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Kyle Bass: "Japanese Retirees Will Lose Up To Half Of Their Life Savings"

Tyler Durden's picture




 

While Kyle Bass notably remarks that pinpointing the end of a 70-year debt super-cycle is naive, the combination of the resurgence of nationalism (impacting trade with China) and the dreadful impact of the earthquake/tsunami (drastically changing Japan's supply chain) has secularly shifted Japan's trade balance for the worst at a time when the current account is already negative. "They are all in denial," Bass notes as the government has failed to deal with its problems over the last 20 years.

Simply put, Japan needs a Schumpeterian 'creative destruction' moment instead of the constant rolling of debts and expanding of government balance sheets to paper over the cracks. The 'moment' feels like it is now, he notes, expanding that "JPY could hit 200," as they lose control; following two decades of volatility-smoothing, the chance of a disorderly collapse are high.

Critically, he fears, "the social fabric of Japan will tear," as with one-third of the nations at retirement age, the fallout from the policies of Abe-Kuroda could cause them to "lose 30-50% of their life savings." What is perhaps even more concerning, he adds, "you are starting to see the central banks not trust each other."

At a certain point in time, "nationalist interest takes over the global [G7] kumbaya," and that is occurring now.

 

"When your debts are 24-times your government tax revenue, you have a secular decline in population, and all of the things are finally catching up to you, what happens when you have a debt crisis?"

Central Banks believe "Devaluation is 'supposedly' the way to freedom"

 

3:00 - Japan's tearing social fabric

4:30 - G7 Kumbaya unwind

6:00 - "There is no way out" for Japan - it's a matter of when not if. And "if there is no way out for them, there is no way out for the rest of us - unless we change the way we operate."

6:30 - "If there is no consequence to the US profligacy [rates not moving against them] well then they will keep spending."  -  "Central banks are enabling the spending"

7:15 - "The Modus Operandi of the west is running deficits; and what that has meant in the past is runaway cost-push inflation - and I think that is what we are going to see"

8:00 - "Investors are too complacent" - this is the single-most riskiest time to be complacent in our generation - "investing with the typical endowment model... is not going to work"

9:00 - "The insidious nature of a runaway inflation is that it bankrupts the middle class... the poor stay poor, the middle class (with savings in the banks) get wiped out, the wealthy (with productive assets) do the best"

9:40 - ... which leads to social unrest globally - and that is a problem...

 

 

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Sun, 04/07/2013 - 16:20 | 3419255 Abraxas
Abraxas's picture

They should be lucky if they loose only 50%. Let me see, there's inflation, there's confiscation, there's taxation, bail-ins, bail-outs, haircuts ...

Sun, 04/07/2013 - 16:36 | 3419296 TheGermanGuy
TheGermanGuy's picture

The subprime crisis will look like chicken-shit in the light of events to come!

Sun, 04/07/2013 - 16:36 | 3419304 Banksters
Banksters's picture

Not according to Christine MonTy Burns Lagarde

 

Lagarde: BoJ's monetary blitz will help growth

Sun, 04/07/2013 - 16:42 | 3419314 Abraxas
Abraxas's picture

Ha! Ha! Thanks for that. It would be funny if it wasn't so sad and scary.

Sun, 04/07/2013 - 16:45 | 3419326 King_of_simpletons
King_of_simpletons's picture

New World Order: Whether one saves or overspends, In the end no one will have any money left.

Sun, 04/07/2013 - 16:57 | 3419366 Stackers
Stackers's picture

Bankrupting the middle class to usher in the socialist new world order is the plan.

Sun, 04/07/2013 - 17:04 | 3419389 slightlyskeptical
slightlyskeptical's picture

I am so tired of this ignorance. Nothing that is happening is socialistic at all. Socialism would be rainbows and unicorns compared to what is in store for us.

Sun, 04/07/2013 - 17:08 | 3419401 knukles
knukles's picture

Don't forget the Rainbow Colored Artificially Flavored Variety Family Pack Skittle Shits!

Sun, 04/07/2013 - 17:15 | 3419416 markmotive
markmotive's picture

Interestingly Hugh Hendry has a somewhat different view than Kyle Bass. Both highly respected, however.

http://www.planbeconomics.com/2013/04/hugh-hendry-god-is-genius-because-...

Sun, 04/07/2013 - 17:51 | 3419617 CH1
CH1's picture

But what will the Japanese DO about it?

Anything at all?

Sun, 04/07/2013 - 18:23 | 3419780 BoNeSxxx
BoNeSxxx's picture

Long cat food....

Sun, 04/07/2013 - 18:49 | 3419861 Fredo Corleone
Fredo Corleone's picture

Kyle Bass.

Resembles my brother Sonny -- but Pop would never allow Sonny to play the FX markets. The Family played judges, cops and Congressmen; never with those Wall Street shysters.

http://af11.files.wordpress.com/2011/03/sonny-corleone.jpg

Sun, 04/07/2013 - 20:10 | 3420125 redpill
redpill's picture

People forget, there were only two things, in concert, that stopped Japan from fighting to the last man in WW2:  the atomic bomb AND their own Emporer.  It took both!  Think about that.  It is difficult to underestimate the resolve of this nation to stay the course.  This snake has been eating its own tail for a long time, and it will strech it out until the end.

Sun, 04/07/2013 - 21:43 | 3420413 eatthebanksters
eatthebanksters's picture

Land of the setting sun...

Sun, 04/07/2013 - 20:14 | 3420142 Jafo
Jafo's picture

What's invisible and smells of pet food?  A survivor's fart!

 

There won't be any cats left.  Poor Puss!

Sun, 04/07/2013 - 21:12 | 3420322 ajax
ajax's picture

 

 

I'm thinking it's time to worship cats again...

Sun, 04/07/2013 - 18:53 | 3419873 negative rates
negative rates's picture

Steal it of course!

Mon, 04/08/2013 - 01:21 | 3420868 Lore
Lore's picture

Ironic that anybody who spearheads a move to do the right thing in any respect gets shunned and ostracized.

What will it take to remove the current people clinging to power?  They are corrupt, inept and useless, or worse yet, psychopaths.  Don't elections matter anymore?

Mon, 04/08/2013 - 07:19 | 3421161 dunce
dunce's picture

To no small extent, elections were the cause of most of the problems.

