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"Detonating The Japanese Debt Time Bomb" With Kyle Bass

Tyler Durden's picture




 

The hyper-correlation of Japanese stocks and the JPY have led many to believe that Abe's miracle promise will be just the ticket to bring the nation's two-decade slump to an end - a 2% inflation target is all you need. However, in a brief CNBC interview, Kyle Bass explains that not only are 99.9% of people wrong about the crisis (explaining the critical aspect of the abrupt turn of twenty years of the 'procylicality of thought' - that deflation is the norm), but Abe's actions have actually brought forward the date of the "detonation of Japan's Debt Time Bomb.

It is the Japanese institutions that own JGBs and they own them at meager rates of interest simply because of the ingrained belief in deflation; when the government begins to target 2% inflation, the swing in forward expectations (he notes to monitor inflation swap breakevens) will be the trigger for Japan's implosion. Bass warns that "Japanese debt is around 24x central government tax revenue and when you sail into the zone of insolvency, nothing you can do will help," though he realizes that calling the end of the 70-year debt super-cyle to a specific date is naive, he does expect the 'bomb' to explode within 18 month to two years.

All of the components for this [bomb] to go off 'all of a sudden' are in place. The clock has started on the qualitative shift in participants' minds that the situation is untenable as the realization that Japan spends 25% of revenue on interest now - and with higher rates (via this supposed inflation) the entire situation becomes farcical as every 1% rise in their cost of capital (or rates) costs them another 25% of revenue!.

 

On JPY devaluation - The signs are already there that elites are exiting the JPY - with recent M&A transactions - he warns. 20% of exports go to China; this could be halved given the tensions, and a JPY devaluation is not going to restore the competitiveness of that secular decline.

On Japanese stocks - The people buying Japanese stocks, are picking up dimes in front of a bulldozer.

Bass goes on to discuss the US Housing stabilization, European stress, and China's economic opacity.

 

 

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Fri, 01/18/2013 - 20:32 | 3167996 Silver Bug
Silver Bug's picture

The Japenese debt bomb will explode on its own. As will all western debt bombs. It is only a matter of time.

 

http://jimrickards.blogspot.ca/

Fri, 01/18/2013 - 20:40 | 3168009 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

Time for hyperinflation and war, gangnam style

Fri, 01/18/2013 - 20:42 | 3168013 Pinto Currency
Pinto Currency's picture

 

There's a worldwide debt bomb in place.

Fri, 01/18/2013 - 20:47 | 3168028 BKbroiler
BKbroiler's picture


Japan is not Greece, we are not japan, so on and so forth.  Here's an easier way to look at it:

http://en.wikipedia.org/wiki/File:US_Historical_Inflation_Ancient.svg

Ever since the Lochness monster decided that economic cycles are bad things to be avoided via interest rate manipulation, we haven't had necessary deflations, just like japan hasn't for following our model.  What color do you guess is next on the chart?

Fri, 01/18/2013 - 20:49 | 3168030 secret_sam
secret_sam's picture

Trying to see how high a junk-count you can pull?  I'd call for deflation too if I didn't think WWIII is going to be chosen as the less painful option.

Fri, 01/18/2013 - 20:51 | 3168037 BKbroiler
BKbroiler's picture

oh yeah, cuz I'm so loved here as it is.  After the mother of all inflation we will get the opposite.  You can delay a cycle, not prevent it.

Fri, 01/18/2013 - 20:56 | 3168043 Pinto Currency
Pinto Currency's picture

Japan is one of the flock.

http://www.businessinsider.com/g10-countries-by-total-debt-to-gdp-2011-12

It's not all about fed gov debt.

Fri, 01/18/2013 - 21:16 | 3168072 Enslavethechild...
EnslavethechildrenforBen's picture

All the governments have magic checkbooks. They all already bought everything worth buying. Now if you want to buy it back it will cost you more than you can afford, because you will never be able to work enough hours to make your checkbook worth more than a loaf of bread. Game over. Go back to sucking your mommys tit. We only outnumber them 100 to 1. We could never defeat them.

Fri, 01/18/2013 - 21:39 | 3168095 Dr. Engali
Dr. Engali's picture

If only we outnumbered them one hundred to one, but 51% of the people love government and the "free" stuff they offer.

Fri, 01/18/2013 - 21:41 | 3168133 SGS
SGS's picture

If kyle was gay, and if I were gay, I'd bang his frontal lobes.

Fri, 01/18/2013 - 21:56 | 3168166 Carp Flounderson
Carp Flounderson's picture

I can't wait until this guy loses all his (aka other people's) money, so we don't have to hear his foolish rants anymore.

Fri, 01/18/2013 - 22:53 | 3168259 strannick
strannick's picture

''When the swap curve indicates inflation'', bitchez

Sat, 01/19/2013 - 08:34 | 3168604 Jendrzejczyk
Jendrzejczyk's picture

".... not for CNBC audience"

 

 

giggling

Sat, 01/19/2013 - 08:39 | 3168606 GetZeeGold
GetZeeGold's picture

 

 

 

I've learned everything I know from the MSM......equities good.....guns bad.

 

To infinity.....and beyond!!!

Sat, 01/19/2013 - 09:48 | 3168643 Popo
Popo's picture

Bass is 100% right on Japan, but frankly his housing call is way off base.   His general thesis of 6.5 years from peak-to-trough in a housing cycle is accurate, but his statement that this cycle is always 6.5 years regardless of Federal Reserve actions is silly.  The down-cycle has been extended, but not mitigated. 

For Bass to make this statement is to make the claim that central banks *do* in fact reduce collapses and not simply postpone them -- and ultimately Bass IMHO inadvertently justifies CB stimulus.

I give him an "A" on his Japan thesis, but unless there's much more to his housing thesis than cycicality then he certainly hasn't convinced me.  And it's important to note that Bass has whiffed quite a few times since '08. 

I just wish timing the Japan collapse was easier done that said.  There are a whole lot of widow-maker trades in that department...

