An Hour In The Company Of Kyle Bass

Tyler Durden's picture

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...

Clip not embeddable - click image for jump to YouTube.

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fonzannoon's picture

I can't reconcile his pessimism about the US debt and jobs not coming back and his optomism about the US housing, food and shale gas. Where the hell does that leave us?

ssp2s's picture

He thinks much of the world will be starving and short of energy.

kito's picture

He has clearly said its a numbers issue for the u.s.... A little slice here...a little tax there....he is f-cking clueless to the very deep structural problems that face the u.s.......

fonzannoon's picture

Exactly! How does someone that smart whiff on that? I wonder if he just realizes what's the point of telling everyone they are fked....don't want to spoil the mood in the room.

kito's picture

I'm telling you fonz....all the gloom and doomers have been getting late night visits by the Men In Black......tow the line or feel the wrath....

fonzannoon's picture

bucks county looks better every day.

kito's picture

Wherever you go fonz, just make sure its away from the island...bad news...not many ways in or out

Ham-bone's picture

Kito - to "sell" something your clients must believe they will be able to enjoy the investment will do no good for KB to say just how dark things may be, only makes him sound like he's nuts.  Call out bad here and there but don't go full retard on how bad it may get...just judge from KB's full on defensible ranch, massive weapons cache, long term food supplies.  He's prepping but keeping the day job just in case.

FoeHammer's picture

He's prepping but keeping the day job just in case.

Interesting point Ham-bone

Schmuck Raker's picture

I think he would say the US is fucked, but Japan will be fucked sooner, so he's relatively long US assets and relatively short Japanese assets. Timing is everything, right?

That's just my take, I could be wrong.

kliguy38's picture

he didn't whiff........he's talking his book.......think about it ......he has NO where to go He was given a billion of his gold to hold.......supposedly......but he is NOT gonna be given anymore and more than likely he's been told to cool it

epwpixieq-1's picture

He is smart, but he is a (virtual) numbers person, he looks only at the numbers in their face value, so if you look at them from the top US looks good. But if look inside, for example, 70% of GDP is consumption, compared with 35% in Europe, the picture starts to change and this is a very simple example. Not to mention 18% of GDP in US is healthcare (whatever that means). 

And do not take him seriously on his mentioning about the energy and fracking, at the end, he looks at the numbers and not at the dynamics of the resources and EIOER factors, as only an financial analyst do, ignorant to the physical reality.

In addition, he has to invest money for his clients, so it is just natural that he sees a good place for the GROWTH of that money.

Lore's picture

Bass: "I'm not gonna go into Consumption Tax. That would bore you."  AAAAUGH!  Is he kidding?!  Global consumption tax power is a long-time goal of the nation-breakers. That's what's missing from Mr. Bass' analysis: elitist psychopolitical policy drivers, even / especially in time of crisis.  One hesitates to walk where angels fear to tread.

Great presentation. Thanks ZH!

MachoMan's picture

@ 10:00 - cost push inflation...  fucking thank you.  Can we please end this bi-flation nonsense?

Caviar Emptor's picture

He's sweet on Bi. Cost push up, demand down

Schmuck Raker's picture

@0:50:00 - on China briefly: "that illusory pile of money"(FX reserves)


Vlad Tepid's picture

I wish I made enough to give it to Mr. Bass to invest for me.  That would be SWEEEEEEET.

Budd aka Sidewinder's picture

Tyler, get your shit together.

X-Factor WAS on tonight.



seek's picture

Man, I was just googling on Bass after watching the full out.

Back in March he made $700K off an $1100 investment. Insane. (And apparently made about $3 billion from $15 million as well.)

When he says we're fucked, I tend to believe him. He's saying Japan in 2 years, that syncs up with 2015 being the start of hell.

Aurora Ex Machina's picture

At a lunch over the weekend, there was general consensus that the markets implode in 2014; certainly, a lot of movement is being based on this.

I argued 2013, but then again, merchant bankers rarely pay attention to the noosphere.

Freddie's picture

He nailed it as far as 80 year cycles. I have had the same thought as well.  USA 2012 - 80 = 1932. 

Europe rebooted during WW2. I wonder if they can kick the can longer than we can.   Japan's road to kcik the can is getting close to running out.

Freddie's picture

What is more interesting is the normalcy bias most of us probably suffer from. 

Well grandma or great grandma went through the Depression and FDR taking her gold.  Thank goodness we will never have that in our liftime.

I wonder how many of us 10 years ago never thought the USA would have another Depression.  This "reboot" shit happens every 80 years or so.  Often due to the bankster elites.

Back to 80 years plus or minus a few years.  Big reboots.