Sun, 04/07/2013 - 21:01 | 3420282 dtwn
dtwn's picture

What would civil unrest look like in Japan?  As far as I know, they are a relatively peaceful country that seemed to pull together well after Fukushima and I can't remember when I heard about violent riots in Japan.  With a demographically aging population and little civilian weaponry are we going to have riots consisting of diappered-geezers with Samurai swords instead of unemployed youth with Molotov cocktails?

Tue, 04/09/2013 - 16:08 | 3428180 papaclop
papaclop's picture

The smart ones will buy gold or even bitcoin while they still can.

Sun, 04/07/2013 - 19:18 | 3419956 Spigot
Spigot's picture

I have, in the past, been interested in Hugh's monologues, but after a while it seemed he became quite pleased with himself whenever he talked. Kind of a turn off.

Sun, 04/07/2013 - 21:02 | 3420283 HardAssets
HardAssets's picture

IMO what's in store is a new global feudalism. Bankrupt the people of the world by co-ordinated destruction of currencies. Then create a new bankster global currency and the end of any hint of national governments beholden to their citizenry. LIke in the EU, the intl bankers will call the shots.

The moves beyond that involve massive depopulation by various means. We live in a freakin' sci-fi movie.

Sun, 04/07/2013 - 19:58 | 3420092 ISEEIT
ISEEIT's picture

Probably not the plan. The problem is the model employed to devise the plan. The model was based on deeply disturbed reasoning. The plan therefore is producing deeply disturbing results.

That's central planning in a nutshell and the future we are being subjected to thanks to those sociopathic morons who've fallen for the "FORWARD" bulsshit666.

Thanks assholes.

Sun, 04/07/2013 - 20:06 | 3420097 Kirk2NCC1701
Kirk2NCC1701's picture

Close, but no cigar. Actually, the real plan is to eliminate the middle class, so that they can bring back Feudalism.

The rich & powerful (families and clans) plan to retake the world. With the organized religion leaders aiding and abetting as they always have. Remember: Religion is what keeps the poor from killing the rich.

Sun, 04/07/2013 - 18:53 | 3419876 piliage
piliage's picture

Ah yes, Mme Lagarde, another worthless lawyer who has never been elected to anything who now gets to run the IMF due to EU and French cronyism. It makes Wall Street look democratic.

Sun, 04/07/2013 - 16:37 | 3419308 kliguy38
kliguy38's picture

Yup......50% is just for starters.....but look at the bright side....no gastrointestinal diarrhea thanks to the "natural" irradiation provided for their food 

Sun, 04/07/2013 - 17:16 | 3419420 tom a taxpayer
tom a taxpayer's picture

Tokyo markets open…now I can get get blowfish at Tsukiji fish market and then eat blowfish delicacy at Tentake restaurant.

http://www.youtube.com/watch?v=C7ZWpIDKOH8

http://www.factzoo.com/fish/pufferfish-blowfish-fugu-poisonous-sushi.htm...

Sun, 04/07/2013 - 20:23 | 3420172 HardlyZero
HardlyZero's picture

Seems like its always the island nations that whack their people.   I guess they can not walk across the border, so they are captive.  UK next ?  or will Australia become a debtor's prison again ?  Portugal is 50% on the water, Spain too....  get a boat just in case.

Sun, 04/07/2013 - 17:04 | 3419385 Yamaha
Yamaha's picture

What Japan needs it a bunch of "Obamas" - that would make the social fabic burn more quickly. As in - would cause them to all go out and burn their homes.....

Sun, 04/07/2013 - 18:23 | 3419783 ChanceIs
ChanceIs's picture

For sure Obama will run the US into the gorund - if we continue to let him.  I an't stand it.  However, the alternative this last time - Romney/Ryan - would have been worse.  That little geed Ryan with all of his shell games probably could have strung things out a few more years.  Then the bubble would have been much bigger.  No.  Much better witth Obama.  It will enter the embolystic state and burst more quickly - less collateral damage - more time for me to recover.

I call my COngresspuke and point out that the Chinese central bank is buying gold, oil fields, farm land and businesses.  Ours is buying worthless US debt and mortgage backed securities.  (My God will there be carnage in the house prices when interest rates move back up.)  I say...send them Bernanke and left their mid tier portfolio managers come over here and buy for us.  I can say thing like that because Joe McCarthy is long dead - but I am sure that he would see my point and exonerate me if he were alive today.

So we were over there telling Japn 20 years ago that they had to print their way out of their mess.  why we felt we had a right to advise them I know not.  At least we are following our own advice.  China must be loving this.  I really could never understand how a small country like Japan was able to kick the stuffing wout of China for the last 150 years.  Now China gets to watch Japan - and us - self immolate.

I love what America used to be.  I guess that I should get out the Mandarin For Dummies book.

Sun, 04/07/2013 - 22:54 | 3420628 shuckster
shuckster's picture

Haha Ryan is a geed with his video journals and whatnot

Sun, 04/07/2013 - 18:08 | 3419698 All Risk No Reward
All Risk No Reward's picture

Nicole Foss on Finance and Bubbles

http://www.youtube.com/watch?v=kYXA9XHFUCU

People with 50% "haricuts" (looting) will be the envy of the vast majority of people who are chopped up worse.

This is an Art of Financial War operation in play...

Debt Money Tyranny

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

Weapons of Mass Debt

http://www.keepandshare.com/doc/3324744/wmdebt-graph-3-79k?tr=77

Sun, 04/07/2013 - 19:16 | 3419950 prains
prains's picture

Knowledge has NO use if you don't know what to do with it..........

Sun, 04/07/2013 - 20:31 | 3420196 NewAmericaNow
NewAmericaNow's picture

The bankers shall feel the people's Katanas

Sun, 04/07/2013 - 20:39 | 3420225 Antifaschistische
Antifaschistische's picture

50%?   I respect Kyle's math...but if you take a 60% haircut just on your currency, and if interest rates have to rise and depress bond prices, that could be another 30%.

I think they'll be lucky when the dust settles to have 20% remaining.

Sun, 04/07/2013 - 20:40 | 3420232 Son of Loki
Son of Loki's picture

<< They should be lucky if they loose only 50%. >>

 

Agree. They will be luckier if they don't get leukemia or thyroid cancer also.