Sat, 01/19/2013 - 11:55 | 3168694 francis_sawyer
francis_sawyer's picture

 "For Bass to make this statement is to make the claim that central banks *do* in fact reduce collapses and not simply postpone them -- and ultimately Bass IMHO inadvertently justifies CB stimulus"

~~~

Ummm ~ Why don't we simply say that CB's "cause" collapses... Fucking with a free market so that a few can siphon off profits for themselves eventually CAUSES a collapse... PERIOD... They do this purposefully & at their own whim based on other macro & socioeconomic situations which are either already in place, or come to be on their own...

Even before the Fed, the 'crises' occurred when the money supply was jockeyed around with [mostly on purpose]... Before the Fed, these games were played in order to get people to believe that a SYSTEM was needed to be put in place to avoid these things [which were engineered in the first place]... 1907 comes to mind, as well as the the War of 1812, & the Coinage Act of 1873... There are many others & they pre-date even the United States...

Classic Hegelian dialectic...

Sat, 01/19/2013 - 16:18 | 3169328 FEDbuster
FEDbuster's picture

Kyle has plenty of nickles, gold and guns for the coming black swan events.  His mortgage play may be a little counter intuitive, but as I understand it, he thinks the yield curve will flatten and his MBS will rise in value due to tighter spreads.  Japan is just a matter of time, patience. 

Sun, 01/20/2013 - 00:22 | 3170104 RebelDevil
RebelDevil's picture

Regarding the timing: I first heard about Japan being the trigger of the grand hyper-flationary collaspe from Max Keiser. His prediction - Japan will be the first of the G7 nations to dive into hyperinflation. There is a 99.9% chance this will happen BY April 2013. (He expicitly said this in an interview on Alex Jones' radio show, which is posted on YouTube as the Dec. 4th show. He also repeats this on the Keiser Report and on his site.) 

He seems confident. Lets just hope he's wrong, because if he is right, then we are almost at the 3 month countdown!

Mon, 01/21/2013 - 15:41 | 3173518 mkkby
mkkby's picture

Don't worry, silly boy.  It won't happen in 2013.  Probably not 2023 either. 

Europe goes first, and the bankers have drug Greece out since 2008.  They still have to play out Spain, Italy, France and the southern countries.  At least a decade, probably 2.

Sat, 01/19/2013 - 02:57 | 3168496 prains
prains's picture

Carp your dick is so lodged into your left ear you can piss out the right

 

good luck with that

Sat, 01/19/2013 - 09:06 | 3168616 GetZeeGold
GetZeeGold's picture

 

 

+1 for the visual.

Sat, 01/19/2013 - 10:24 | 3168667 CPL
CPL's picture

http://www.youtube.com/watch?feature=player_embedded&v=bA7UPopbHrw#!

http://sofiaglobe.com/2013/01/19/bulgarian-politician-ahmed-dogan-attack...

Guy forgets to put one in the chamber before whacking a Bulgarian politico publically on stage.

 

BREIVIK Execution style not.

Sat, 01/19/2013 - 10:42 | 3168684 GetZeeGold
GetZeeGold's picture

 

 

 

...leader of Bulgaria’s Movement for Rights and Freedoms

 

Obviously rights and freedoms is frowned on over there.

Sun, 01/20/2013 - 08:18 | 3170372 CPL
CPL's picture

Someone took it down on copyright claims.  lol

Sat, 01/19/2013 - 10:44 | 3168686 Ralph Spoilsport
Ralph Spoilsport's picture

Good snag CPL. +1

Sat, 01/19/2013 - 11:07 | 3168695 CPL
CPL's picture

It was too weird to pass up.

 

Guy runs up to one of the leadership and forgot to put a round in the chamber.  The look on both of their faces is completely priceless, then the old man gunning him with the boots after is funny ass shit.

Sat, 01/19/2013 - 11:08 | 3168696 nmewn
nmewn's picture

lol...well, they certainly do have "interesting ideas" of restraining & arresting over there ;-)

Sat, 01/19/2013 - 11:11 | 3168698 CPL
CPL's picture

The old man and the cane....lol  Like a tiger.

Sat, 01/19/2013 - 11:21 | 3168703 nmewn
nmewn's picture

lol...just saw that...hold him for me!!!

Sat, 01/19/2013 - 11:27 | 3168709 Svendblaaskaeg
Svendblaaskaeg's picture

Gun Safety Rule 2. fail

2. Assume That Any Gun, at Any Time, is Loaded

http://hunting.about.com/od/guns/tp/Gun-Safety-Rules.htm

"I did not fail to load that gun all by myself, There was a great teacher somewhere in my life. Somebody helped me fail to load that gun"

"MOAR AMMO!"

 

 

Sat, 01/19/2013 - 15:08 | 3169193 fonestar
fonestar's picture

Gun Safety Rule 3.  Do not go in the woods with Dick Cheney.

Sat, 01/19/2013 - 15:06 | 3169190 fonestar
fonestar's picture

Spoken like a true 2005 bubble-buyer.

Sat, 01/19/2013 - 01:44 | 3168207 SafelyGraze
SafelyGraze's picture

http://www.usatoday.com/story/sports/ncaaf/2013/01/18/manti-teo-hoaxer-c...

Report: Ronaiah Tuiasosopo confessed hoax to friend

Ronaiah Tuiasosopo, the California man suspected of being behind the Manti Te'o "girlfriend hoax". The elaborate, cruel hoax led Te'o to believe he was in love with a woman named Lennay Kekua, who then supposedly died of leukemia, leaving Te'o grief-stricken.

Tulasosopo has a long history of staging hoaxes. "I made people think that you still own stuff after you lend it to someone who sold it. Crazy! I also told people that a promise-to-give-you-something is just as good as the actual something. And they believed it!" 

Experienced reporters tiptoed to the edge of the truth and didn't quite believe where their reporting took them. The story was too important to let the absence of verifying facts get in the way. Just like fans in the stands, the reporters wanted the story to be true.

Sat, 01/19/2013 - 09:19 | 3168624 GetZeeGold
GetZeeGold's picture

 

 

Thank goodness we have a solid media.

Fri, 01/18/2013 - 23:08 | 3168293 Dr. Engali
Dr. Engali's picture

Nobody said anything about giving up. I'm just stating the reality of the situation, that the majority of the people are plugged into and will defend the system.

Fri, 01/18/2013 - 23:17 | 3168305 JeffB
JeffB's picture

Yeah, I know.

I was being a little facetious, and yet I am hoping that at some point we'll have the perfect storm of circumstances such that the people will wake up enmasse and listen to a real leader with some sense, sooner rather than later.

We have some of those leaders, believe it or not.

Unfortunately, it appears that we may not get a critical mass until far more damage has been done.

 

Fri, 01/18/2013 - 23:26 | 3168321 Dr. Engali
Dr. Engali's picture

Personally I think they came close to losing control, and people might have galvinated, but now this thing has drug out for so long that they have successfully divided us again. If you ask me I'd say they are angling to push us towards a civil war so we kill each other off then they can re-establish order.
There is a reason that they are branding Obama as the new Lincoln.

Sat, 01/19/2013 - 00:42 | 3168402 Diogenes
Diogenes's picture

Lincoln ha, more like the new Ford. Hope he doesn't turn into the new Edsel.

Sat, 01/19/2013 - 01:37 | 3168443 NoDebt
NoDebt's picture

Well, we all knew that the Fed's ad-hoc response to the '08-09 crisis was of the "extend and pretend" variety.  Somehow, magically, valuations would rise again and make all that worthless paper worth full-face again.  Almost laughable at the time, right?

Well, looks like they succeeded.  Not without a few "minor" unintended consequences along the way, of course.  Once again, a "temporary" program becomes more permanent than 50 year old concrete.

Welcome to Japan, everyone.  We're following the script to the letter, we're just an act or two behind.  If you're waiting for some quick resolution to this I think you'll be very disappointed.

Sat, 01/19/2013 - 09:15 | 3168620 GetZeeGold
GetZeeGold's picture

 

 

Obama might be the new sheriff.....but he sure as hell ain't no Abe Lincoln.

 

Bush was polling better for the love of Pete.

 

Sat, 01/19/2013 - 12:08 | 3168786 francis_sawyer
francis_sawyer's picture

 "Personally I think they came close to losing control"

~~~

You give 'THEM' too much credit for having any control in the first place...