2012 - 80= 1932 ( Depression and Hitler runs against von Hindenberg)

1932 - 80 = 1852 (need a civil war to fleece the sheep and to enrich a certain european banking family)

1852 - 80 = 1772  (Revolutionary War coming) 

Seer's picture

But... don't ya think that at some point, as the reboots tend to get bigger and bigger, there will be a LAST reboot in which, well, there isn't a reboot because there's nothing left to bootstrap any with?

It's possible that it could be the end of one big super-cycle.

40 years though, that's an interesting number.  I believe that this also covers discovery-to-peak for oil fields if I'm not mistaken.  It's all eerily close to "42" :-)

BTW - Good job of late on providing info.

Freddie's picture

Thanks.  This reboot for the USA may mean some breakup and China gets a lot more control.  Another site talked about during the depression that all the good scrap metal went to Japan in 1935 or so.  Now it is all going to China including grandma's gold (we buy gold).

The other one is dear leader's Saudi Arabia.  The question is what happens when Japan becomes insolvent which could be before the end of 2013 or maybe 2014.  The USA is not far behind.

MachoMan's picture

I don't believe that the reboots get larger and larger...  in general, I think a reboot is a reboot.  At present, because we believe we have mastered the universe, we have been able to prolong this cycle for a bit through some papering over and political meandering (and a whole bunch of other stuff). 

Further, I'm not even sure that partaking in these cycles (as mako/land of the free or whatever his new name is would say, the "equation") is necessarily a bad thing.  The backwardness of countries and locales that refuse to partake is decent evidence that it is to be avoided. 

The real question is one of strategy and I'm not sure that it's even a question we have any way of providing a scientific/quantitative answer to...  which is, do the technology gains and research/development during credit boom cycles (demand drawn forward) benefit us more than the alternative, a much more muted advancement, albeit more fundamentally sound?  [presuming the latter is even possible, I think it too is probably prone to similar cycles].  Effectively, each time we have a bust, the bust is not so large as to completely destroy all of our previous technological gains and other advancements...  we may then begin the next boom cycle with a residual capital induced starting point, thereby stairstepping upwards over time.  However, there comes a few notable risks...  first, along our stairstep to the heavens, we develop world killing technologies (biological, chemical, nuclear, environmental, etc.) that may be difficult, if not impossible to maintain during a bust period.  second, there is also the risk of a super cycle bust whereby a very material portion of the residual gained throughout all the inner-cyclical booms gets destroyed (e.g. dark ages). 

I think though, at the very least, it's time the world collectively had a conversation about how to proceed...  this conversation has been historically dictated to the people...  and I think people are becoming aware of the proposition...  albeit from more practical/direct avenues.

Lore's picture

MachoMan: "I think though, at the very least, it's time the world collectively had a conversation about how to proceed..."

Problem --> Reaction --> Solution. 

You will be assimilated.

Ignorance is bliss's picture

Thanks for putting the 80 year cycle in perspective. I wonder who the new great evil leader will be?


Hu Jintoa?

Kim Jong-un?

other suggestions?

game theory's picture

Bass is very cogent in his arguments.  If you have an hour and care about the gobal economy, this video is worthwhile.  Also, it took over a decade before war broke out after the crisis in the late 20s. 

CheapBastard's picture

I like Bass. Here is also an excerpt from an informative speech by Jamie Galbraith taken from Jesse's Cafe in part:


This is the great illusion of the last generation, and it fostered a form of economic growth that was intrinsically unstable and unsustainable. Why? Because it was based on declining standards for loans and on lax accounting of the proceeds of those loans. Or to put it in simple terms, it was based upon financial fraud, on the most massive wave of financial fraud that the world has ever seen.

And the world has seen a lot of financial fraud. It was known to be such to the lenders at the time. This was true of housing loans in the United States made by the tens of millions that were known to the lenders as “liar’s loans,” as “ninja loans,” no income, no job, no assets; as “neutron loans” destined to explode leaving the building intact but destroying the people. This was known at the time. These were loans that had to be refinanced or they would default..."


Here is a link to the entire speech thanks to the link by Jesse:

tooriskytoinvest's picture

Watching Your Money Disappear: There Is No Exit Strategy. There Is No End To Quantitative Easing. Central Banks Will Print As Much As Necessary To Save Their Ponzi-Scheme Of Credit And Debt. You Need To Take Immediate Steps To Protect Your Wealth...NOW!

infinity8's picture

So many critics. I thought it was Great ZH, thanks. He just kept warming up as far as delivery. The only other thing I can reccomend right now is "Antics Roadshow" by Banksy that I watched on Netflix the other night (documentary).

q99x2's picture

Pattern recognition - Things that are repetitive in your mind become axiomatic through induction, if you hear it enough times everyone believes it because that's the case. He is saying that economists don't read ZH often enough and that they actually believe in the BS. Huh, I thought they were planning a conspiracy to take over the world and kill us.

