits. Obviously, the first and foremost solution is to stop making "money" out as nothing, by allowing the money supply to be controlled by a privatized legal counterfeiting ring, namely the central banks, and their overall banking system. That privatized fiat money is a fundamentally fraudulent financial accounting system which is insanely backwards because no matter and no energy, therefore no goods, and no services, ever can be made out of nothing, nor sent to nothing, BUT, fiat money gets made out of nothing, as debts, and can disappear when the debts are repaid or defaulted upon. 

My "grand thesis" is to make political science be perceived in ways which are consistent with physics and biology, and the energy laws, and general systems theory, that are used to understand everything else throughout those realms. The paradoxical problem with that thesis is that human sciences are in a head-on collision with the Oedipus Effect, as manifested in the history of warfare, where success in war depended on deceits, and thus, those who were the best at being dishonest won the wars. Thereby, the history that made War King then made Fraud King.

The central banks are currently the Fraud Kings. I do not propose the impossible of stopping that from existing. Rather I propose it is possible for more people to understand that, and therefore, have a better kind of arms race between the different social groups, so that we could make and maintain a better dynamic equilibrium of the relative rates of social robbery. I will not attempt to explain here how radical my concepts about the synthesis of ancient mysticism with postmodernizing sciences are. However, that system of understanding is the basis of my "grand thesis" regarding the required revolutions in the monetary systems.

I have never tried to make money inside the established system, and therefore, I do not expect anyone who is interested in making money inside those established systems is going to care about what I have to say. I am not offering any "actionable intelligence" in that sense. For several decades, I have been saying that the money system was insane, and that it was not good enough to beat that system, but rather, it was necessary to defeat that system. I have never been interested in making money within the established systems, because I have always been convinced those systems were runaway insanities, which would destroy themselves.

Up until 2008, far, far, far fewer people saw that. Several decades ago, it was hard to find even one person in a million who understood that "money" was being made out of nothing. Now, I think we have gotten up to maybe a few people in one hundred have nodding acquaintance with that concept. IF we survive to get to the point where 5% understand that well, and 20% more understand that generally, then we might finally see some revolution in our financial systems. One could say that my whole life has been day dreaming and preparing for that possibility.

Tue, 11/20/2012 - 19:57 | 3000379 logicalman
logicalman's picture

How about factoring in that just about every Japanese resident is going to be a bag of cancer in 15 - 20 years thanks to Fuck You Shima?


Long chemo drugs?


What a fucking mess the world has become.

Tue, 11/20/2012 - 20:04 | 3000393 TNTARG
TNTARG's picture

Indeed. The World should be working on that matter instead of bombing around and speculate with "derivatives" or "derivates" or whatever. Do we think radiation is gonna stay still over Japan and in the japanese sea? They're not the only ones who are gonna be cancer bags in 15-20 years.

Tue, 11/20/2012 - 20:21 | 3000435 vato poco
vato poco's picture

Please do not worry.

Tue, 11/20/2012 - 19:58 | 3000380 JPM Hater001
JPM Hater001's picture

Man Crush


Tue, 11/20/2012 - 19:58 | 3000382 TNTARG
TNTARG's picture

"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"

Well, banksters are running monetar policiy in the USA as well as in Europe. In many countries banksters emplyees were de facto put to run governments too, as in Italy.  So the whole post is full of s..t.- The guy starts with a false premise.

Tue, 11/20/2012 - 20:08 | 3000404 logicalman
logicalman's picture

When money comes into existence as debt, at interest, in a fractional reserve system, it's bound to end in tears whoever gets to run it.


Tue, 11/20/2012 - 19:58 | 3000387 Rainman
Rainman's picture

I read the whole letter and it was excellent. I was about to jump out the window in despair, but decided instead to dig a hole to store my gold.

Tue, 11/20/2012 - 20:23 | 3000444 THE DORK OF CORK
THE DORK OF CORK's picture

Japan is a semi sov country..................

Most of Europe is not...........


As long as that continues it will suck resourses from Europe


Start of something big ?