Wanna talk about 'CONTROL' [& how much of it these 'Masters of the Universe' have]?... OK ~ perfect ~ I'll play...

Miss about 2 EBT card 're-ups' & we'll see how much CONTROL you have over anything...

Sat, 01/19/2013 - 07:18 | 3168579 samcontrol
samcontrol's picture

personally dr , i think you are full of it with your 8ball.

Sat, 01/19/2013 - 12:25 | 3168800 Shell Game
Shell Game's picture

Yes?  What do your instincts tell you?

Fri, 01/18/2013 - 23:46 | 3168346 Calmyourself
Calmyourself's picture

In between jabs at the GW religionists I have been saying the same for 2 years and 24 weeks.  If you or I had the switch for say hyperinflation, the word to collapse the confidence in the reserve currency would we say it?  Knowing the hell to be unleashed could you look at the swollen bellied children and remind yourself it was for the greater good?  No, me either, which is what it means to have everyone spiritually invested in the ponzi, think on that long and hard.

We are all plugged into supply chains which for our intents and purposes is the system, we all protect it every day and will continue to do so becasue who doesn't wish for a happy ending?  This is what  the PTB know and count on; most men don't want the world to burn.

Sat, 01/19/2013 - 01:23 | 3168434 secret_sam
secret_sam's picture

      We are all plugged into supply chains which for our intents and purposes is the system,...

It's hard to figure how those supply chains justify TARP, a trillion dollar Federal deficit, "targeted inflation," and the current banker salaries, tho.

Everyone wants a paycheck.  The rot runs deep.  It's just what you do for a living, right?

Make your own excuses and realize they don't apply to *everyone.*

Sat, 01/19/2013 - 01:57 | 3168461 tango
tango's picture

You have to understand that the vast majority of those twits salivating over finanial ruin are clueless as to what will really happen. It will not be survivalist fun.  When credit disappears we face utter poverty, starvation (particularly in areas depending on daily deliveries) and almost certainly, tremendous social unrest as suddenly all those checks from the government cannot buy anything. 

And yet I see no way out.  Producers are giving up or opting out, zombies seem to multiply like rabbits and our "leaders" seem blind, deaf and dumb.  It's like being on an island in a rising flood and going about your activies as the water slowly rises. 

Sat, 01/19/2013 - 03:27 | 3168521 Doña K
Doña K's picture

I am reading the comments in detail and the past several days it seems to me that there are way too many down arrows for established Zerohedgers. I am convinced there is a concerted affort by (???) to infuence thought.

Does anyone else feel that way? 

Sat, 01/19/2013 - 03:41 | 3168526 akak
akak's picture

I have noticed that same thing too Dona, and what I have noticed more specifically is certain intelligent, reasonable but very anti-establishment comments almost immediately receiving multiple downarrows within a very short time after being posted.  I suspect malicious trolls with multiple sockpuppet handles being responsible for this.

Sat, 01/19/2013 - 11:09 | 3168547 Gazooks
Gazooks's picture

when markets or opinion overburden to one side, not a good thing, here/anywhere

 

problem is, that's exactly what's happened w/monetary authority in the modern era

 

it's different this time until it, suddenly, just isn't

 

bring the malicious mf trolls

Sat, 01/19/2013 - 11:41 | 3168739 francis_sawyer
francis_sawyer's picture

@akak

~~~

You might be right... but all I know is that a couple of DOWN arrows [from idiots, or bots, or whatever] who don't have the cojones to articulate their views isn't much of an opinion shaper in my world...

Sat, 01/19/2013 - 12:47 | 3168843 fuu
fuu's picture

I think we should swap the up arrow color to red, and the down arrow color to green. The utter confusion of shredded comment valuation models would be epic.

You busy Sac?

Sat, 01/19/2013 - 13:02 | 3168889 francis_sawyer
francis_sawyer's picture

You're probably right...

~~~

Someone was just on here the other day saying that a local real estate agent was using that RED/GREEN tactic to fool peple into thinking house prices in the area were rising...

Sun, 01/20/2013 - 00:02 | 3170103 Moon Pie
Moon Pie's picture

I think going Sea Foam and Magenta would be lovely....brighten the place up, don't you?

Sat, 01/19/2013 - 15:57 | 3169283 debtor of last ...
debtor of last resort's picture

It's because one gets an extra foodstamp for downvoting libertarian rednecks. On the record, yes, since about a week or so.

Sat, 01/19/2013 - 05:52 | 3168559 Jstyr
Sat, 01/19/2013 - 14:33 | 3169124 Seer
Seer's picture

"They all already bought everything worth buying."

I'm not so certain of this.  I'm kind of thinking that companies still own stuff of value (mostly machinery and process rights) and governments own all the trash that said companies were over-producing.  Cecil Rhodes put it all out front and center when he'd stated that third-world countries are the dumping grounds for surplus production.  Well... we've kind of run out of third-world dumping grounds and instead were dumping on ourselves.  And the real worm in the apple was that we shifted to construction as the economic driver, and construction (end product) cannot be readily exported (though construction companies can operate abroad).  Obviously, "no one could have seen this coming"...

Anyways, I think that it's even worse in that the govts own shit that NO ONE cares for anymore.  Think of it all as perishable shit that's passed its expiry date, stuff that we can't peddle to third-world countries as write-offs ("humanitarian aid").  Stuck holding the bag of rotting perishables...

Fri, 01/18/2013 - 21:03 | 3168055 economics9698
economics9698's picture

Here is a blog I did about how to correctly balance a federal budget so we all do not implode, but of course that is too late.

Any way it's a simple method that incorporates incentives for federal government s to avoid inflation taxation and forces responsible spending that results in surpluses most years but allows deficit spending in bad economic years.    

 http://usa-wethepeople.com/2013/01/thompsons-rule-to-balance-the-federal...

 It is relatively simple:

1. Restrict federal spending to a percentage amount. Here in the USA because we have income, payroll and corporate taxes but no value added tax (VAT) we have historically collected around 18% of the GDP in federal revenues. This has varied little since WWII with the exception of today and the late 40s. Other countries will have to evaluate this percentage on a country by country basis but keep in mind for ever 10% of government created the economy loses 0.5% to 1.0% in GDP growth per year. This adds up over time very quickly.


