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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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 ...

TheGermanGuy's picture

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

Abraxas's picture

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

King_of_simpletons's picture

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

Stackers's picture

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

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.

knukles's picture

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

markmotive's picture

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

CH1's picture

But what will the Japanese DO about it?

Anything at all?

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.

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.

eatthebanksters's picture

Land of the setting sun...

Jafo's picture

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


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

ajax's picture



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

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?

dunce's picture

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

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?

papaclop's picture

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

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.

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.

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.

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.

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.

kliguy38's picture

Yup......50% is just for starters.....but look at the bright gastrointestinal diarrhea thanks to the "natural" irradiation provided for their food 

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.

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.

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.....

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.

shuckster's picture

Haha Ryan is a geed with his video journals and whatnot

All Risk No Reward's picture

Nicole Foss on Finance and Bubbles

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

Weapons of Mass Debt

prains's picture

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

NewAmericaNow's picture

The bankers shall feel the people's Katanas

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.

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.

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.


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 


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 

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).

natty light's picture

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

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.

mkkby's picture

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

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.

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.

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. 

sunaJ's picture

Great info, Kyle.

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

knukles's picture

Now that's what I call Blood Lust

Tinky's picture

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

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.