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Kyle Bass: "Japan Will Implode Under Weight Of Their Debt"

Tyler Durden's picture


As the fast-money flabber-mouths stare admiringly at the rise in nominal prices of Japanese (and the rest of the world ex-China) stock prices amid soaring sales of wheelbarrows following Kuroda's 'shock-and-awe' last night, it is Kyle Bass who brings these surrealists back to earth with some cold-hard-facting. Out of the gate Bass explains the massive significance of what the Japanese are embarking on, "they are essentially doubling the monetary base by the end of 2104."

It is a "Giant Experiment," he warns, but when you are backed into a corner and your debts are north of 20 times your government tax revenue, "you're already insolvent." Simply put, Bass says they have to do something and they have to something big because they are "about to implode under the weight of their debt." For a sense of the scale of the BoJ's 'experimentation', Bass sums it up perfectly (and concerningly), "the BoJ is monetizing at a rate around 75% of the Fed on an economy that is one-third the size of the US!"

What they are trying to do is devalue the currency to attempt to become more competitive while holding their rates market flat - the economic zealots running the world's central banks believe they can live in that Nirvana - and Bass believes that is not the case, as they will lose control of rates, since leaving the zone of insolvency is impossible now. His advice, "if you're Japanese, spend! or take it out of your country. If you're not, borrow in JPY and invest in productive assets." Do not be long JPY or Japanese assets as he concludes with the reality of Japan's "hollowed out" manufacturing industry and why USDJPY is less important that KRWJPY.




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Thu, 04/04/2013 - 18:44 | 3410177 FoolsAdvice
FoolsAdvice's picture


Thu, 04/04/2013 - 18:50 | 3410204 ghandi
ghandi's picture

Speaking of heart:


now most Americans want weed legal!

Thu, 04/04/2013 - 19:09 | 3410245 DJ Happy Ending
DJ Happy Ending's picture

Any suggestions on how a normal working person in the US can borrow in JPY?

Thu, 04/04/2013 - 19:15 | 3410271 prains
prains's picture

reach over with extra long chopsticks while they're not looking

Thu, 04/04/2013 - 19:17 | 3410278 ghandi
ghandi's picture

Look past the Potemkin village erected by central banks.


Thu, 04/04/2013 - 23:02 | 3410948 jeff montanye
jeff montanye's picture

the date in dark in the post should be 2014 not 2104, right?

Fri, 04/05/2013 - 05:25 | 3411493 debtor of last ...
debtor of last resort's picture

No, no, 2013.

Fri, 04/05/2013 - 05:36 | 3411501 Boris Alatovkrap
Boris Alatovkrap's picture

Japan or Amerika - Boris cannot is decide more scary... When Central Bankster is only hammer, everything is look like nail.

Thu, 04/04/2013 - 20:20 | 3410434 smlbizman
smlbizman's picture

can we add a new one to the the list.....fuck you faber...asshole

Thu, 04/04/2013 - 19:33 | 3410316 El Oregonian
El Oregonian's picture

First you want to secure a wheelbarrow, you'll need one soon in order to transact business...

Thu, 04/04/2013 - 20:18 | 3410435 Papasmurf
Papasmurf's picture

Any suggestions on how a normal working person in the US can borrow in JPY?

I'm sure Goldman Sachs can help you out with your multi-national investments.

Thu, 04/04/2013 - 21:11 | 3410593 donpaulo
donpaulo's picture

DJ you would need to establish credit with a J-bank. Having done that about 4 years ago I can tell you that its no small undertaking

Thu, 04/04/2013 - 22:50 | 3410918 deKevelioc
deKevelioc's picture

It's called futures.  Sell yen and buy, say, norwegian krone.

Fri, 04/05/2013 - 05:47 | 3411510 qmhedging
qmhedging's picture

meanwhile in Italy


Couple found hanged in Marche

Macerata, April 5 - A couple in economic difficulties were found hanged Friday morning in the Marche region.

The man, 62, was one of thousands of so-called 'esodati' ('exiled ones') left without a pension or wages because of the government's hike in the retirement age 16 months ago.

Police told reporters there was "no doubt" the couple killed themselves out of desperation at their inability to survive economically. Neighbours who found the dead bodies in the town of Civitanova Marche told police the pair were unable to get by on the small pension of the 68-year-old wife.

"They couldn't even pay the rent," neighbours said. Suicides have risen during Italy's worst recession in years, deepened by outgoing Premier Mario Monti's austerity policies.

The government passed a law to help 40,000 esodati through till retirement but unions say their overall number is much higher, at least 150,000.

Thu, 04/04/2013 - 18:53 | 3410209 CClarity
CClarity's picture

On top of being insolvent, Japan needs to start importing young people ASAP. Plunge value of currency, Export products, import youth.  A new human experiment that will surely have unforseen, and tragic, consequences.  

Maybe they can import some of the starving North Koreans.  As much as the Japanese xenophobically don't like the Koreans, I'm not sure what ethnicity they would rather import.

Thu, 04/04/2013 - 19:43 | 3410334 tarsubil
tarsubil's picture

I think Bass has a point that the Japanese hate the Koreans and Chinese so they aren't inviting anyone in. I'm starting to think after Japan implodes, it will be invaded. Geez, who knows, maybe North/South Japan split between China and the US.

Thu, 04/04/2013 - 21:19 | 3410619 ATM
ATM's picture

The Chinese can have the radioactive part. They won't mind. The can put a computer part manufacturing plant there.

Thu, 04/04/2013 - 19:42 | 3410335 NoClueSneaker
NoClueSneaker's picture

Tamagochis ?

Fri, 04/05/2013 - 03:28 | 3411392 mfoste1
mfoste1's picture


Fri, 04/05/2013 - 08:00 | 3411651 Socialized Losses
Socialized Losses's picture

/PC filter OFF/  Need to import youthful workers to make export products?  May I suggest bringing in boatloads of young black Africans.  They have a good track record. /PC filter ON/  Im not so sure this can be called a "new human experiment"

Thu, 04/04/2013 - 18:58 | 3410222 zorba THE GREEK
zorba THE GREEK's picture

Japan will implode... 20 years and waiting....