Sun, 04/07/2013 - 20:54 | 3420263 Freddie
Freddie's picture

American baby gooners and seniors will also lose half of their life savings thanks to the Afrikan muslim.  Nice job idiots.  F baby boomers and the greatest generation - the TV generation who let TV and Hollywood steal their future.  Morons.

Sun, 04/07/2013 - 21:55 | 3420459 EINSILVERGUY
EINSILVERGUY's picture

you really need to qualify your remarks.  Boomers are not a monolithic group. Not everyone sucks off the system or voted for Il Duce.  Some of us were raised by depression era kids, didn't turn on tunein or drop out. Some of us work hard and believe in self reliance , have sympathy for those less fortunate but don't beleive in supporting the parasitic class or the corporate class. Just saying 

Sun, 04/07/2013 - 21:55 | 3420462 EINSILVERGUY
EINSILVERGUY's picture

you really need to qualify your remarks.  Boomers are not a monolithic group. Not everyone sucks off the system or voted for Il Duce.  Some of us were raised by depression era kids, didn't turn on tunein or drop out. Some of us work hard and believe in self reliance , have sympathy for those less fortunate but don't beleive in supporting the parasitic class or the corporate class. Just saying 

Sun, 04/07/2013 - 23:00 | 3420641 Son of Loki
Son of Loki's picture

Yes, Freddie, you forgot to mention those poor Gooners who lost 45% value of their house, the largest single Gooner investment (aka, GI).

Mon, 04/08/2013 - 03:44 | 3421001 natty light
natty light's picture

F Tom Brokaw for sucking up to them with that POS book.

Mon, 04/08/2013 - 06:55 | 3421133 Oldrepublic
Oldrepublic's picture

@natty light on Tom Brokaw David Walsh of the WSWS had this to say regarding Brokaw:

A self-satisfied nonentity, who has made no contribution to America’s understanding of itself or the world, Brokaw was praised as having the values of the “heartland,” one of the “plain-spoken figures that lean on tradition and instinct.” The news reader was feted as something akin to a modern-day Abraham Lincoln.

Brokaw is a very wealthy spokesman for the American ruling elite, who has never to anyone’s knowledge uttered a genuinely controversial sentence or formulated a thought that would make the powers-that-be lose any sleep. In recent years he has been earning, simply in his anchorman capacity, something in the vicinity of $7 million a year. This is in addition to income gained from authoring the best-seller, The Greatest Generation, his homage to the generation that fought in World War II. Brokaw now plans to spend more time on his 5,000-acre ranch near Yellowstone Park in Montana. He will be missed by few, and remembered by even fewer.

Tue, 04/09/2013 - 22:42 | 3429439 mkkby
mkkby's picture

Freddie, you sound like a whining loser.  Stop cying and compete.

Sun, 04/07/2013 - 23:44 | 3420737 Buck Johnson
Buck Johnson's picture

You're right, they and us will loose much more than 50% when you take those variables into being.  We will be a third world of two and a half classes.  The poor, the rich and the police/govt. workers on all levels of govt. that you will have to bribe in order to get anything done.

Mon, 04/08/2013 - 00:50 | 3420833 Alexandre Stavisky
Alexandre Stavisky's picture

Forced open by M.Perry in 1868, became modern in Meiji, tried to create Greater East Asia Coprosperity Sphere with wartime imperialism, failed, lost WWII, reconstituted and occupied by SCAP MacArthur, joined CB franchise.  Renewed industrially, allowed special market access, allowed very high valued added electronics, machine & die making, consumer products,etc.  Denied war machines and large military.  Now slated for first failure of global usury collapse with follow on of other large nations.  Like a GE designed core failure.

Tip over by V.Red. Then Eurozone, Then Ukha.  Game set match Charlie Chan Bollywood.

Free Buttonwood journal will set you always on the righteous path.  Truth will mak eyou free.  Truth therefore is free.

Mon, 04/08/2013 - 01:37 | 3420885 Tabarnaque
Tabarnaque's picture

Wasn’t it in Japan that the Finance Minister said not too long ago that retirees are costing too much to the system and that they should have the dignity to hurry up and die instead of being parasite of the system??!! These financial fascists have nothing for the common people. They are psychopathic selfish that cannot see anything beyond their own personal and immediate interest. 

Sun, 04/07/2013 - 16:23 | 3419267 sunaJ
sunaJ's picture

Great info, Kyle.

I think we have started hitting the "chickens running around with their heads cut off" phase, personally.

Sun, 04/07/2013 - 17:09 | 3419403 knukles
knukles's picture

Now that's what I call Blood Lust

Sun, 04/07/2013 - 19:24 | 3419441 Tinky
Tinky's picture

Enough already with the showing off of your mastery of technical jargon.

Sun, 04/07/2013 - 17:30 | 3419489 Spigot
Spigot's picture

This interview occurred 22Jan 2013, far prior to the convulsions of 1st week April (13 sigma event) Japanese "event(s)". Sees Japanese nationalism and change of guard at BOJ as happening at worst possible time (Japanese government debt >2400% of revenues, aging population, unresolved debt, no allowance for "creative destruction" to resolve inbalances).

He mentions CBs are starting to not trust each other and that national interests are starting to overtake global cooperation efforts. Ergo national CB policies will begin to diverge and the relationships between them start to become more chaotic, etc. (notice China's snit fit over "currency wars")

He characterizes the convulsion he sees coming for all of us (sees Japan discontinuities in next18-24 mo by his guess) as the greatest this generation has ever seen, etc. Typical allocation models as overwhelmingly complacent compared to the real situation. Upper middle class will essentially be wiped out. The rich will get richer. The poor will remain poor.

Logical conclusion is "global social unrest" (said in response to interviewer's question about countries pushed into war).

IIRC he has always said the situation in Japan will be happening 18-24 months out. IIRC he has been using the same time frame since publicly articulating his stance 3 years ago. So, IMO this "time frame" is pure boiler plate. Obviously he was (3rd week Jan 2013) concerned about ABE and the new BOJ Governors efforts, and how that would play out.

IMO we are starting down the "great swirly" and Japan just pulled the plug. Everyone else will have to react/respond. Hence Japan is in the driver seat. And I agree with him that the "events" will be generational, and probably multi-generational in terms of the severity of losses.