A nuclear icebreaker is a expensive boat for hire is it  not ?

Tue, 11/20/2012 - 20:25 | 3000445 EscapingProgress
EscapingProgress's picture

Kyle Bass is awesome.

Tue, 11/20/2012 - 20:34 | 3000475 Quantum Nucleonics
Quantum Nucleonics's picture

Kyle might be right, but he's certainly getting his a$$ handed to him on his yen trade.

Tue, 11/20/2012 - 21:34 | 3000682 Fred Hayek
Fred Hayek's picture

I think he sees an unwitting economic ally in "3% inflation" Abe.

Tue, 11/20/2012 - 22:01 | 3000768 Snidley Whipsnae
Snidley Whipsnae's picture

No way the BoJ or any central bank can control inflation at this stage. IF they raise interest rates in an attempt to check inflation at 3% think about what happens to _______ (add your own nouns on dotted line).

Tue, 11/20/2012 - 22:08 | 3000792 Snidley Whipsnae
Snidley Whipsnae's picture

Kyle is probably smarter than the smartest person that any of us have ever been in a room with.

He is also a gambler and a gold bug and I mean both as compliments.

He is looking for big paydays... and not sweating the small stuff.

I have heard some comment that he is a lot different than Hugh Hendry... I don't think so. Both of them are willing to go to incredible lengths to prove that they can make more money than their competitors in this tough market. So... they have different accents.

Tue, 11/20/2012 - 23:26 | 3000971 FutureShock
FutureShock's picture

That's cause he is the smartest guy in the room, the convex Japan play will bring his fund boat loads compared to the risk. When you start looking past a quarter and have the numbers right like he does convictions get realized. One or two or even 5 years for what he will make - shit ............  Any more of a delay means more made in the end. I am sure he loves the delay and having his "ass" handed to him while he buys more. That ass will be some major booty the longer it takes and too much for both hands. 

Tue, 11/20/2012 - 23:44 | 3001044 dtwn
dtwn's picture

I think he's ultimately right, the math of the demographics appears to me to reach a logical conclusion.  But I think he entered the trade a bit too early.  I think they're going to be able to string it out a bit longer.  After all, Greece has made it 3 years and they can't even print their own money.

Tue, 11/20/2012 - 21:39 | 3000709 TruthBeTold
TruthBeTold's picture

Yum, Kyle Bass... Thank you for sharing this!  How awesome to finally see what one of Hayman's letters to investors looks like. More of this please. :-p

Tue, 11/20/2012 - 21:49 | 3000720 Zero Govt
Zero Govt's picture

"Japan has entered its final check-mate phase"

Politicians painting themselves into a corner, run out of options as they've expelled all the easy options, not ever taken a hard decision (ie. stop debt spending)

""When you let the politicians run monetary policy, well, that is how it [ends]"

Ditto your/any country.

Govt, the dumbest most corrupt institution in history. Let's end it.

Stop Paying Tax ...bleed the suckers dry and speed recovery (from Govt)

Wed, 11/21/2012 - 10:21 | 3001731 Landrew
Landrew's picture

I would think it easier for you to move to Haiti or Mexico where there is no government now?

Tue, 11/20/2012 - 21:57 | 3000756 Snidley Whipsnae
Snidley Whipsnae's picture

To get what Bass is saying it's best to read the 31 page letter. It is interesting and not complex... a bit on the scary side but that is the way it is.

Tue, 11/20/2012 - 22:32 | 3000857 woggie
woggie's picture

the beast is on the gobble and all that matters is we're all headed for it's belly

Tue, 11/20/2012 - 22:53 | 3000910 This just in
This just in's picture

Rookout Berow!

Tue, 11/20/2012 - 23:17 | 3000964 Ned Zeppelin
Ned Zeppelin's picture

Let me guess: Kyle's idea is that monetary policy cannot be entrusted to politicians or The People, and can only be entrusted to a central entity removed from political control that will objectively, fairly and benignly act in the best interests of all.

It's called the Federal Reserve. 