Thu, 04/04/2013 - 22:51 | 3410922 deKevelioc
deKevelioc's picture

We really mean it this time.

Thu, 04/04/2013 - 19:14 | 3410246 Alexandre Stavisky
Alexandre Stavisky's picture

And the Sumo objective is to eat so much, napping between meals, that sheer size will overcome an opponent's skill and dexterity.

Central Banker Sumos feast only on QE and shihei hihei.  Unfortunately they've become so large that their kohai must perform a terrible function when they evacuate the bowels.  They are so large they CANNOT properly cleanse themselves.  Nice to have a fighting guild where gluttony is so open and positions so coveted that newcomers don't mind being a "damp rag" (as Nigel Farage might say.)

Ever watch a sumo match?  Hilarious as roly-polys in superdiapers huff and puff to toss another diapered dude out of an arbitrary ring.  30 seconds of exertion and their lungs virtually give out. Reminds one of the elephants and the grass.

Someday the dollar will be tossed from the ring.  Until then your every move to preserve yourself will be crushed with extreme prejudice.

Thu, 04/04/2013 - 21:09 | 3410573 Dr Benway
Dr Benway's picture

Sumo actually involves a great amount of technique, balance and timing.

Lyoto Machida has even pulled off sumo style throws in high level MMA matches.

Thu, 04/04/2013 - 18:45 | 3410178 francis_sawyer
francis_sawyer's picture

Talk your book bitchez!

Thu, 04/04/2013 - 18:49 | 3410193 nmewn
nmewn's picture

The Bernanke Swndler & LackofTrust has nothing on the japs...what the hell...we used to be number one!

Thu, 04/04/2013 - 20:14 | 3410420 jon dough
jon dough's picture

Maybe we can be number Won...

Thu, 04/04/2013 - 18:47 | 3410186 Timmay
Timmay's picture

And by "implode" you mean print more money, right?

Thu, 04/04/2013 - 18:51 | 3410201 McMolotov
McMolotov's picture


Thu, 04/04/2013 - 19:50 | 3410350 Crash Overide
Crash Overide's picture


Thu, 04/04/2013 - 20:28 | 3410456 mt paul
mt paul's picture

does the beast

like sushi..

Thu, 04/04/2013 - 18:48 | 3410192 KashNCarry
KashNCarry's picture

It's that post-Fukushima sucking sound!

Thu, 04/04/2013 - 18:50 | 3410194 Yellowhoard
Yellowhoard's picture

Bass is my profit prophet.

Thu, 04/04/2013 - 18:50 | 3410203 ar01
ar01's picture

Does anyone know what's actually stopping central banks from just canceling the debt on their books?

Thu, 04/04/2013 - 18:55 | 3410217 iDealMeat
iDealMeat's picture

oh...  only about a Quadrillion in derivatives would blow up..

Thu, 04/04/2013 - 19:08 | 3410243 you enjoy myself
you enjoy myself's picture

and what's stopping governments from declaring derivatives to be illegal insurance contracts?  i think that's the end game - they can't ever be settled once the great daisy chain starts, so they won't be.  they'll just all be voided retroactively.

Thu, 04/04/2013 - 19:19 | 3410282 iDealMeat
iDealMeat's picture

Central Banks / Banks are and own the governments.. Debt is the power..  They'll keep stealing (through printing, inflation, or outright theft) the minimum to pay off interest and keep the ponzi going.


It won't end until people wake up and cut their consumption.

Thu, 04/04/2013 - 19:42 | 3410333 calgal
calgal's picture

yes and everyone can kiss every dime in their bank accounts goodbye ala Cyprus

Thu, 04/04/2013 - 19:51 | 3410358 Crash Overide
Crash Overide's picture

"and what's stopping governments from declaring derivatives to be illegal insurance contracts?"


Endless cocaine and hookers... MOAR!

Fri, 04/05/2013 - 07:44 | 3411631 GoldBricker
GoldBricker's picture

How many of those derivative contracts are tied to the debts of those very countries or their retainers (think not only big banks, but also US agencies, states, European Development Bank)? What happens to the interest rate you have to pay once the derivatives on your debt become worthless? Do JPM and GS even know the answer to this?

This is why nobody is defaulting now, except maybe Argentina. The modern nation-state must borrow, its debt must increase. To be cut off from the market is to have to live on what you take in, and nobody's ready for that.

Maybe this is why they wouldn't touch the senior bondholders in Cyprus banks. Easier to go after the depositors; there's no derivatives on their stake.

Thu, 04/04/2013 - 19:18 | 3410277 nmewn
nmewn's picture

Yes...and besides that perfect ponzi point of a commensurate drop in government spending (here) they'd be right back to a trillion dollar debt in what...fourteen months?

They may be goin to hell in a basket...but at least lets enjoy the ride ;-)

Thu, 04/04/2013 - 20:29 | 3410465 mt paul
mt paul's picture

before or after

rehypothication ..?

Thu, 04/04/2013 - 19:16 | 3410267 Mine Is Bigger
Mine Is Bigger's picture

Looking at the size of their bond purchasing plan, I actually wondred abut that, too, especially cosnidering the BOJ is majority owned by the Japanese government, unlike the Fed.

Thu, 04/04/2013 - 20:17 | 3410428 jon dough
jon dough's picture

Right, we're the other way around...

Thu, 04/04/2013 - 19:31 | 3410306 Diogenes
Diogenes's picture

You do that and the game is over.