Interestingly enough we now know that the G20 has completed its political frameworks for confiscating any and all accounts to "resolve" illiquid finanical organizations...

...just in time it would seem.

Sun, 04/07/2013 - 19:12 | 3419940 MedTechEntrepreneur
MedTechEntrepreneur's picture

One thing that I find deeply disturbing is that the Fed is essentially bypassing the congressional power of the purse by intervening in the bond market to the tune of 80b/mo (should be illegal).  It is impossible for the bond market to revolt and bring congress to it's senses when the Fed is operating at the behest of the executive branch and TPTB.

Interest rates should have already started climbing.  The Republic has devolved into a Keynesian Oligarchy.

Sun, 04/07/2013 - 19:39 | 3420023 Spigot
Spigot's picture

The Fed is a franchise of Congress. I'm pretty sure that Congress is owned by the same people who own Ben and so harmony is ensured. Its always been a oligarchy, we're all just more aware of it now. America is divided: The bottom 93% who believe the American Myth and the top 6.9% who prey on the bottom 93% and the top 0.1% who own the intermediate 6.9%.

Sun, 04/07/2013 - 20:28 | 3420186 HardlyZero
HardlyZero's picture

It has started.

Now the algos have "Cyprus", "Japan" and "Portugal" in their decisions.  That is why the Japanese post-Cyprus is so interesting.

There may be NO EXIT from this point on.

Japan is the tell....the rest will be history.

 

Cat's out of the bag.

Pandora is out of her box.

Everyone is going on vacation and golfing.

Sun, 04/07/2013 - 22:37 | 3420577 Spigot
Spigot's picture

most excellent japanese sushi

Tue, 04/09/2013 - 15:09 | 3427831 papaclop
papaclop's picture

Very well said.

Sun, 04/07/2013 - 16:28 | 3419280 Gamma735
Gamma735's picture

Kyle is the King of telling it like it is.

Sun, 04/07/2013 - 16:47 | 3419338 koncaswatch
koncaswatch's picture

But, but.. Dr. Krugman says Japan is finally doing it right.

http://economistsview.typepad.com/economistsview/2013/01/paul-krugman-japan-steps-out.html

I'm with Kyle

Tue, 04/09/2013 - 15:17 | 3427871 papaclop
papaclop's picture

Paul Krugman is either a complete idiot or a lackey of the Fed. I'm leaning towards the former.

Sun, 04/07/2013 - 16:29 | 3419282 GOSPLAN HERO
GOSPLAN HERO's picture

FEMA camps in USSA will be packed.

Sun, 04/07/2013 - 16:40 | 3419312 Winston Churchill
Winston Churchill's picture

Only until they go thru' the 'showers'.

Sun, 04/07/2013 - 17:49 | 3419605 Poor Grogman
Poor Grogman's picture

"Showers" will not be needed just wait for a hot summers day and turn the A/C off.

Most of the people will be dead by dinner time.

Sun, 04/07/2013 - 20:10 | 3420122 Kirk2NCC1701
Kirk2NCC1701's picture

But some will bribe their way out with gold or Bitcoin. Maybe the former, but more likely with the latter (invisible).

Sun, 04/07/2013 - 16:42 | 3419322 Bam_Man
Bam_Man's picture

...Voluntarily - once the EBT cards stop working, or the monthly stipend buys half a loaf of bread, whichever comes first.

Sun, 04/07/2013 - 16:37 | 3419300 badewann
badewann's picture

It was not 50 Million worth of AU. It was something like 110 Kilos worth about 5 (!) Million USD. Read this story already one or two days ago,

in a Swiss Paper. 

Sun, 04/07/2013 - 21:27 | 3420361 ajax
ajax's picture

 

 

Thanks Badewann:

Here's the article: it was 110 kilos worth approx. CHF 5.4 million ... Multiple times more money is laundered every evening at the casinos nearby - get a grip and stop circultaing ridiculous stories about gold confiscation etc. The Italian customs agents seize many times more in value of ancient antiquities crossing over into CH every year as well.

Sun, 04/07/2013 - 21:30 | 3420368 ajax
ajax's picture

 

 

Holy Shit I forgot the link:

http://www.20min.ch/ro/news/suisse/story/20454482

 

 

Sun, 04/07/2013 - 16:32 | 3419288 fonzannoon
fonzannoon's picture

runaway cost push inflation. Makes sense. He keeps saying the U.S is years away from this.  Makes no sense.

Sun, 04/07/2013 - 16:44 | 3419303 Abraxas
Abraxas's picture

Perhaps, the reason is that there are huge 'buffers' preventing this from happening in US in 1-3 years. It's an enormous animal, so it will take time for the poison to work itself through the system. Personally, I thought that 2012 was gonna be the year. That goes to show you how much I know.

Sun, 04/07/2013 - 16:43 | 3419323 Winston Churchill
Winston Churchill's picture

Go read the Shadowstats long report.

John Williams is sticking by end of 2014 for hyperinflation in the US.

Whether we have a deflationary collapse first ,is the question, that makes

hedging difficult.

Sun, 04/07/2013 - 17:09 | 3419404 kridkrid
kridkrid's picture

Hyperinflation and deflationary collapse are two sides of the same coin. We could even feel the effects of both simultaneously, I believe. We will feel inflation in the things we need and deflation in the things we own, to include our own labor. This is happening already, but it's not being described as such. Shitstorm straight ahead.

Sun, 04/07/2013 - 17:32 | 3419507 fonzannoon
fonzannoon's picture

that's how i see it. Is there any difference between gas prices at $2.00 and the average guy has no pot to piss in and can't afford it or gas at $20 a gallon and no one can afford it? Right now wages are collapsing so i don't see hyperinflation as everyone is out of work. I also don't see prices collapsing. to me right now is nasty ass stagflation without high interest rates. Probably followed by nasty ass deflation that no one will benefit from, followed by hyperinflation that will finish everyone off. Good times.