2. Subtract two years from the budget year. 2013 – 2 = 2011. 18% of the nominal 2011 GDP.

 
Finished. 18% of the 2011 GDP is $15.075 trillion x $2.7135 trillion. Current tax receipts are $2.671 trillion with the resulting deficit of 43 billion. Quite a difference from the trillion dollar deficits we are currently running.

 

Fri, 01/18/2013 - 21:18 | 3168085 Enslavethechild...
EnslavethechildrenforBen's picture

Fail

Fri, 01/18/2013 - 23:40 | 3168341 tarsubil
tarsubil's picture

Why balance the budget when you can just print money? They don't want to balance the budget. They want to sniff cocaine and molest cocktail waitresses.

Fri, 01/18/2013 - 23:46 | 3168348 fonzannoon
fonzannoon's picture

When u put it like that i almost sympathize...

Sat, 01/19/2013 - 14:36 | 3169130 Seer
Seer's picture

Sorry, but my time is limited right now, in which case I'll just ask you directly:

What about growth?  Are you proposing it?

If you are premising our future on growth then you're STILL heading us over the cliff.  Promoting perpetual growth on a finite planet IS a Ponzi!

Fri, 01/18/2013 - 22:05 | 3168183 Harbanger
Harbanger's picture

"oh yeah, cuz I'm so loved here as it is. "  It's not about "love" or wanting to be loved. It's the hat you're wearing.

Fri, 01/18/2013 - 22:31 | 3168222 JeffB
JeffB's picture

I don't know about that. I think there are quite a few examples of countries that went from years of inflation to... hyperinflation.

http://en.wikipedia.org/wiki/Hyperinflation

Of course, they paid for it afterwards as well, but I don't think a deflationary collapse prior to a big jump in inflation is a foregone conclusion by any stretch of the imagination.

Fri, 01/18/2013 - 23:26 | 3168322 secret_sam
secret_sam's picture

"Deflation" is when the bankers lose the pot at the poker table. 

"World War" is when they flip the table over in the middle of a hand and dash out the door with whatever they can carry.

Sat, 01/19/2013 - 14:39 | 3169136 Seer
Seer's picture

Food, Shelter and Water.

Let the bastards run away carrying a bunch of worthless shit.  "Solution" is to not let them come back AND to not recognize whatever they are trying to pawn (or use as a "currency").

I'm staying put.  Land/ground is worth more than all the bankers put together (dead or alive).

Fri, 01/18/2013 - 20:56 | 3168042 Pinto Currency
Pinto Currency's picture

 

dbl post

Sat, 01/19/2013 - 03:01 | 3168500 NidStyles
NidStyles's picture

Deflation is a good thing, that is what the problem is, too many chumps screaming bloody murder over a good thing. Why? Because you've been told to almost all of your life.

Sat, 01/19/2013 - 05:33 | 3168553 Gazooks
Gazooks's picture

not good for anyone/thing absolutely dependent on negative real rates

 

like a 700T derivatives Ponzi, an army of Corzine clones

 

and their vested victims

Sat, 01/19/2013 - 08:28 | 3168601 Burr's 2nd Shot
Burr's 2nd Shot's picture

I am not so sure that is true if one is a producer. In addition, I am guessing you are pro price deflation, and not wage deflation, but you won't get one without the other.

Sat, 01/19/2013 - 14:40 | 3169138 MSimon
MSimon's picture

Semiconductors.

Tue, 01/22/2013 - 12:33 | 3175701 BigJim
BigJim's picture

yup.. you can have prixce deflation without wage inflation; and, as production tends to become more efficient over time, it's the norm in an economy with a stable money supply and low population growth.

Of course, wars slaughtering millions of consumers/producers, escalating energy/resources costs, baby-boom demographics, employment regulation, immigration, and central banks flooding the world with currencies make it all a bit moot.

Sat, 01/19/2013 - 14:41 | 3169144 Seer
Seer's picture

When speaking in terms of Austrian deflation that would mean a reduction in the circulation of a thing (money).  And when that "thing" might be food?

"Men argue, nature acts." - Voltaire

"Economics" is just man arguing...

Fri, 01/18/2013 - 21:19 | 3168083 Dr. Engali
Dr. Engali's picture

The problem with your chart is we haven't always been the world's reserve currency. The approximately 7 trillion outside of the U.S paints a different picture. I will agree with this though... in the world of digital money and little actual cash it is hard to tell which way things will go. We could have massive deflation if the digital money all disappears. It be interesting to see.

Fri, 01/18/2013 - 21:25 | 3168103 Enslavethechild...
EnslavethechildrenforBen's picture

Yeah sure...

and time will start going backwards, right?

Fri, 01/18/2013 - 21:31 | 3168116 Dr. Engali
Dr. Engali's picture

You have a point? Do you think that if all the digital money disappeared tomorrow and all that we had was the cash on hand that we would have massive deflation or inflation?

Fri, 01/18/2013 - 21:41 | 3168135 fonzannoon
fonzannoon's picture

Doc I honestly get lost there. If digital dollars disappeared would it matter if food/gas prices etc. dropped massively if no one had any real dollars to buy them with? Sure Kito would have his huge stash of cash but he would be one of very few that do, and it would not be long before the zombie people watched him doing supermarket sweep and got agitated. Very similar to how the gold bugs would be chased all over town in hyperinflation.

I have no idea what the hell I am talking about anymore. I stopped drinking for a few weeks...I work better on the sauce...

Fri, 01/18/2013 - 21:56 | 3168145 Dr. Engali
Dr. Engali's picture

I'm with you Fonz... My gut tells me hyperinflation through and through, and I'm planning around that scenerio. But I always find myself pondering Kito's point and I think it's a valid point. All I know is the longer this mess drags out the more I tend to overthink things. It's rather maddening.

I was going to work out, but I think I'll have a drink instead.

Fri, 01/18/2013 - 22:05 | 3168185 fonzannoon
fonzannoon's picture

good move.

Fri, 01/18/2013 - 22:57 | 3168267 Enslavethechild...
EnslavethechildrenforBen's picture

By adding another zero to your theft spree you in effect can steal ten times as much. Two zeros and you can steal a hundred times more than you were previously stealing. No human can resist that temptation. What people refer to as the debt is in actuality just the amount that has already been stolen to date. That will not lessen because everyone likes money. Deflation is the stupidest concept you ever hear about. Now grow up.

Sat, 01/19/2013 - 11:35 | 3168730 Terminus C
Terminus C's picture

Right... because deflation has never happened before...

Grow up indeed, those who claim to know the future of this mess and shout down any who disagree with ad hominem attacks are charlatans.