Thu, 04/04/2013 - 20:36 | 3410422 slightlyskeptical
slightlyskeptical's picture

The current game needs to be over.  Isn't that a given by all the discourse on this site? That said, it doesn't have to be too painful if done properly. Especially if it was done unilaterally throughout the world. i do think this is the plan but they need to secure more power before pulling the last trigger.

i would print to pay off all the debt. The giant sucking sound in the financial system would cancel out any inflationary effects that such printing would cause and likely would be extremely deflationary in the end. Most banking institutions would go kaput. We need a new banking system anyways, so who cares. Those that played the game properly would do just fine but would have to adjust to a non-debt based money system with no fractional reserve lending.

To get the economy back up and rolling the government would print to buy all consumer debt. Lower interest rates and principal so most of this gets paid back. This would free up many hundred of dollars monthly in the majority of households, enough to get the economy moving again. Money would be free to invest in the production that we currently ship offshore. When that production comes back the job crisis is over.

After the reset there would be no taxes and no government debt to pay interest on. Simply print what is needed, starting from a baseline and limit the budget growth from there. If an occasion comes up where more money is needed then levy a one time tax to cover those particular costs (after a vote of approval by the taxpayers). Let social security invest in the new origination market - mortgages would be secured by the home and future benefits.

It would be a good place to start.


Thu, 04/04/2013 - 18:52 | 3410205 RobD
RobD's picture

"2104"? Whats the problem, that's like almost a hundred years from now lol. /sarc

Thu, 04/04/2013 - 18:52 | 3410206 Seasmoke
Seasmoke's picture

75% X 33% = BOOM !!!!

Thu, 04/04/2013 - 19:00 | 3410225 geewhiz
geewhiz's picture

Crack up boom

Thu, 04/04/2013 - 19:12 | 3410255 Snoopy the Economist
Snoopy the Economist's picture

wrong math.

it means 3x75%=225% relative to fed reserve printing

Thu, 04/04/2013 - 19:16 | 3410273 augustusgloop
augustusgloop's picture


Thu, 04/04/2013 - 19:50 | 3410356 Goldilocks
Goldilocks's picture

August Gloop Oompa Loompa Song (3:48)

Thu, 04/04/2013 - 18:59 | 3410210 kevinearick
kevinearick's picture

have you ever noticed that the anxiety-ridden increase their speed when they need an off-ramp...and there is none. get the driver to pull over and get out, or jump if you must.

or to beat a dead horse:

the first panacea for a mismanaged nation is inflation of the currency; the second is war. (repeat QEInfinity adnauseum)

Thu, 04/04/2013 - 18:52 | 3410211 Q.E.easy
Q.E.easy's picture

I've been begining to wonder if Japan is going to go all Weimar on us. When inflation(hyper) finally rears its ugly head desperate, armed, developed countries have done interesting things in the past.  

Thu, 04/04/2013 - 19:00 | 3410226 hannah
hannah's picture



oh wait...shit i just fell and hit my head and woke up and thought i was maria butaroma on CNBC.

Thu, 04/04/2013 - 21:41 | 3410664 Ropingdown
Ropingdown's picture

Japan imploded before, in 1930.  The Japanese Finance Minister printed the hell out of money in30-33 and spared Japan the worst effects of the Great Depression. By 34 the economy was growing very well.  Of course they began to use their prosperity to pay for wars, the occupation of Korea and Manchuria.  The US and others starved them of supplies (oil and scrap steel), at which point war become inevitable.  Despite the US preference to "fight Germany first"  (i.e. "we'll get to Japan next!) our plan was scotched by the attack on Pearl Harbor.

Thu, 04/04/2013 - 22:13 | 3410767 hannah
hannah's picture

i got news for you...the economy wasnt 'growing'. the gov was proping it up with prepping for war. if the gov hadnt done that the printing would have caused the whole system to collapse.

Thu, 04/04/2013 - 19:01 | 3410228 Yossarian
Yossarian's picture

If BOJ buys all the bad debt assets from the Japanese banks and insurance co's with the stroke of a key, then there will be no more debt because, despite what these central bank jokers say, there will be no resale into the markets and this is just pure monetization.  Aaaand it's gone.  

Bass says they will lose control of rates and on a real basis he is right but on a nominal basis he is wrong.  BOJ will sit on the bid thorughout the yeild curve while borrowers take advantage of negative interest rates.  The Yen carry trade is on but the question remains where those borrowed Yen go.  I say they leave Japan. Unfortunately the average Japanese without substantial assets will be poorer as the cost of living will be rising while their incomes continue to lag.

But BOJ is betting that they can buy up enough of the incremental and existing debt before inflation and gets too far out of control, eventually returning to a more normalized policy stance.  Im more in the Kyle Bass camp and think that bad price signals will further erode their real economy and this policy will be a long-run disaster. 

Fri, 04/05/2013 - 01:53 | 3411295 StychoKiller
StychoKiller's picture

"Careful where you put your hands (brainz!), Yossarian."

Thu, 04/04/2013 - 19:00 | 3410230 Goldilocks
Thu, 04/04/2013 - 19:01 | 3410231 Debugas
Debugas's picture

why would they implode if they can print to infinity their own currency

Thu, 04/04/2013 - 19:13 | 3410258 CitizenPete
CitizenPete's picture

Someone will have to buy the debt and pay it back someday, theroetically.

At this point its all a fable.  The big reset will happen even though the average sheep will keep spending and accepting more and more bad debt leveraged a thousand times.

When a McDonalds Double Quarter Pounder with Super-sized fries and a bucket of carbonated syrup from Atlanta (Coke) costs $16 FRNs Bubba may finally notice. 

Thu, 04/04/2013 - 19:29 | 3410301 centerline
centerline's picture

Yup.  It's a big world and all interconnected.  Money just sloshing around.  Just a matter of time before it manifests itself as hit to J6P's wallet.

Thu, 04/04/2013 - 19:34 | 3410318 Diogenes
Diogenes's picture

They didn't notice when it went from $1.50 to $9 and they won't notice when it goes to $16 as long as a) McDonald's raises its prices slowly and b) Bubba has $16

Thu, 04/04/2013 - 21:11 | 3410596 BigInJapan
BigInJapan's picture

Because there aint' fuck-all here 'cept old people.