Sun, 04/07/2013 - 18:00 | 3419654 duncangraper
duncangraper's picture

 

Inflation buffers for USA

 

1)World Resrve Currency

2)Shadow Banking Liabilities

Why we're the potential last hyperinflation dominoe.  But we will lose both, eventually

 

 

Sun, 04/07/2013 - 16:43 | 3419321 Ballin D
Ballin D's picture

He seems to hedge his public statements. If you say the world's ending and youre wrong, everyone calls you a doomer and you lose credibility.

 

If you say the worlds ending in Japan while US is facing a short term recovery (specifically thinking about what hes said about housing) you win if everything collapses (blame it on Japanese crisis getting out of control) and if the world holds on for a while, youre probably going to be right about a short term recovery in the US.

Sun, 04/07/2013 - 16:59 | 3419377 Banksters
Banksters's picture

Agreed.   It is simply surreal to accept the massive monetization going on as a phenomenon that couldn't blow up tomorrow with one well placed black swan. Same goes for Europe.

Sun, 04/07/2013 - 18:30 | 3419809 DosZap
DosZap's picture

runaway cost push inflation He keeps saying the U.S is years away from this. Makes no sense.

 

Maybe not yet runaway, but definitely already IN IT.

Sun, 04/07/2013 - 21:06 | 3420303 dtwn
dtwn's picture

Whoa, MIT's Billion Prices Project inflation index just took a sharp turn upward recently.  Look at the steepness of that slope!  Too little data to tell if it is going hyperbolic yet but it sure makes a nice trend line from '08.  Would be interesting to take the second derivative of it to see how much acceleration there is.  Also, no surprise to ZHers, but it is also sharply deviating and diverging from reported CPI.

Tue, 04/09/2013 - 15:25 | 3427915 papaclop
papaclop's picture

I agree with Bass, but feel the US is only months away. Once Japan or a larger European country goes over the edge it will pull the world in like a giant toilet.

Sun, 04/07/2013 - 16:36 | 3419297 valkir
valkir's picture

Who cares about only 50 %.In USA  will loose 100 %.

Sun, 04/07/2013 - 16:59 | 3419375 Hindsight2020
Hindsight2020's picture

As much as I believe the US has serious structural problems saying 100% is just ignorant.  99.x% ok but 100% is impossible.

Sun, 04/07/2013 - 17:29 | 3419502 HowardBeale
HowardBeale's picture

He forgot to account for the residual value (1-x) of the dollar as toilet paper.

Sun, 04/07/2013 - 17:33 | 3419509 HowardBeale
HowardBeale's picture

Which brings up an interesting question: Are 1s and 0s as useful in the bathroom as a debased U.S. dollar...

Sun, 04/07/2013 - 21:38 | 3420399 ajax
ajax's picture

 

 

The word is LOSE , I repeat once more, LOSE    not loose. 

LOSE YOUR MONEY LOSE YOUR MIND.

LOOSE LIPS SINK SHIPS.

 

GET IT? GOT IT? GOOD.

Sun, 04/07/2013 - 23:50 | 3420750 vamoose1
vamoose1's picture

thank   you   so  much   for   that     my   self   contrul   gets   well    kind  of   loose   when  i   see  it   :)

Mon, 04/08/2013 - 02:22 | 3420935 Nick Jihad
Nick Jihad's picture

Oh FFS, would it really kill us to spell it "luze"? Isn't that the obvious phonetic spelling? How about "nite", just like "kite"? When are we going to reform these silly spellings?

 

Mon, 04/08/2013 - 07:28 | 3421171 StandardDeviant
StandardDeviant's picture

Cue the obligatory link to A Plan for the Improvement of English Spelling, sometimes attributed (though probably incorrectly) to Mark Twain.

Sun, 04/07/2013 - 16:38 | 3419305 Smiley
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Inflation is confiscation through dilution.

Sun, 04/07/2013 - 16:45 | 3419330 akak
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The solution to dilution is execution.

Sun, 04/07/2013 - 17:34 | 3419517 HowardBeale
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...execution.

And all we're asking is a measly 0.1%. That should rebalance things.

Sun, 04/07/2013 - 16:41 | 3419318 Deathrips
Deathrips's picture

Will loose 50% of what? Whats 50% of 0 again?

Papers worth nothing....it stings to wipe with.

 

Sun, 04/07/2013 - 21:40 | 3420404 ajax
ajax's picture

 

 

NO, will LOSE 50% ...

Sun, 04/07/2013 - 16:47 | 3419332 Milestones
Milestones's picture

My, my things are being really heated up. This crash is going to be a dozzy!!!          Milestones

Sun, 04/07/2013 - 23:52 | 3420755 vamoose1
vamoose1's picture

doozy   not   dozzy

Sun, 04/07/2013 - 16:48 | 3419335 TahoeBilly2012
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The FEMA camps are starting to sound luxurious compared to retiring on $200 a month. Is there a website showing planned amenities? We used to have bunk beds at our summer cabin and I really thought that was fun. As long as there are girls in camp, I am okay with it. ;)

Sun, 04/07/2013 - 16:58 | 3419370 Seasmoke
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The juicy steak is not real !

Sun, 04/07/2013 - 17:40 | 3419538 Henry Hub
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Here's a picture to show you what it will be like. Enjoy!

http://www.qualityinformationpublishers.com/historicalpictures/Nazi%20Co...

Sun, 04/07/2013 - 21:36 | 3420391 Real Estate Geek
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You know, technically those ARE bunk beds.

Sun, 04/07/2013 - 16:47 | 3419336 cherry picker
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It is the "social unrest" aspect he speaks about which is the most troubling and I see and hear it now.

The only thing preventing riots in America today is the "entitlements", food stamps, welfare, unemployment insurance.  If those were to vanish or be devalued and people start doing what they must simply to "survive", never mind having a job, vehicle, utilities or even deccent shelter, there will be a problem as there is a faction out there who will say, "This is crazy and we will no longer live like this."

Kyle Bass is spot on.

Sun, 04/07/2013 - 17:29 | 3419494 robertocarlos
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According to an earlier article the only way out is to make welfare less attractive. Or working more attractive.

Sun, 04/07/2013 - 17:41 | 3419559 Henry Hub
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...Or actually have jobs available for people.

Sun, 04/07/2013 - 16:49 | 3419343 CTG_Sweden
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Article:

 

"Critically, he fears, 'the social fabric of Japan will tear', as with one-third of the nations at retirement age, the fallout from the policies of Abe-Kuroda could cause them to 'lose 30-50% of their life savings.'"