Fri, 01/18/2013 - 22:37 | 3168227 nope-1004
nope-1004's picture

Name one nation, country, or culture that collapsed as a result of deflation?  Japan has been in a deflationary spiral since the early 90's.... yet it keeps going until, as Bass says, currrency collapse (ie. hyperinflation).

I just don't think central bankers have the courage to do what is right and let large institutions fail, so we bail until collapse.  Been done many times before.

 

Mon, 01/21/2013 - 16:03 | 3173574 mkkby
mkkby's picture

Right.  And when was there ever deflation without a gold standard in place?  Fiat inflates, period.  A gold standard can deflate.

Sat, 01/19/2013 - 01:09 | 3168423 JackT
JackT's picture

We all over think and worry. Watch the dumbasses pull it off somehow just to spite those who actually give a damn.

Sat, 01/19/2013 - 04:20 | 3168536 green888
green888's picture

I have come to the end of thinking, content to read comments

Sat, 01/19/2013 - 14:48 | 3169155 Seer
Seer's picture

What you're pondering over is "affordability."  I'd taken up this position of argument YEARS ago when engaged in the discussion of future oil prices- I said that what mattered was "affordability;" if prices are "low" and you're unemployed then what does "low prices" really mean? and if you're employed and the prices are "high" what do "high prices" mean?

I can, with certainty, state that most things that are more directly associated with essentials/fundamentals (Food, Shelter and Water) WILL become less affordable for the whole (which, if you consider the 7+ billion on the planet, is pretty much the way it has been).

Fri, 01/18/2013 - 22:21 | 3168210 Harbanger
Harbanger's picture

How can they make digital money just disappear without someone losing that money?  The new money being created is the only thing keeping the economy from crashing. 

Fri, 01/18/2013 - 22:26 | 3168217 CPL
CPL's picture

What if someone made a massive head fake on the value of a dollar?

 

Dollar would be ended the same second.  Instant fiat death.

Fri, 01/18/2013 - 23:11 | 3168287 Enslavethechild...
EnslavethechildrenforBen's picture

Newly printed money is what destroys an economy unless it goes straight to the bottom of the economic pyramid. It never does.

Say you lived on a small island the size of a few square blocks. Say one person on that Island can write unlimited checks, so he buys all the land, homes, petroleum, Gold, etc. Soon everyone spends all the paper and their broke, one or two people have hoarded it. Then if you want to buy it your stuff back, Mr.Checkbook is the only man with money so you have to work for him and he pays minimum wage. Plus, he raises the price of everything by 500% because he can, he owns it.

Now exactly how is this supposed to be good for the Islands economy?

Fri, 01/18/2013 - 23:11 | 3168296 fonzannoon
fonzannoon's picture

i totally reject that example because it makes me feel very uneasy thinking thats what is going on.

back to my happy place...

Fri, 01/18/2013 - 23:29 | 3168329 Rusty Shorts
Rusty Shorts's picture

Mr. Checkbook would be dead, dead, dead. - King Louis XVI

Sat, 01/19/2013 - 03:40 | 3168525 Doña K
Doña K's picture

He forgot a detail on his scenario. The checkbook master has several enforcers and several people in the island receiving welfare who would defend him against the masses. Additionaly, he has taken away all guns except the ones for his enforcers. Sounds familiar?

O"bummer will take guns away and pull a Chavez on the US. If he will not do it, at least he is thinking about it. He will fail of course. The good ole boys will never give up their guns. 

Sat, 01/19/2013 - 09:51 | 3168649 GetZeeGold
GetZeeGold's picture

 

 

He forgot a detail on his scenario

 

Fortunately.....he never saw the bullet coming.

Sat, 01/19/2013 - 01:40 | 3168448 secret_sam
secret_sam's picture

       The power of the printing press can only be entrusted to angels. 

Sat, 01/19/2013 - 14:53 | 3169171 Seer
Seer's picture

"The new money being created is the only thing keeping the economy from crashing."

No, it's the "appearance" of "new money."  That is, it's the illusion.  How many times do we hear how important it is that people have "confidence" in the USD (or whatever currency)?

This supposed "new money" isn't backed by anything.  So, there's really nothing being held up other than the illusion.

The bankers and military "men" have been getting most of us (those not of the 2/3 who live on $3/day or less) an elevated standard of living (and they take a BIG cut for their part).  When we can no longer pay these folks (whom we're becoming to like less and less by the day- read "less willing to hand over bribes to") then the illusion is over, the "economy" crashes.

Fri, 01/18/2013 - 21:37 | 3168126 CPL
CPL's picture

The script never changes.  Print print print.  Or Massive deflation.

 

Both lead to trade war positions.  Ethier for inflating the dollar strength against the debt owed.  Or claiming insolvency by erasing the memory of the central bank main frames.  The outcome will result in shortages and bad blood for everyone involved on all levels.

These are only symptoms of a larger problem aren't they.

Sat, 01/19/2013 - 14:57 | 3169180 Seer
Seer's picture

"These are only symptoms of a larger problem aren't they."

"war positions"

ALL wars are about resources.  The "larger problem" lies with our inability to perpetuate the growth meme (which requires resources).  I'm sure that if we're all "free" and the bankers are all shot that this "larger problem" goes away </sarc>.

Fri, 01/18/2013 - 22:16 | 3168204 zorba THE GREEK
zorba THE GREEK's picture

And "Boom goes the dynamite" Japan becomes Greece x 2.

Sat, 01/19/2013 - 01:03 | 3168417 piceridu
piceridu's picture

China could go boom too...Bass is asked about China and he says he doesn't believe their numbers...here's why: 

http://www.reuters.com/article/2013/01/19/us-caterpillar-siwei-idUSBRE90...

How dumb can the idiots at Cat be? 

 

Sat, 01/19/2013 - 02:02 | 3168465 tango
tango's picture

I heard the interview live (a tour de force of logic and thought) and the reactions of the "hosts" were interesting.  Some were clearly skeptical yet most seemed to understand exactly what he was saying and most seemed to agree with him.   I'm not one of those constantly griping about CNBC and their hawking of stocks.  Sometimes you can learn a few things and most of the hosts are clearly fed up with Obama and company. 

Sat, 01/19/2013 - 15:28 | 3169233 Seer
Seer's picture

Greece ^ 2 is probably closer.

Sat, 01/19/2013 - 06:35 | 3168568 EscapeKey
EscapeKey's picture

Ooh, I like a good fairytale. Like the government sponsored inflation stats so evident in this graph.

I guess - as long as we don't eat, go anywhere, dare to get educated, or insure our health - inflation is contained.