Thu, 04/04/2013 - 19:03 | 3410236 piliage
piliage's picture

I can hear Bernanke screaming, "See! See! I told you we weren't printing enough!"

Thu, 04/04/2013 - 19:25 | 3410287 khakuda
khakuda's picture

Bernanke is already setting the stage to print more. It is actually inevitable. It goes until it implodes.

Thu, 04/04/2013 - 20:35 | 3410482 NoDebt
NoDebt's picture

Which is why it's called a liquidity trap.  Very hard to get out of once you're in it. 

Thu, 04/04/2013 - 19:07 | 3410241 Evil Bugeyes
Evil Bugeyes's picture

Either Japan will implode or Kyle Bass will. I personally think that in a few years there are going to be more than a few Japanese retirees who will regret not having purchased gold back when the yen was still worth something.

Thu, 04/04/2013 - 19:10 | 3410244 Yen Cross
Yen Cross's picture

    I'm not so sure I agree with the krw/jpy trade idea. I have been following S.Korea, and they are having growth issues.

 Excluding the obvious with DPRK here is a short  but good piece. (2nd LD) S. Korean economic growth slows to 3-year low in 2012 | YONHAP NEWS

Thu, 04/04/2013 - 19:11 | 3410254 kito
kito's picture

If you're not, borrow in JPY and invest in productive assets."...



i find it quite interesting he didnt mention investing it in gold.......

Thu, 04/04/2013 - 19:15 | 3410270 fonzannoon
fonzannoon's picture

He said Japan pulling forward GDP "is not the panacea that everyone thinks it is".

The last time he said "this is not the panacea everyone thinks it is", he was referring to gold.

Somehow he went from guns and gold to productive assets and oil wells and apartment complexes financed at low fixed interest rates. He sounds like a financial advisor for the 1% now. The little guy can hold onto their few ounces of gold and shoot it out with their neighbors.

Thu, 04/04/2013 - 20:16 | 3410427 Pancho Villa
Pancho Villa's picture

Maybe Bass can get more leverage on apartment complexes and oil wells than on gold. There might also be tax reasons?

Thu, 04/04/2013 - 21:44 | 3410674 Awakened Sheeple
Awakened Sheeple's picture

He is a financial advisor for the 1%.

"The minimum investment with Hayman is $5 million."

Fri, 04/05/2013 - 00:53 | 3411158 piliage
piliage's picture

That is REALLY interesting. 3 months ago his buy-in was one million. He has been swamped with demand. Also, he lost one of his business partners in a tragic car accident a few months ago and may be trying to simplify his client structure to focus on institutional players.

Thu, 04/04/2013 - 22:23 | 3410814 chindit13
chindit13's picture

It's because he finally logged in to his Elitebook page and read his Wall.  The messages reminded Bass what real wealth is all about.  The messages reminded him that those who can and do have everything still need a challenge, and that challenge comes not in the form of counting their wealth, put playing with it and enjoying the feeling of power.  The messages reminded him that all of his fellow 1/10th of 1%ers (OTOOPs) are dumping non-productive assets and loading up on productive assets in order to control them to a degree not seen since the days of Monarchs, Emperors and Mangods.  Generational holdings of non-productive assets (you can guess what these are) are being dumped on to the retail set (in the greatest Pump and Dump in history), and the OTOOPs are picking up companies, factories, transport systems, commercial and residential properties, farmland, resource land and---for their pleasure---art treasures and collectibles.

In the end everybody gets what he wants.  The OTOOPs control the planet's total production, and retail gets "real money".  The OTOOPs gain the psychic pleasure of playing Monopoly with real assets, real enterprises, and real production--plus all of their assets throw off income and also allow them to be The Boss, employing millions of serfs---while retail gets pretty trinkets that will give them years of counting and stacking pleasure in the privacy of their own homes, as they go out to labor each day for the OTOOP, who own every single productive asset on the face of the Earth.

That's The Plan anyway.   It takes little more than a cursory look at the financial headlines, deal stories and proliferation of certain types of websites and blogs over the last few years to realize The Plan is working to perfection.  Everybody is playing his role.  Everybody, indeed, is getting what he wants.  Those who have had all of life's dreams come true get to have new dreams and new competitions.  Those who have had only dreams and fantasies get more of the same.

Thu, 04/04/2013 - 23:14 | 3410973 Alexandre Stavisky
Alexandre Stavisky's picture

Except the OTOOPs to die! And unless they can effectively transmit their special knowledge, it perishes in a generation.  Every man dies, very few truly live.

And finally, except for the most virile deniers, all must face the final judgement of the Creator.

Then is when realization comes that perhaps they were playing the wrong game, and made the most ridiculous of mistakes.

Wealth transfers have no post-mortem operation.  Death is the ultimate capital control.

Thu, 04/04/2013 - 19:17 | 3410274 Al Huxley
Al Huxley's picture

There's a longer presentation from a while back - earlier in the year (I think it was posted on ZH as well) and someone in the audience asks for what to do, given the situation in Japan and his response is 'sell Yen, buy gold and go to sleep for 10 years'.  So yeah, he's a 'gold is a store of value' guy.

Thu, 04/04/2013 - 19:26 | 3410289 fonzannoon
fonzannoon's picture

Deep down Bass knows the US is right behind Japan. he probably got the egan jones riot act read to him and has since calmed down and is enjoying the limelight now.

Thu, 04/04/2013 - 19:27 | 3410298 kito
kito's picture

they came for michael burry after his wsj editorial.......................................

Thu, 04/04/2013 - 20:44 | 3410502 Temporalist
Temporalist's picture

Here is the Kyle Bass presentation from March 2013 at

Myron Scholes Global Markets Forum


One of the last question he answers is "What does a retail investor do" and his reply is to buy gold and sell Yen (and sleep on it for a decade or more).