He seems to have read Stephen Greenblatt's "The Swerve."

Freddie's picture

Things that are repetitive in your mind become axiomatic through induction, if you hear it enough times everyone believes it...

Oh like the lying media including Bloomberg web news talking about the Bushmaster AR 15 used in Conn by the sick kid?

The kid who supposedly really had 2 pistols then 4 pistols in the school and no AR 15.

The AR15 which may have been a Saiga .223 or shotgun that was in the trunk of his car.

So if you say it was an AR 15 enough times - the public believes it?  That axiomatic?

F TV, F Hollywood and their ilk who want to disarm you.

TV is for sheep.

darteaus's picture

You'll like this then:


BTW, Love your movies Mr. Kruger.

muppet_master's picture

kyle bass

is a smart man....i only listened to him speak for like 5-7 minutes.....bc i'm too busy watching the Science Channel:  Dark matters, twisted by true......

anyways seems like mr. bass is a gold bull....he'll be right eventually when gold @ $10k, but that doesn't mean that gold won't first see $300, yes three-hundered, like in 2000.

bass says that it will end in war...i agree..he says he doesn't know, which players...i think he doesn't want to get in trouble, but the obvious players are...well who do we owe $$$$$$$$$$ ???

US vs China + Russia (we don't owe much to Russia, but they won't want to "LET A CRISIS GO TO WASTE"

other players also, but those are the main players.

by the way, one of the recommended videos -linked to kyle bass youtube video, was alex jones:  odummer caught fake crying..!!!

OMG !!! that's exactly what I said on ZH in real time on 12/14/12 !!! odummer was fake crying...STUPID HEDIUS BAD ACTOR!!


resurger's picture

Learn how to calculate the "Short Free Price" before you say that gold will be at 300!

steveo77's picture

This worked well last year....bought a wicked good telescope, hope people will check out some of the pictures and klik some adz.

See the end of the world, close up, LOL

Toolshed's picture

That is a nice C-8 my friend. That IS a pretty nice scope for Hawaii. The biggest privately owned scope I ever saw there was a C-11. Have you taken it up on Mauna Kea yet? The views at the higher altitudes are absolutely mind blowing. I used a 6" to photograph Haley's Comet from Mauna Kea and was astonished at the difference being at 9,000 feet made. It was too hard to breathe at the 13,000 ft summit so I set up near the astronomers quarters. There was snow even at that elevation and it was quite cold, but what an awesome experience.

q99x2's picture

I agree with him except on two points.

I don't think the housing market has hit bottom. I believe that the US will be ok once the globalists, crooked politicians, banksters and in general middle men/con men are either locked up or exiled. The country cannot continue with crimminals in position of power and without fraud being prosecuted. The politicians and banksters are like pedophiles they can't stop what they are doing. They have to be stopped.

Just my opinion.

CheapBastard's picture

My realtor said housing hit bottom when my hood was at $800 per foot.

She said it again at $60 pf....and again at $55 pf.


Now, too-many-to-count houses are sitting on the market for less then $48 pf and foreclosures are rising.


Honestly, I don't see a bottom in the near futre.

darteaus's picture

You must have meant $80/foot, or you live in Palo Alto.

Temporalist's picture

I don't like missing the graphs during the speech so here are a some related to the topics:


Ned Davis - Total Credit Market Debt to GDP (until 2007 but quite clear)


European Economy Guide (good quick graphs)

Current Account Surpluses in the EU - European Commission

The Eurozone's giant sucking sound (very small graph of zero current account balance)


Japan interactive Charts


Japanese Interest Expense as a percentage of Tax Revenue


Adult diaper fashion show


Cthonic's picture

Thanks for those.  Watched the vid after a commenter posted it here yesterday; was worth the time.

Bicycles and Beer's picture

maybe next year we'll get this years vid. =/

who needs a time machine when you have the interwebz?


edit: link to bestest paper of 2 years bass mentioned 



This one is not busted.

Not really worth reading. More simplistic Taleb black swan observations.



needfiatforBBB's picture

here's the dilema.  in order to extract a new dollar out of the system you have to first satisfy existing stakeholders in the status quo.  You help to perpetuate the system and we'll let you graft a little yourself.  All the new college grads are expecting their slice of the "good life".  It's build into our species, greed, for resources and power (and then the woman).  petri dish.  comopund interest. math.  At this pint its all a forgone conclusion.  long popcorn.

CheapBastard's picture

"House prices will never fall."


Good Bass example of the 'optimism bias' 2008.