 

 

 

My comments:

 

If the Japanese government distributes some printed money to a pension fund that buys stock which benefits from a depreciating yen, I guess that Japanese retirees could be compensated for inflation caused by money printing.

 

One problem in Japan is that the general public owns very little stock. So they don´t benefit much from higher stock prices.

 

Sun, 04/07/2013 - 16:53 | 3419354 hardcleareye
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Enjoy reading and listening to Bass.  Thoughtful and intelligent individual.

Sun, 04/07/2013 - 16:54 | 3419359 jubber
jubber's picture

Mike Norman Ridicules Kyle Bass http://youtu.be/zNlNiLHZB7U

Sun, 04/07/2013 - 17:01 | 3419382 fonzannoon
fonzannoon's picture

Mike Norman lol?

Sun, 04/07/2013 - 17:06 | 3419396 knukles
knukles's picture

Whodafug's Mike Norman?

Sun, 04/07/2013 - 17:57 | 3419646 ImReady
ImReady's picture

Normans the guy with a great radio face.

Sun, 04/07/2013 - 18:02 | 3419679 Bay of Pigs
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I couldn't listen to that assclown.

Sun, 04/07/2013 - 19:28 | 3419992 tsx500
tsx500's picture

he can't hold KB's jock

Sun, 04/07/2013 - 16:57 | 3419360 New World Chaos
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We will probably see a stampede out of JGB's short-term but it will be driven by foreigners and the BOJ will be able to monetize the relatively small fraction of foreign-held bonds without having to monetize the rest all at once.  The BOJ has a large cushion because 1) most of the pension money is legally tied down and the Japanese can't stampede out of it if they wanted to, and 2) The Japanese are the second-best sheeple in the world.  Willing to sacrifice themselves for evil leaders who they unquestioningly see as good. 

I could see the entire nation committing ritual seppuku in the form of a slow bleed-out and die off.  ~25% real inflation per year, no riots, no mass awakening, no Mad Max, lots of grannies eating radioactive cat food, lots of quiet desperation as TPTB drive the country deep into the ground.  Sad.

The only hope is that Japan reinvented itself twice in the past 200 years when faced with imminent doom.  It was driven by the leadership both times, though.  No chance of guillotines. 

Sun, 04/07/2013 - 16:53 | 3419361 Ignorance is bliss
Ignorance is bliss's picture

I have always wondered why multi-tenant housing is considered a good asset in troubled times. The renters can't pay, the houses get abused, the fiat money produced doesn't buy anything and taxes increase. It's not Until the smoke clears that income producing assets are viable. I would expect housing, storefronts, office complexes to collapse in price as vacancies and taxes increase. Farmland is nice, but you have to work it. In today's world that is heavy machinery and fertilizers all requiring oil and mined fertilizers, all of which will cease to flow when the currency inflates into trash. should I short Japan? Exactly how long until my earnings are lost due to Weimar inflation and taxation. I feel like captain Kirk facing a kobayashi Maru of my own.

Sun, 04/07/2013 - 16:55 | 3419363 Seasmoke
Seasmoke's picture

Becoming a billionaire sure is good for your physical looks and well being.

Sun, 04/07/2013 - 17:03 | 3419369 steve from virginia
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@Zero Hedge:

 

"Simply put, Japan needs a Schumpeterian 'creative destruction' ..."

 

The Japanese spent the years after the war aping the USA,  now they get the 'stupidity' bill. What the Japanese are going to get is simply destruction. Whatever they had which was creative is now out of reach.

 

 

 "JPY could hit 200," as they lose control; following two decades of volatility-smoothing, the chance of a disorderly collapse are high."

 

The JPY is unlikely to 'get there'. Fuel would be too costly long before JPY 130 or so. This would deflate Japanese economy. Meanwhile, depreciated JPY means uncertainty about whether oil producers accept it, they are likely to demand dollars from Japan, instead. This means ...

 

"the social fabric of Japan will tear," as with one-third of the nations at retirement age, the fallout from the policies of Abe-Kuroda could cause them to "lose 30-50% of their life savings."

 

Whatever variation is suggested by the bosses the process is the same: stealing from the elderly to support the world's automobile industry.  Problem is, supporting the cars makes the fuel problems worse which in turn requires more unaffordable credit in a vicious cycle.

 

"At a certain point in time, "nationalist interest takes over the global [G7] kumbaya," and that is occurring now."

 

This is economic harakiri for the Japanese establishment. Japan cannot win this currency war: at some point the Saudis don't accept the yen => the yen is no longer a reserve currency => China is bankrupted because of their massive (now useless) JPY position. China uses yen to gain fuel, a depreciated yen and China goes on an unforseen -- and stringent -- 'energy diet'.

 

So does Japan, btw. The managers don't understand the consequences because they don't think 'energy' or Peak Oil.

 

"Central Banks believe "Devaluation is 'supposedly' the way to freedom"

 

Central banks cannot 'devalue' anything that does not have value in the first place. Any currency is nothing more than a false promise, collateralized by worthless used cars and smog, a lifestyle that meant something in 1920 but is obsolete now.  

 

Only thing central banks do is make matters worse ... make errors and ruin their economies. Japan does not have any worthwhile collateral -- rusty auto factories and dying reactors -- the BoJ flirts with making unsecured loans, falling instantly insolvent as a consequence and trigger a bank run.

 


Sun, 04/07/2013 - 17:11 | 3419409 Ignorance is bliss
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China might be going on a real diet. I am sure everyone has read about the mass poultry executions and what about those pigs floating down the river. A country with that many mouths to feed can't afford to the loose major food stuffs easily. Pig and foul make up a large percentage of most diets. I wonder what chicken or pork go for now. If this virus keeps up they may end up not reporting it and let the virus take care of their overpopulation problem. Either that or food inflation starts real hunger games.

Sun, 04/07/2013 - 19:02 | 3419904 negative rates
negative rates's picture

In case you don't recall, they used to live off of rice completely. Mabey thought they could fatten up on pork or chicken, now they relize they can't, so who doesn't want to fatten up on foul? 

Fighting army's, that who.