Thu, 04/04/2013 - 19:28 | 3410294 kito
kito's picture

@al...................i saw the same presentation, which is why im surprised, as fonz states above you (shout out to my boy fonz....yo).........that he seems now more interested in apartment buildings and oil wells...................perhaps he is fonz states above..... only speaking to the 1 percenters and the cnbc audience who dreams of being the 1%......................................or perhaps he shared a bubble bath with warren buffett?????????

Thu, 04/04/2013 - 19:37 | 3410323 Diogenes
Diogenes's picture

I think he is capable of doing arithmetic and bases his calls on that. Everything he has ever said seems to come from mathematical analysis. Plus he has 550 employees analyzing every investment in the world.

Thu, 04/04/2013 - 19:58 | 3410378 I think I need ...
I think I need to buy a gun's picture

@kito what do u mean "they came for burry" i didnt hear please enlighten? thanks

Thu, 04/04/2013 - 21:11 | 3410587 kito
kito's picture

After he ripped the fed in the WSJ, federal agents came a knockin and they decided to rip through his company....wa speech he gave at UCLA? Graduation

Thu, 04/04/2013 - 21:31 | 3410649 I think I need ...
I think I need to buy a gun's picture

thanks,,,,didn't know about wsj part

Fri, 04/05/2013 - 03:59 | 3411430 chindit13
chindit13's picture

It's a pairs trade.  Buy gold AND sell yen.  In other words, he is of the view gold rises in yen terms.  He also said 250 yen/dollar might be in the cards.  What he did not say was that gold rises vs. the dollar.  He may believe that it does, but that is not implicit in the long gold/short yen statement.

Thu, 04/04/2013 - 19:57 | 3410372 therover
therover's picture

I believe in one of the previous videos posted here on Bass speaking at a conference, talking about Japan, he stated sell Yen, buy gold.  

Not sure if he would state sell dollars and buy gold though. At least not yet. 

Me...I am in the sell dollars, buy gold/silver trade at this point. 


Thu, 04/04/2013 - 19:12 | 3410256 jean paul marat
jean paul marat's picture

Thus the north korean situation.

Thu, 04/04/2013 - 19:14 | 3410265 Tango in the Blight
Tango in the Blight's picture

Does Kyle Bass have a Ph.D? Does he have a Nobel Prize?

So what does he know?

Leave it to the educated people of Harvard and Princeton and Oxford and Cambridge.


Thu, 04/04/2013 - 19:15 | 3410272 FieldingMellish
FieldingMellish's picture

I'll take: "We'll deal with that problem when we get to it." for $400, Alex. (or is that Y40,000?)

Thu, 04/04/2013 - 19:28 | 3410297 savagegoose
savagegoose's picture

so if i want to buy anything made in Japan, wait a year and it wwill be cheaper? WTG

Thu, 04/04/2013 - 19:31 | 3410307 nmewn
nmewn's picture

Or fweeeeee chipping ;-)

Thu, 04/04/2013 - 19:39 | 3410317 are we there yet
are we there yet's picture

This is a mistype. It is year 2014 not 2104.

Thu, 04/04/2013 - 19:40 | 3410325 akak
akak's picture

Ben Shalom did warn all of us that interest rates would be held (artificially) low "for an extended period" ......

Thu, 04/04/2013 - 19:34 | 3410319 Fruitcake
Fruitcake's picture

Looks like Ben has a co-pilot now in his helicopter

Thu, 04/04/2013 - 19:52 | 3410321 Muppet Pimp
Muppet Pimp's picture

Nice to see KB acknowledges the "macro tourist" phenomenon.  You can be as libertarian, free market capitalist as they come (good on you for it), but the damage inflicted on average local folks in the era of bubblenomics is not to be denied.  The more big money managers and hedgies who acknowledge the phenomenon, and avoid being a part of it, is ultimately the better off their industry will be longterm.  Happy to see him mention it.  They got some good people down in the lone star state (im obv. biased, was born in Tyler).

OT Rant:

The whole hot money flows into country, speculative real estate bubble forms, media goes nuts with television programs telling the locals they can be rich speculating in real estate, locals lever up and buy properties, banks aid speculative fervor by lending to anyone with pulse by taking advantage of government backstops and incompetence, hot money flows out creating greater fools of locals, locals go bust, government steps in and obligates very same locals and their next several generations of offspring to pay off the debt via increased taxes, leftist politicians smell blood and move in with overly generous entitlement packages (free food, phones, cash, healthcare) while secretly hoping to usher in US communist era.  The textbook example of how to destroy a capitalist society has been written right before our very eyes.  Icing on the cake is the financial engineering (gaussian distribution, aka hokum) was created by a chinese national, and the policies put in place by the US were put in by the Clintons, who were responsible for opening the floodgates on shipping our industrial base to China.  If I did not know better I would say the free marketeers are being outflanked by the commies right here out in the open, in front of everyone.  It is also certainly hard to dispute the clintons are communists (Bill likes to call them Communitarians).  Absolutely remarkable.

Add to that the speculative bubble is now forming in Farmland which when it busts could potentially leave these same jokers in charge of large portions of the food supply.  And they are getting armed to the teeth (unprecedented ammunition stockpiling and 3200 armored vehicles, etc) by forming a domestic militia to outgun the local population.  All the while trampling on our constitution and seeking to disarm our people.  Our president may or may not have even been born in the US but was definitely raised as an indonesian, and does not share the values the country was founded on.  This is freaking disgraceful.  Who knew it could be this easy to run roughshod over the US.  Major networks running TV shows that provide the communist vietnamese a prime time spot to showcase Communist songs for the sheeps consumption while showing our downed aircraft from the war, giving the middle finger to the ones who fight to keep us out of harms way.  This is just disgraceful.

American Idol is on in an hour and I just got a tweet about Justin Bieber I need to investigate, have to go...priorities you know....



Thu, 04/04/2013 - 20:10 | 3410410 prains
prains's picture

insurrectionism needs a steady hand and an unwavering target and you kiss on all counts, you look where you are led. Obama is the guy selling hotdogs in the stands compared to where you need to find the source of your problems. Guys like Beck and Rimbaugh are paid to shill for the diversion and you've bought in my friend. 