Sat, 01/19/2013 - 11:48 | 3168758 in4mayshun
in4mayshun's picture

Hey Kyle, I know your a smart guy and all, but I got a little nugget for you...
In order to buy houses, people have to procure jobs, and not just minimum wage jobs, good paying ones! The only houses selling where I live are the repo's that are listed for less than the intrinsic value of the house. New houses and non-repo houses are still dead and the kids graduating college are working for $10/hour.

So how the hell is the housing market supposed to improve fundamentally?

Sat, 01/19/2013 - 15:35 | 3169244 Seer
Seer's picture

Obviously this starts to encroach upon the notion of questioning the very premise that everything centers on- perpetual growth on a finite planet.  Neither Kyle or any other talking-head is going to go here as it'll verge on questioning their own relevance/importance (I mean, really?, do I need someone to tell me that Food, Shelter and Water are the most important things? [though these "advisors" don't come out directly and say so, in the end that's what they're "buying" for their clients]).

Those who don't understand reality look to the talking-heads to make a cover story for them.

Fri, 01/18/2013 - 20:48 | 3168014 BKbroiler
BKbroiler's picture

.

Fri, 01/18/2013 - 20:49 | 3168029 secret_sam
secret_sam's picture

Howzat happen?

Sat, 01/19/2013 - 15:37 | 3169248 Seer
Seer's picture

Yeah, and what does it mean?  Over-done?  Under-done?

When insiders miss the inside joke one has to wonder if there's some sort of failure to communicate...

Fri, 01/18/2013 - 21:24 | 3168102 Cash2Riches
Cash2Riches's picture

Debts worldwide are inevitably going to explode. Once that happens currencies will collapse globally. At that point you better hope you hold enough gold and silver to take you into the new financial system.

Keep Stacking Gold and Silver. Protect your wealth.

Sat, 01/19/2013 - 15:39 | 3169254 Seer
Seer's picture

"new financial system"

Meet the new boss...

I'll skip this one, thank you.  Instead I'll just look to go directly to something that's not predicated on perpetual growth, as That will be the ONLY surviving model/"system."

Fri, 01/18/2013 - 20:43 | 3168017 Snakeeyes
Snakeeyes's picture

Yup. The Japanese debt will explode like ours and Europe. Poverty here we come!

http://confoundedinterest.wordpress.com/2013/01/12/debt-star-federal-deb...

Fri, 01/18/2013 - 21:19 | 3168087 ZeroAvatar
ZeroAvatar's picture

I gotta tell ya, silver bug:  You seriously disrespect the Tylers when you jump in, 1st comment, say a few words as if you really cared about the post, and then

 

SPAM YOUR MOTHERFUCKING BLOG!

Fri, 01/18/2013 - 22:43 | 3168248 Newager23
Newager23's picture

I really like Kyle Bass, always have. He is brilliant and an awesome analyst. However, his choice to invest in this housing recovery might not payoff. This year is shaping up to be very volatile, and the only reason the housing market is currently expanding (slightly) is because of the Fed's stimulation. Our economy is manipulated and at risk - because of that manipulation. I find it ironic that he is betting against Japan because of the persistent manipulation by their central bank, but is betting on our housing market recovering WITH central bank manipulation.

He has bought gold in the past, but did not bring it up in the conversation. Clearly he is not panicking or fearful of an economic collapse. But what happens when this "debt bomb" does explode. Does he really think our "debt bomb" will be immune and not be closely correlated to Japan. I say, watch out. I say, once one debt bomb explodes they all explode. So, a bet on the housing market seems pretty risky to me. Let's see what happens in 2013. I don't think it will be as smooth as 2012, where the DOW and SP decided to have a nice double-digit rise.

If the economy decides to roll over in 2013, the housing market in the U.S. is going to begin another crash in my opinion. I expect housing prices to fall back to 1995 levels. I'm a bit of pessimist in this regard. But my bet is that people will lose their jobs and be forced to move in with friends and family. I'm expecting a plethora of empty houses across the nation. And a checkerboard effect in many neighborhoods at night, where you have many houses with no lights on.

If we are going to get a housing recovery, that basically implies that the Bernank is going to pull off this print and grow strategy. And Obama is going to enjoy a stable economy during his last term. Somehow I think that is a long shot.

My bet is on hard assets and precious metals, including gold and silver mining stocks.

www.goldsilverdata.com (for mining stocks).

 

 

 

 

Fri, 01/18/2013 - 22:55 | 3168265 fonzannoon
fonzannoon's picture

Am I way off for envisioning Bass/Gross etc. owning the mortgages, the banks owning the homes, the sheeple renting the homes and the fed covering the banks if the sheeple can't pay the rent?

Basically the banks are the angry guy, and Bass and Bernak are standing behind him, and we are "Stu".

http://www.youtube.com/watch?v=X5eKLtRSC4Y

Fri, 01/18/2013 - 23:29 | 3168328 847328_3527
847328_3527's picture

I don't agree with Kyle abut housing. True, there are a handful of locations where prices seem to be temp stabilizing Ex: The Aliens want Cali (Irvine, etc for example) and some investment companies grabbing a few neighborhoods (that then get run down since renters don't give a hoot abuot caring for a house they don't own).

But overall, unemployment and the massive shadow inventory (now 9 years of supply according to the NYT) will continue to press prices downward. As oil prices rise, people will be further pressured. My guess is housing will not "recover" for a generation (30 years).

Look at Japan now 20 years down the road and much worse off.

Sat, 01/19/2013 - 01:32 | 3168439 secret_sam
secret_sam's picture

I also disagree with what I think is Kyle's *tone* on housing, but could he possibly just mean it'll stay flat indefinitely?  That's obviously a lot better than the long bond...

Sat, 01/19/2013 - 15:53 | 3169279 Seer
Seer's picture

These folks ARE the oligarchs!

Those that have big megaphones and REALLY tell the TRUTH end up being nailed to a cross (or some such).  Bass, Gross, Rogers et al tell partial truths, enough to make them appear as less red meat come the time when the masses erupt.

As you note/question, the flaws are apparent when you dare raising more than superficial questions (advance more than a layer or two under the surface).  Many people are willing to stop short because they're not wanting this big game to end, they're wanting to be just like (or get as close to) folks like Bass as possible.

Deception is a big part of nature.  Humans are OF nature.

Fri, 01/18/2013 - 23:06 | 3168289 billsykes
billsykes's picture

 I am long physical multifamily this yr and for the next 3, after that.... no idea. Kyle on the other hand is going whole hog and doing subprime, which is a bit more ekk to me. 

I think the fed can print and grow, I just would book profits and structure offshore for possible downside protection, if the thing doesn't play out, fuck it and walk away with your accumulated profits, if you cannot restructure. That's the new capitalism to me. Trust nothing, pull everything out as fast as you can and as much as you can, recession/depressions happen every 5 yrs so expect it and live and structure it accordingly.