Sun, 04/07/2013 - 17:21 | 3419446 hardcleareye
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SoV,

With no fuel  most of Japan's industrial and financial complex collapses (aka the motive for the bombing of Pearl Harbor), that is a given.  How long will it take for this to unfold? So were does that truly leave them, (can they feed themselves)?  And how will they respond as a culture and country? What happens to the "global economy" if the second biggest economy collapses....

I think you need to take the next step in the logic and am looking forward to reading your thoughts on this.  More fodder for the Dooms Day Dinner.   lol

 

Sun, 04/07/2013 - 17:37 | 3419526 robertocarlos
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Reply to Steve in Virginia: So the tough choice will be between a Chevy Malibu and a Lexus GS.

Sun, 04/07/2013 - 18:24 | 3419758 steve from virginia
steve from virginia's picture

 

 

 

@roberto:

 

"So the tough choice will be between a Chevy Malibu and a Lexus GS."

 

I see you have a well-conditioned-by-TV mind. You should think outside the box once in awhile. 800 million cars means an unsupportable burden of debt as none of them can pay their own way.

 

The choice so far has been to drive a car or enjoy a somewhat functional economy.

 

Peeps have been making that wrong choice over and over: the outcome is unraveling economies in Greece, Syria, Egypt, Yemen ... Portugal, Ireland, Spain ... France ... now Japan and China ... soon enough, Germany and the US.

 

The choices coming right up are more diabolic: to drive a car or eat, to drive a car or live in a peaceful country ...

 

The 'Good Old Days' are never coming back ... ever. Santa Claus is not going to come down the chimney ... and take the human race in hand and lead it to the Promised Land. It's simply not going to happen. We've burned through the bulk of our cheaply accessible capital, what remains is unaffordable. Yet we have nothing to show for that destroyed capital but waste.

 

What comes now are shortages ... permanent shortages ... as in 100 million years permanent.

 

I'd get rid of that goddamned car if I were you ... that's good finance advice.

 

 

Sun, 04/07/2013 - 17:01 | 3419383 S474NtheD3v1L
S474NtheD3v1L's picture

keep talkin' dat book kb

Sun, 04/07/2013 - 17:05 | 3419393 hardcleareye
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Given Japan's culture of conformity I wonder if you will see "social unrest" in Japan should these events unfold.

Japan has a deeply rooted culture that views waste as immoral,  the "just enough" frame of mind.  Individuality is sacrificed for the common good of the society.  If any culture can adapt to what Bass is predicting and "survive intact", with a minimum of social unrest, my bet would be on the Japanese culture.

Hmmm, what would a "post-industrial" Japan look like?

Sun, 04/07/2013 - 17:15 | 3419413 Ignorance is bliss
Ignorance is bliss's picture

I wonder if the Mayans or Atlanteans had a lot in common with Japan. Once upon a time, there was a Japan. a great civilization that ceased to exist. First came poverty then came famine, last came China.

Sun, 04/07/2013 - 17:16 | 3419422 wonderatitall
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i think japan will do what is the new paradigm blame game. its easy. blame bush and head for vacation

 

Sun, 04/07/2013 - 17:19 | 3419423 booboo
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"Hmmm, what would a "post-industrial" Japan look like?"

One huge drive in theater some where near a steaming pile of a nuke plant playing 3D Anime cartoons and serving fish flavoured popcorn.

Sun, 04/07/2013 - 17:29 | 3419495 dick cheneys ghost
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EDO v Modernity.........

Sun, 04/07/2013 - 17:33 | 3419510 Bicycle Repairman
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I agree with much that you say, but there will be no post-Fukushima Japan, if for no reason other than Fukushima is never going to end.

Mon, 04/08/2013 - 01:06 | 3420853 Alexandre Stavisky
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Social unrest?  Forgot the Kempeitai? Made the Gestapo look like pantywaists.

Sun, 04/07/2013 - 17:20 | 3419448 ebworthen
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And yet the first two months of this year billions went into equities now that they have topped.

Did people not learn the lesson in 2001?  In 2008-2009?

Apparently very few did.

Sun, 04/07/2013 - 17:21 | 3419456 knukles
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Buy moar Nickels

Sun, 04/07/2013 - 17:24 | 3419461 robertocarlos
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He actually got out but only because computers were so damn slow.

Sun, 04/07/2013 - 17:31 | 3419508 q99x2
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Lawyers losing money. Nothing wrong there.

If things go Ice9 I'm not so sure he's going to get paid either. I've never heard him speak about counterparty risk and the markets locking up. I think that would be a big problem for his company if that happened and that is why he does not address the issue but instead defers it to an effect not likely to happen until years after Japan collapses.

Sun, 04/07/2013 - 17:41 | 3419561 lieto
lieto's picture

Doesn't it just feel like we are getting close to the shit show really getting going?

Japan having to halt trading in their bond pits the other night for instance?

Cyprus?

We'll see.

Even though things take longer to play out than most of us think possible big cracks are appearing in the facade of, all is well.

Kyle Bass is honest enough to point to them and make the honest call of describing what he sees in a dishonest world.

For that, I for one thank him.

 

 

Mon, 04/08/2013 - 03:10 | 3420971 Pareto
Pareto's picture

I think the black swan is or will be a rate of change thing rather than a specific crisis event.  If black swans are, by definition, unanticipated, then I think that the black swan won't be so much about "what" as it will be about How Fast".  I think things are going to occur like infinitely quicker than most people think.  Like super fucking fast - commensurate with the magnitude of the size and scope of the derivatives market blowing up.  Like over a long weekend.  As seems to be the case since Lehman. 

Sun, 04/07/2013 - 17:47 | 3419590 HowardBeale
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I think Bass has it bassackwards: The U.S. does NOT have longer than Japan, and, in fact, will replace Japan as a sacrificial lamb that will allow decent nations to come together and solve the truly worldwide problem.

It will come about due to three things: roles historically played by the two countries, the level of public awareness and instantaneous access to information, and the current roles played by the two countries, the U.S. being a parasitical blight on the planet via its financial mafia and high-tech genocide machine; Japan being a model of advanced civilization and a producer of all things quality. I'm not even playing the devil's advocate here. The world understands these things, and the next great black swan will be: The world chooses NOT THE U.S. How does that happen? I don't know. But somehow I think it happens.