Thu, 04/04/2013 - 20:47 | 3410517 Muppet Pimp
Muppet Pimp's picture

For the record, for the man on the street who just wants to work for a living and is unaware of the macro financial aspects, we have done a decent job at restoring things to normalcy.  In Florida things have turned the corner with the economy and jobs.  But, we have not rectified many of the issues that got us here, and just this week Obama is openly advocating giving home loans out to bad credit risks.  These freaking politicians never learn.  More than likely we will not solve the big issues, as there are armies of high paid individuals on K street whose sole purpose in life is to see to it that we do not fix them, as they are highly profitable to their clients and they are merely whores who could care less what happens to the country long term.  Some of the people doing the best work right now are at the Central Bank. 

Thu, 04/04/2013 - 20:50 | 3410531 prains
prains's picture

Yeah but bud this is NOT Obama's call man, he's a paid stooge just like the rest, follow the strings to the Banking master bud and vent your frustration there where it needs to be focused, not to the paid shill

Fri, 04/05/2013 - 17:26 | 3410627 are we there yet
are we there yet's picture

Do not insult whores by saying lobbyists are like them

Thu, 04/04/2013 - 19:41 | 3410331 chump666
chump666's picture

All the while China can mess with Japan exports (revenue) for ever and ever, while Abe and BoJ print for ever and ever.  Till Japan gets war crazy at the eleventh hour and sets off the false flag...That China so dearly wants.

Thu, 04/04/2013 - 19:46 | 3410342 slightlyskeptical
slightlyskeptical's picture

jaoanese society is old. When they die the governement will just eliminate their bond holdings. Japan will get this straightened out in no time.

Thu, 04/04/2013 - 19:45 | 3410341 Oldwood
Oldwood's picture

What does anyone know? There has been plenty of speculating and projecting and while many of the predicted metrics have been right on, the predicted result hasn't happened. Is it that with modern technology they can just print so instantly that nothing can actually collapse unless they let it? I'm not sure that confidence and perception is the key thing anymore. It just may be as simple as printing more. Yes it will dilute and destroy the value of all of our currencies, but unless someone in control says stop, this dilution could go on forever. Who would have thought that we could have sustained negative interest rates? Who would lend their money at such rates? Evidently someone is, or should I say someTHING? Its kind of the carrot on the end of the string, teasing the mule along, and the mule thinking...I surely can reach it at any moment! I would have never thought this possible, but now I find myself wondering more every day.

Thu, 04/04/2013 - 19:49 | 3410353 Bogdog
Bogdog's picture

Hoping this leads to a price drop on a new Honda Goldwing F6B........

Thu, 04/04/2013 - 19:53 | 3410362 flyonmywall
flyonmywall's picture

Some people learn nothing from history. Basically, the Japanese are all German now. Haven't we seen this movie before?


Thu, 04/04/2013 - 19:57 | 3410375 TrustbutVerify
TrustbutVerify's picture

I'm a Bass fan and have been familiar with his Japan scenario for a while now.  But the interviews of him are exclusively about Japan.  What I'd like to hear, when his pal on CNBC interviews him, is what Bass thinks the potential backwash would be in other countries and markets.  

If Greece ( caused so much turmoil around the world (and its the economic size of Delaware) some thoughts on the likes of Japan (the world's third largest economy) imploding and the potential domino effects to the rest of the world economies would be welcomed.  

Thu, 04/04/2013 - 20:05 | 3410393 Bogdog
Bogdog's picture

I'll paint a picture for you. 

EVERYONE NAILED TO THE TREE OF WOE. And you gold coin horders, this goes for you too.

Clear enuf?

Thu, 04/04/2013 - 20:08 | 3410401 danpar
danpar's picture

"they are essentially doubling the monetary base by the end of 2104."


2014 ?!?

Thu, 04/04/2013 - 20:07 | 3410402 q99x2
q99x2's picture

Positive GDP for the year--The year. I heard him say a year. Another F'kn year of this bullshit. It is alwasy just wait another year and the markets will come down. What's this year 6? They ain't never coming down.

Thu, 04/04/2013 - 20:11 | 3410408 gaoptimize
gaoptimize's picture

2014, right?  Doubling by 2104 might be appropriate depending on demographics.

Thu, 04/04/2013 - 20:19 | 3410437 buzzsaw99
buzzsaw99's picture

His advice, "if you're Japanese, spend!

The irony of course being that is exactly what the japanese bankers and politicians want. Does Bass work for the BOJ?

Thu, 04/04/2013 - 21:40 | 3410665 BigInJapan
BigInJapan's picture

The fuck else are they supposed to do? Watch their salaries and savings dwindle until they can't eat anything but dirt?


Fri, 04/05/2013 - 01:41 | 3411268 Mind Architect
Mind Architect's picture

It isn't irony at all. The BOJ has set conditions such that you'll lose if you act contrary to their wishes.

Sun, 04/07/2013 - 13:52 | 3418783 AgentScruffy
AgentScruffy's picture

This is consistent w/ how people have reacted in history to hyperinflation. When the currency is rapidly becoming worthless they seek anything tangible to buy --for good reason. (Because their currency will be worth even less in the near future.) While Japan is not currently in hyperinflation territory they are very weak and on the road to demise of their currency, sadly.

It's one thing to spend lots of money because the central bank wants you to and you believe the propaganda that things are getting better, so you continue on blindly, with little to no savings or hard assets. It's another thing to prepare and take cover precisely because you disbelieve the propaganda.

Thu, 04/04/2013 - 20:24 | 3410445 Dareconomics
Dareconomics's picture

Japan is staring down the edge of the cliff of insolvency.  Place your bets wisely.  There will be a coordinated central bank rescue of the country if interest rates rise over 2%.

Thu, 04/04/2013 - 20:30 | 3410449 smartstrike
smartstrike's picture

If Bass had any meaningful short position on JGB, Hyman Capital would be where MF Global was last year.