Tue, 11/20/2012 - 23:17 | 3000966 americanspirit
americanspirit's picture

What you (generically speaking) have to understand is that Kyle is one of a whole bunch of brothers, uncles etc who are just about the smartest clan on earth. He is the public face but he doesn't speak for himself - although he is without doubt a leader within the family despite his youth. When you hear Kyle talk you are hearing a pantheon of excellent minds talking - factor that in before you make any smart-ass comments. Those of you not caught up in self-importance - those who have ears, let them hear.

Tue, 11/20/2012 - 23:59 | 3001074 augustus caesar
augustus caesar's picture

Absolutely nothing new here for those of us who have been following Japan.

Wed, 11/21/2012 - 05:15 | 3001354 Dealyer Turdin
Dealyer Turdin's picture

Too Big To Feel.  O, it hertz when the quake turns your slush fund to a shake and the last straw sucks you down such a sound!  When the pigeons come back to roost on your noose release your burden, Dealyer Turdin!  Everywhere you look there's a crook and you're hanging in suspense above the fence where the thin blue line defends the hangman's shrine, no need to call the cops there won't be enough mops to feed the mobs or stop the slobs.  Pigs on the slopes squealing we ain't dealing dopes, nope, there will be pork if you just hold out your fork, stand your ground and don't back down release your burden, Mr Durden.

          Sincerely, Dealyer Turdin


Wed, 11/21/2012 - 06:06 | 3001380 lakecity55
lakecity55's picture

Great Fantasy: Corzine and Bloomberg both swinging from a lamp post!

Wed, 11/21/2012 - 07:21 | 3001421 AnAnonymous
AnAnonymous's picture

'Americans' have it easy.

They have been working successfully at depleting Earth's resources.

This will come with consequences.

Now they have it easy because they attach the depletion's consequences to any sort of things they want to.

Taxation policy, debt...

But a zero debt, tax policy will change nothing: depletion of resources is on thanks to 'americans'.

But 'americans' can do like Bass: helping the consumption part by pushing on papers claiming that a debt ratio or stuff like that will matter.

Every bit of consumption helps toward depletion of resources. The 'american' duty...

Wed, 11/21/2012 - 07:35 | 3001431 Who is John Galt
Who is John Galt's picture

Yes but what will happen when the Chinese glob on to the americancitizenism?

I mean expand on this whole globbing on process and what it means.


Wed, 11/21/2012 - 13:03 | 3002309 akak
akak's picture

Incorrect WIJG --- it is "blob-up", not "glob", and "US 'american' Citizenism", not "americancitizenism".

When expounding on the bigotry and insanitation of AnAnnoyingUs, the proper terminology is the mattering thing, very much the crustiest bit of an important something.

Make me laugh!

Wed, 11/21/2012 - 10:29 | 3001764 OhOh
OhOh's picture

Excellent video, outstanding newsletter. He needs to hold onto his writers.

Wed, 11/21/2012 - 10:48 | 3001822 jaygould
jaygould's picture

i don't get it???!!! granted, bass made 1 good call, subprime short; so now he is a genius about everything?? maybe he should just retire to his texas ranch with his guns, supporting backward-looking texas republicans but then again all the fawning pundits would have to find someone else to tout. why don't u write about bass's returns post-subprime?????????????????????????????????????

AND, besides all the "bs" comments above, does anyone really understand what the future of japan will look like? or, for that matter, the U.S. in 1 yr? i'm starting to read 'zerohedge' as a comic strip espousing half-truths, rabble-rousing comments, false hedge fund prognosticators, etc..... will be interesting to see where the latest headlines take "us" re: SAC, n'est-ce pas? is it possible another fortune simply based on "superior" information???????????

Thu, 11/22/2012 - 00:01 | 3003913 pocatello
pocatello's picture

Damn!  Kyle is one sexy beast!

Thu, 12/20/2012 - 11:33 | 3082624 blackmamba
blackmamba's picture

I am unable to listen to Kyle Bass's comments because the video clip will not respond to my attempt to open it. Is this something to do with my computer?? It has happened at other webistes.

Your help would be much appreciated.


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