Sun, 04/07/2013 - 18:55 | 3419877 Ropingdown
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The US has played deficit consumer to Germany's, Japan's, China's, Korea's, and Sweden's export economies.  That's over.  And we've got plenty of farmland, energy, and water.  And if we don't have enough, we've got Canada next door.  We may have hard times, but we easily still have a winning hand if Congress stops the debt machine and allows us to deflate a bit into the reset.  IF.

Sun, 04/07/2013 - 19:31 | 3420001 DollarMenu
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RD: you say "if Congress stops the debt machine".

That can not happen, the entire system is built on the debt system foundation.

Congress is the epitome of that system's function, completely captive by those who benefit from the debt.

I don't know how we get from here to there, but it won't be by any governmental moves, rather in spite of government and it's operations.

Sun, 04/07/2013 - 17:49 | 3419601 IridiumRebel
IridiumRebel's picture

That's it? I'm think 80% at least.

Sun, 04/07/2013 - 17:51 | 3419610 buzzsaw99
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The wealthy have "productive assets"? Name one. All I see is them selling bullshit stocks to gullible outsiders. Hardly productive.

Sun, 04/07/2013 - 20:19 | 3420156 Kirk2NCC1701
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1. Commercial real estate. They're buying, selling and refinancing like crazy. You'd know this, if you knew anything about the Escrow and Title business. Admittedly, not all locations are equal.

2. Agro-businesses. Just ask Monsanto.

Sun, 04/07/2013 - 17:55 | 3419630 QQQBall
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he hits it well at the end. In Socal the apt investment market is soi hot, the little guy or guys are kind of being squeezed out. Multiple "all cash," non-contingent offers... the rich/more well-off  are levering up into productive assets; the MC in cash is seeing their purchasing power diminish not just in relative currency terms, but also in absolute terms of asset prices. You could see how someone would just buy a nice home with low IR assuming the payments are painless; or they could leave their deposits in CITI and wait for them to be confiscated to bank stock. :)

 

 

Sun, 04/07/2013 - 19:22 | 3419960 smartstrike
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It's ironic - no - real estate prices in Cali should be going down as ALL the rich were supposed to vote with their feet and move out to low tax states like Wyoming, Montana, Idaho, North Dakota and other such undesirable states with low quality of life.

Sun, 04/07/2013 - 18:00 | 3419656 jim249
jim249's picture

The yen used to be much higher than 200 to the dollar back in the early seventies. Remember those days? Cheap cars, motorcycles, stereos and more. Japan was booming. Than the USA had to put a stop to that because the US corporations were suffering. It is all one big global balancing act on a continuing basis.

Sun, 04/07/2013 - 18:07 | 3419703 ebworthen
ebworthen's picture

Banks and central bankers have made it clear they believe stealing your savings is moral, ethical, and justified.

Governments have demonstrated over the past five years that punishing savers with ZIRP, NIRP, and currency debasement while rewarding corporations with bailouts and not prosecuting fraud is their agenda.

There is no reason for any individual to believe that any asset they possess, including their life, will not be taken from them.

Sun, 04/07/2013 - 20:26 | 3420187 Kirk2NCC1701
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And yet private citizens get branded as tax-dodgers, criminals and Oligarchs, when they try to expat their assets. They're just "people". Unlike the Other people: Multinationals.

Sun, 04/07/2013 - 18:08 | 3419709 Shaten
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Any nation that issues debt in the form of bonds can not tolerate the lack of inflation. Japan's fundamental sin has been the lack of inflation. If they can cause controlable inflation the goverment can save itself.

Of course for savers and citizens the position is quite the opposite.

Except the citizens are the ones who demand the goverment to borrow the money.

No virgins in this.

Sun, 04/07/2013 - 18:09 | 3419716 scraping_by
scraping_by's picture

"the dreadful impact of the earthquake/tsunam/nuclear disaster..."

Fixed it for ya.

Though to be fair, the real cost of the nuclear part is yet to arrive.

http://www.telegraph.co.uk/news/worldnews/asia/japan/9410702/Nearly-36pc...

 

Other than that, the idea that a globalized Japan will do better than a mercantilist Japan defies history. It was as a nationalist economy subsidized into foreign economies that Japan grew wealthy and arrongant.

They cut too deep, of course, strangling their trade partners until they were economic colonies. When the neoliberal ideologues convinced them it was necssary to be as defenseless as the Americans, mostly in financial trade, was when the zombies rose. I think they're trying to get back to their glory days.

Sun, 04/07/2013 - 18:22 | 3419775 q99x2
Sun, 04/07/2013 - 18:21 | 3419777 KickIce
KickIce's picture

Another ZH article with a typo, should read will lose everything.

Sun, 04/07/2013 - 18:27 | 3419797 tom
tom's picture

I'm actually expecting the opposite, that this huge QE relative to GDP will turn out to be a dud. The private sector, instead of accumulating JGBs, will accumulate yen cash bank deposits, and not spend any more. The japanese won't panic and sell yen, and there aren't enough foreigners holding yen assets to create a chaotic dump. I could be wrong, but that's my sense of how it will play out.

Sun, 04/07/2013 - 18:45 | 3419846 dootyfree
dootyfree's picture

Japan will never have a debt crisis as long as they issue debt in their own currency...... Stop fear mongering!!!!!  Ridiculous...

The only fear is hyperinflation... and with minimal chance of achieving full employment... I doubt it.

Sun, 04/07/2013 - 20:10 | 3420111 tom
tom's picture

Lots of countries have had debt crises with debt issued in their own currency. Most recent biggie was Russia default on local-currency debt in 1998.

In countries that lack independent central banks, it's possible to have a local-currency debt crisis and not default, by forcing the central bank to buy all the debt, so that instead of default you have hyperinflation. Which is generally much worse than default.

The problem with you MMTers is that you're so excited to discover some fact that you think is little understood, like the possibility of forcing the central bank to buy all the local debt in a debt crisis, that you think you're some kind of Columbus making this great discovery for the first time, and don't bother to think it through to reach the obvious conclusion that actually everybody knows and it's beside the point.

Dingbat.

That said I'm skeptical that Japan will have a local debt crisis or inflation anytime soon. I see more of the same mediocre stagnation and very gradual impoverishment of the middle class ahead, as far as the eye can see.

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