He often said that he would not invest in Nikkei, which more than tells how smart he is? No, he is putting his money into US real estate just like all the other plain vanilla hedge funds to rent to public that is getting poorer every year in real terms---that's smart, really smart? Anyone wants to guess what blows up first, Japan or US residential rental real estate?


Thu, 04/04/2013 - 20:29 | 3410455 BigInJapan
BigInJapan's picture

Kaeeru Bassu izu sumahto ando richi mon! 

Thu, 04/04/2013 - 20:33 | 3410479 mt paul
mt paul's picture

bernaki to leave Fed post in 2014

will he devalue the $

on the way out the door..

Thu, 04/04/2013 - 20:36 | 3410483 Westcoastliberal
Westcoastliberal's picture

"they are essentially doubling the monetary base by the end of 2104."

Should not this be 2014 or am I stupid?

Thu, 04/04/2013 - 21:21 | 3410625 DollarMenu
DollarMenu's picture

They also spoke about 'over a two year period' - several mentions.


Thu, 04/04/2013 - 20:45 | 3410513 MoneyChasingReturns
MoneyChasingReturns's picture

Japan as a government is going to do just fine. It can print money to pay back all its loans at any moment it chooses. Its always the nieve savers who loose. As a society and economy it needs a crash to be healthy again. When young people buy the office towers, apartments, industries and means of production at low cost it will thrive. The old government and elites will print as long as it takes to hild thier values artificially high and keep the means to a recovery from the young and intelligent. Time to leave... Come back after a crash.

Thu, 04/04/2013 - 20:46 | 3410514 MoneyChasingReturns
MoneyChasingReturns's picture

Japan as a government is going to do just fine. It can print money to pay back all its loans at any moment it chooses. Its always the nieve savers who loose. As a society and economy it needs a crash to be healthy again. When young people buy the office towers, apartments, industries and means of production at low cost it will thrive. The old government and elites will print as long as it takes to hild thier values artificially high and keep the means to a recovery from the young and intelligent. Time to leave... Come back after a crash.

Thu, 04/04/2013 - 20:45 | 3410515 gridlocked
gridlocked's picture

The Fed must have $4-$5 Trillion on their books by now. The media has been saying $3 Trillion for over a year.

Thu, 04/04/2013 - 22:03 | 3410727 Professorlocknload
Professorlocknload's picture


@ grid,

I'd grant a zero could be placed behind that $3 T and it wouldn't surprise.

"Hendry says that $3 trillion in Fed monetization has not unleashed inflation. Yet. What would?"

Whatever it takes. The more they dump into it, the less GDP it buys, the exponentially larger the next infusion must be.

Hey Benny, got your ears on?


Thu, 04/04/2013 - 20:46 | 3410519 MoneyChasingReturns
MoneyChasingReturns's picture

Japan as a government is going to do just fine. It can print money to pay back all its loans at any moment it chooses. Its always the nieve savers who loose. As a society and economy it needs a crash to be healthy again. When young people buy the office towers, apartments, industries and means of production at low cost it will thrive. The old government and elites will print as long as it takes to hold thier asset values artificially high and keep the means to a recovery from the young and intelligent. Time to leave... Come back after a crash.

Thu, 04/04/2013 - 21:05 | 3410565 smartstrike
smartstrike's picture

Nikkei is going to 20,000, Kyle Bass is going to work for Herbalife.

Thu, 04/04/2013 - 20:59 | 3410551 Monedas
Monedas's picture

" I have to go sign some checks !"  .... slang expression in Mexico referring to taking a shit and the "paper work" that follows such event !   Tengo que firmar unos checques !  

Thu, 04/04/2013 - 21:00 | 3410553 Black Markets
Black Markets's picture

Printing IS defaulting.

Thu, 04/04/2013 - 21:07 | 3410571 Temporalist
Temporalist's picture

Printing is admitting you have a problem, defaulting is succumbing to your sickness.

Thu, 04/04/2013 - 21:04 | 3410563 BigInJapan
BigInJapan's picture

And if you're a gaijin in Japan, BORROW YEN, convert to dollars, move that offshore, and enjoy your free money as the Yen loan debases.


Thu, 04/04/2013 - 22:25 | 3410819 Professorlocknload
Professorlocknload's picture


Or in the US, buy income producing properties at 30 year 3% fixed and let 'er rip. Oh, and heloc that student loan (if you have one) rate down, then trickle the payments out as long as possible. Merlin the Bernank will reward you for that.

4 APR 2013. (Just gonna check back here in a couple 4 years and see how this pans out.)

Thu, 04/04/2013 - 21:10 | 3410590 kedi
kedi's picture

US foreign debt per capita is about $52000 dollars, Japan, $20000. Percent of GDP, US, 106, Japan, 45. The US deficits, foreign debt and trade deficits coninue to climb steeply. Japans saving rate is far higher and positive than the US negative rate. The ability of the average Japanese citizen to face reality and sacrifice to do what is required is far beyond the US citizen. I suspect Japan might fare through the economic dreamscape to the rude awakening and aftermath, better than the US. The wild card really being China. Fast forwarding and overtaking even the US in economic folly. China will cause great destruction in it's sphere as it succumbs. As the US will. At 55, I wonder if I will live to see the US actually take over Canada and Mexico outright. And use the military to take others down with it. I suspect the US will be defaulting on debts, before Japan. Which will explosively unravel the world as it is.

Thu, 04/04/2013 - 21:13 | 3410598 wattsnotsaid
wattsnotsaid's picture

Or maybe if Japan is successful in printing (a la USA) ,then Kyle's positions will implode. 

Thu, 04/04/2013 - 22:45 | 3410899 Professorlocknload
Professorlocknload's picture

Place your bets. I tend to believe Bass is more savvy of the real world than Ben. By degree!

Thu, 04/04/2013 - 22:07 | 3410615 Aurora Ex Machina
Aurora Ex Machina's picture

Pay attention, you're too early.