 

Sat, 01/19/2013 - 00:24 | 3168389 bilbert
bilbert's picture

Yep - I listen pretty closely to Kyle, and found myself wondering, WTF??

After a couple quick scenarios, I came up with this:

Nobody asked Kyle about his thoughts on hyperinflation happening in the U.S. in the next 12 - 24 months.

Hmmmm............

Sat, 01/19/2013 - 01:43 | 3168445 r3phl0x
r3phl0x's picture

True hyperinflation (50% or more per month) is unlikely in a fiat currency as large as the USD or EUR. The Fed would literally have to create ~$5 trillion per month.

Sooner or later we'll see very high inflation, but not a true hyperinflation, at least not in 2013.

Sat, 01/19/2013 - 10:17 | 3168663 Calmyourself
Calmyourself's picture

Unlikely as a shortage of fiat paper currently on hand?  Disagree, the printing begins where the confidence wanes, printing is a result rarely the trigger.

Sat, 01/19/2013 - 10:38 | 3168681 BlueCheeseBandit
BlueCheeseBandit's picture

There's a lot of USD in the world. If confidence in USD fails, it will be coming back home.

Sat, 01/19/2013 - 15:59 | 3169289 Seer
Seer's picture

I love it when I see people who actually understand reality!

I think it irrelevant, however, to label it anything other than "currency collapse."  Currency collapse is what the real issue is; and, as you note, this can very easily/rapidly happen should the bulk of humanity, which is OUTSIDE of the US, decides to quit playing the "money for nothing" game...

Currency collapse wouldn't be a good thing for Bass, not with the sub-prime cards that he's holding.  He needs to talk around it while he suckers others into the lair (for the off-loading of his shares).  This is how it all works, does it not?  If you're buying you're quiet; if you're selling you make all sorts of noises/appearances.

Sat, 01/19/2013 - 16:01 | 3169292 Seer
Seer's picture

And to (attempt to) provide a visual...

Think this as the release of a stretched rubber-band.

OR, perhaps more appropriately:

The back-end of a slinky catapulting over its head as it bounds down the staircase.

Sat, 01/19/2013 - 07:44 | 3168587 MyBrothersKeeper
MyBrothersKeeper's picture

Great post in general. However I think you are missing point on Bass post.  He likes non-agency RMBS NOW because he feels housing prices have bottomed out.  Non agency doesn't have, in his mind, the same risk it did before.  Non-agency yields are 6-8% and will compress driving prices up.  But why are you under the impression that he thinks this is a long term play?  I have heard him allude to the next year or two in this thesis.  He said when Japan does bust it will be bad for all of us but also says it's impossible to predict the bust.  If it looks more and more probable in that 18-24 mth window i'm sure he'll go back to what he did in 2007 which is finding the best things to short....probably Euro banks or specific industries. No good hedge fund manager has a real long term play. When he says the Japan result looks way more obvious than even the sub-prime crisis in US did in 2007 than that is saying something.

Sat, 01/19/2013 - 16:09 | 3169305 Seer
Seer's picture

"he feels housing prices have bottomed out"

That's the point of argument right there.  And as others have noted, the litmus test would center around wages and employment.  For his position to hold it would necessitate that wages and unemployment stabilizes (and for growth to occur would require increasing wages and increasing employment AND increasing interest rates- and, in a grow-or-die environment we'd then be requiring a pretty big reversal here).

I'm thinking that his position is status quo, it has all the look and feel of someone who didn't get the memo that growth is dead (note from Mother Nature).  If this is not the case then he's doing a GS (telling clients to buy when you're selling).

Sat, 01/19/2013 - 09:30 | 3168634 BidnessMan
BidnessMan's picture

My bet is the foreclosure system will get overwhelmed and people will just stay in their house. Certainly what is happening in Florida. More and more "zombie" foreclosures where the lender does not actually foreclose. Because then they would owe taxes and maintenance on the property. So they don't actually foreclose, and dont have to notify the Borrower either. Borrower moves out, but still on the hook for the property!

So once people wise up, they will stay in the house and never have to leave. The lender does not want the property to add to their existing REO inventory, and the cost and liability that goes along. Moving out just because you can't pay the mortgage is foolish.

Sat, 01/19/2013 - 17:51 | 3169525 Seer
Seer's picture

Great summation.  A Catch-22 if ever there was one.  I wonder where Bass accounts for this (reality)?

Instead of Scarlett Letters being scribed on folks' foreheads we'll be able to measure based on how run-down properties become.  Those who cannot make mortgage payments are not very likely to perform home maintenance; and should they become unemployed the very necessary maintenance like plumbing and roofing repairs are going to be neglected -> fast-track to a condemned building status (though there's likely not going to be folks plastering notices/tape on the buildings).

Sat, 01/19/2013 - 10:36 | 3168675 BlueCheeseBandit
BlueCheeseBandit's picture

I agree. As much as I like Bass, I can't agree with his housing thesis. Where are the new jobs and income to support housing prices? Who is buying? Certainly not the young, with no jobs and student loans.

I also think his thesis of Europe, then a few years later Japan, then a few years later the US is odd. IMO, Europe can't collapse with the rest of us looking on saying sucks to be you. I think it all go together. His relative timing may be right, but I don't think it's separated by years.

Sat, 01/19/2013 - 00:10 | 3168365 cranky-old-geezer
cranky-old-geezer's picture

 

 

The Japenese debt bomb will explode on its own. As will all western debt bombs. It is only a matter of time.

Actually you and Bass are completely wrong, it won't ever "explode", just like the US debt bomb won't ever "explode".

These nations have central banks that can print their own currency and set interest rates.  Long as they can do that, no "debt bomb explosion".

Betting the printing press will stop printing is idiocy, as the last 4 yrs has shown.  Central banks are linking QE termination to fantasies that will never happen.  BOJ says 2% inflation would stop their QE.  But there won't ever be 2% inflation the way they measure it.   Just like here in America, Fed says QE stops at 6.5% unemployment, but we won't ever see 6.5% unemployment again.

Why?  Because BOJ and Fed have drained so much wealth out of their respective economies, there's not enough left for any sort of economic recovery.

We're stuck in -3% to +1% GDP growth from now on, and it would be worse if you leave out govt spending, which comes mostly from borrowing these days, which means printing more currency, aka more QE.

This pattern isn't gonna end.  We're stuck in this borrowing and printing paradigm from now on. No, it isn't a cycle we'll come out of.  It's structural now. 

Same thing will happen here that happened to ever other financial empire in history.  Steady debasement of the money till it's worthless.

Whether Roman coins or Japanese Yen or American dollars, same thing happens, steady debasement till they're worthless.

Sat, 01/19/2013 - 04:02 | 3168531 BeerBrewer09
BeerBrewer09's picture

go back to the pink panties please!