Summer at earliest.


But what a hedge:

Heads; NK invades SK, China involved, USA invokes global satellite, net infrastrcture and localised damage via weaponised relics from the cold war and carriers; China hits their "global disruption of Apple, Dell, and the MIC" and sends the kill-switch to most CPUs made in the last 10 years... (and so on)

Tails: This is a managed decline, this has been made clear, A is merely what we spend a lot of energy (time / money / gold whatever; it's all energy and the whole promises / stored / yawn parts of a material base to energy exchange) preventing, and you lack a real idea of the willpower towards that idea.


There is no Plan B, people.



((Bass is pushing his position; it's not wrong, but he has no idea about non-economic solutions. Mass-seppuku could be just as logical a solution to the issues of Japan; and if you think I'm joking, do yourself a >search fu< on oldies volunteering for the recent clean up to save the youth, and those 35% virgin numbers; the idea that the social cannot cure the economic is fucking blind, pig ignorant and ceases to acknowledge the last million or so cases where it did. Edit / Note: if you're not aware of the Japan scandal involving "old people should just die", then you're probably missing the joke.))

Fri, 04/05/2013 - 06:22 | 3411529 css1971
css1971's picture

You think China is going to help NK?

No way. North Korea is threatening the USA because someone (china) is trying to remove Kim Jong Un from office.

You're seeing a 2 year old's tantrum played out in geopolitics.

Thu, 04/04/2013 - 21:29 | 3410644 MythicalFish
MythicalFish's picture

"I hope I am wrong on this." Very noble, but I think you don't.

Thu, 04/04/2013 - 22:16 | 3410773 Paracelsus
Paracelsus's picture

Ireland- Forced nationalization of Euroloan debts,transfer of private bank debt to public debt .

Greece- Disorderly default,bond haircuts,austerity measures,probable mass exodus of young professionals. Nation stays in Eurozone temporarily but at very high social cost.

Cyprus- Forced bank restructuring,Not,repeat,not only bank bailout required.Banks are insolvent and need to be freshly recapitalized.Nation barely stays in Eurozone. UK bases are a complication to sovereignty issues.Turkey owns half of island due to military occupation. The banking industry (off-shore) may not survive,and tourism industry takes a nosedive.

Argentina- vulture hedge funds refuse to cooperate in messy bond default. Country has had financial implosions for the last century.Numerous IMF restructurings.etc.

Iceland-Banking industry defaults. Public referendum twice on transfer of debt from private sector to public sector. Bankers told to get lost. Criminal investigation of bankers for the purposes of prosecution. Highest per capita range-rover ownership on planet. 

Thu, 04/04/2013 - 22:23 | 3410796 Paracelsus
Paracelsus's picture

 I still do not understand the involvement of the Japanese intelligence services in the Chiasso incident some years back. They were sending a message,yes,but what,and to whom?

Any ZH thoughts on this now that we have a new counterfeit bond confiscation in Italy?

Thu, 04/04/2013 - 22:37 | 3410863 Izznogood
Izznogood's picture

I really like the way Kyle Bass demonstrates the debt interest payments-to-tax revenue problem. Does anyone know of charts that demonstrate on a country-to-country basis how this ratio has moved over the last couple of decades?

Thu, 04/04/2013 - 22:46 | 3410903 chindit13
chindit13's picture

Thirty-five pips on the 10-year!  Why, when I was a lad I used to have to walk through six hundred pips just to get my yield!

Thu, 04/04/2013 - 23:50 | 3411043 Aquarius
Aquarius's picture

Taking about stupidity, who could ever think up making a tree leaf "illegal"? Is this something about "Adam and Eve"? Did "God" keep the leaves when he threw Adam and Eve out of the Garden and declared them illegal? I don't understand; really, why are leaves and trees illegal?

Are snakes "illegal"?

Fig-leaves "illegal"?

Are gardens "illegal"?

It seems to me that if you elect enough stupid people to places where they should be, then eventually, everything becomes "illegal".


Because "they" haven't declared "stupid" as "illegal", er, yet!

But, then, then "they" would be out of a job;-)

Ho hum

Fri, 04/05/2013 - 01:36 | 3411262 Mind Architect
Mind Architect's picture

Look at this piece of shit Kuroda and the smirk on his face as he tries to justify destroying the wealth of millions of people. I hate these motherfuckers that get off on their power. He probably won't even have the balls to kill himself after the yen completely collapses, but I'm sure the yakuza will.

Fri, 04/05/2013 - 11:13 | 3412850 vincent
vincent's picture

I've been reading When Money Dies again.

Prices changing by the hour, and workers heading to the shops on their breaks, before prices rise again.

So, will it be price controls, or just a steady and significant rise in prices indefinitely?

Striking workers demanding wage hikes to keep up with the inflation?

Auto and electronics makers will not save them. The worlds' purchasing power continues to decline. Credit is evaporating.

They'll need to dump UST's just to buy the food and oil they need.


Mon, 04/08/2013 - 13:59 | 3422662 hardmoneyjim
hardmoneyjim's picture

How bout this for a way out. The BoJ buys up the government's debt with new mouse-click money. This debt is then magically eliminated, i.e., the BoJ forgives the debt, so poof, it is gone. (They use some accounting ruse to justify a negative net worth at the BoJ) This purchased debt, formerly held by the people, becomes new money. But what about inflation after all that new money is printed? The BoJ is also the banking system regulator, so they can control how much lending the banks do. They can therefore make the banks shrink their loan books, thus controlling the amount of money held as deposits against the loans. So the BoJ can, on the one hand, print new money and give it to the government. On the other hand, they can shrink the money supply that was created by fractional reserve banking. If they are clever enough they might be able to control money supply enough to avoid a huge inflation. Never mind that restricting bank lending would destroy what is left of economic progress in Japan. I hate to say it, but I think the Japanese sheeple will permit themselves to be screwed in this way. Comments?

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