Sat, 01/19/2013 - 07:25 | 3168581 Tao 4 the Show
Tao 4 the Show's picture

Cranky - I wonder about the situation in Japan along similar lines. However, these days, massive amounts of money (i.e. expectations on ability to spend in the future) are wrapped up in the JPY bonds. Certainly, the upcoming and current retirees could get spooked about that.

So, what happens then? One answer is dumping of these bonds. The JPYgovt has a couple of options: 1. Disallow selling of the bonds, 2. buying them directly with newly printed money, or 3. allowing yields to rise and crash the govt in short order. They are not as insulated as the U.S. in its reserve currency role. Thus, it would appear Japan is in for rough times sooner than later.

Option 1 is dramatic and rocks the world financial scene. Option 2 leads to disabling inflation. That makes your suggestion on target, but my guess is that Bass is also targeting this possible outcome.

Sat, 01/19/2013 - 10:40 | 3168683 BlueCheeseBandit
BlueCheeseBandit's picture

Controlled interest rates mean a bond crisis morphs into a currency crisis. On this I agree with Bass wholeheartedly.

Sat, 01/19/2013 - 12:04 | 3168782 in4mayshun
in4mayshun's picture

Sorry geezer, you're just wrong...

They can slowly debase a currency until the 50 million people on welfare can no longer buy basic essential items like food and electricity. After that point, society unravels because of the rampant looting and crime. Also, the millions of people making minimum wage stop going to work because, well, what's the point? Sure, you could raise wages and social security and welfare benefits, but the boat rises with the tide. If everything rises then interest rates must rise also and it's game over. That's what's so scary about the situation were in, either we let the banks implode or the banks let society implode, and I'm betting that the banks get their way.

Why else would they be trying to confiscate guns if they didn't know chaos is coming?

Sat, 01/19/2013 - 12:38 | 3168829 Calmyourself
Calmyourself's picture

Chaos, yes.. The gestalt points to ultimately chaos and PTB are planning with a set of battlefield prepping moves that can only be gamed out manuvers.  This study out of West Point is interesting, setting the table.  I like to loo k at the table and see just how set it is for the end game.  Main course will come out of the ktichen in this 2nd term..

http://www.nationalreview.com/corner/338049/new-anti-terror-front-yes-government-thinks-its-right-wing-extremists-john-fund

Sat, 01/19/2013 - 17:57 | 3169537 Seer
Seer's picture

Somewhere along the line REAL REALITY will surface, and it don't matter squat about what numbers we're playing with.  Mother Nature cannot dole out the volume of resources necessary to provide what we're currently trying to churn through let alone any that would push the growth needle.

Govts, virtual human constructs, cannot create anything.  So... I'm taking Mother Nature over govt for the win, Alex.

A crash WILL occur (either in the form of full-out realization OR war).  Just not thinking that people are going to take this overshoot thing lying down.

Sun, 01/20/2013 - 06:34 | 3170321 Rick Blaine
Rick Blaine's picture

ACTUALLY, YOU are wrong because Bass would agree with everything you said.

If central banks just continue to print money (as they probably will), at SOME POINT, interest rates will really start to go up and the central banks won't be able to do a damn thing about it.

...and that is when the debt bomb explodes.

That is, AT SOME POINT, those holding government debt are really going take it in the ass - either by simple not getting their money back or getting paid back in a seriously devalued currency.

Either way, governments are going to lose their ability to borrow more and more to pay back the bond holders.

...and that is when "we" (e.g., Europe, Japan, the U.S.) really start living within our means.

 

Sat, 01/19/2013 - 01:21 | 3168432 OldPhart
OldPhart's picture

Nice of the exchange to shut down all trades and sing 'Happy Birthday' in the background.

Fri, 01/18/2013 - 20:40 | 3168010 surf0766
surf0766's picture

He's long housing  because of the time frame it has already been down? 

Fri, 01/18/2013 - 20:48 | 3168027 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

he doesn't put like this, but i think he's just frontrunning the fed like everyone else

Fri, 01/18/2013 - 20:51 | 3168036 surf0766
surf0766's picture

Do housing prices fall or rise with the dollar crash?

 

Sat, 01/19/2013 - 11:43 | 3168743 knowless
knowless's picture

in real terms that depends on if you happen to be looking in a place with a functional economy left or not, i'de avoid vegas, and buy in places that make real shit.. however doing the opposite of what i think makes sense and is probably a better dollar play.

Sat, 01/19/2013 - 18:00 | 3169541 Seer
Seer's picture

"buy in places that make real shit"

Real shit as in really shit, as in most worthless products today?  or, as in stuff that really matters (for our future world)?  Do you know if you've got it picked right?

Further, one can make stuff but that don't mean people can buy it.  The import/export paradigm is going to become rather shaky...

Sat, 01/19/2013 - 12:36 | 3168824 Randall Cabot
Randall Cabot's picture

Rise

Fri, 01/18/2013 - 20:59 | 3168048 gjp
gjp's picture

Hard to take all these 'thoughtful' guys speaking real truth about many of the world's problems yet actively contributing (parasitically) to the biggest problem of all.  Gross, Bass, Hendry are three that come to mind, and they all piss me off even though they are often talking from the same playbook as much of the ZH faithful, just not the whole story.

Fri, 01/18/2013 - 23:11 | 3168292 billsykes
billsykes's picture

they are the symptom not the cause (cept bill, none of them mgt much money they are just internet famous), Hendry said it himself- if you want to make money since the 1960's finance is the way to go.

He is right.

Sat, 01/19/2013 - 01:34 | 3168440 secret_sam
secret_sam's picture

Plumbers don't tell folks to fix their own toilet, either.

Sat, 01/19/2013 - 18:03 | 3169546 Seer
Seer's picture

If they try an lay blame on anything other than our flawed paradigm of perpetual growth on a finite planet then I point my finger at them and call them a propagandist (for the grow-or-die system).

Fri, 01/18/2013 - 20:57 | 3168046 MyBrothersKeeper
MyBrothersKeeper's picture

He's long housing because he believes the, from a pricing persepective, things have bottomed out.  He has most money in non-agency so he is not front running fed per se.  He is long non agency because they are paying 6-8% yields and feels the yeild will compress and drive up price.  That's my understanding.  If he shorted the same things in 2008 and made 591 million I wouldn't bet against him. Besides he isn't the only one...PIMCO Income has about 20% in on agency mortgage which helped it get 20+% last year.

Fri, 01/18/2013 - 20:43 | 3168015 urbanelf
urbanelf's picture

Happy Birthday!

Fri, 01/18/2013 - 20:54 | 3168021 WhiteNight123129
WhiteNight123129's picture

Short Japanese bonds and Long Japan Tobacco, tobacco shares will increase dividend even in deflation, and if you have hyperinflation tobacco sharex will trounce bonds.

You have positive carry while waiting and now currency risk.

 

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