Kyle Bass Warns "There Is No Way To Protect Yourself If US Treasuries Default"

Tyler Durden's picture

"If the politicians lead us into a 'prioritization of payments' situation for Treasury Secretary Lew or an actual missed payment, there is nothing you can do to protect yourself from that!" are the ominous words that Kyle Bass uses to describe the farce that is rapidly approaching (and for now being ignored by stocks). Bass went on to pull no punches in his "disappointment" in JCPenney's performance (and dilution) coming as close as he can to saying "sell." But his piece de resistance was a dismal destruction of any silver lining for Puerto Rico and the significant implications that will have on Muni bonds in general.


On Default risk and "Un-hedgeable" implications:


On JCPenney - "Disappointed" - "didn't belive they needed to raise the capital... and now they have diluted us over 30%"


On Puerto Rico and the threat to the entire Muni market - "you look at their finances and you can only say - I have no clue how this can exist for very much longer"

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Shell Game's picture

LOL, here's your headline Fonz...

King_of_simpletons's picture

BUT, there will be no default.

You see, we are led to believe that there will be a default. It can't happen. It won't happen.

I am truly thinking of joining the Pro-Yellen bandwagon. 100 years of the Fed and the only thing to show for are a few bubbles here and there. Nothing catastrophic.

I don't think there is ever going to be a financial armageddon people are envisoning.

Go Yellen. Pump it up.

Max Hunter's picture

Interesting. I can think of a couple ways right off the top of my head.

HoofHearted's picture

I've got the biggest man crush on Kyle Bass you can have, but he's beginning to let me down.

I never understood why he would put anything into JCP and said so from the beginning.

And now saying there is no way to hedge the default? I can think of several ways, but none of them involve shuffling paper around. You'd have to be in real assets, and Kyle is there in many ways. Maybe part of the questions was cut off. I still want to love Kyle, but he is just losing me recently...

TruthInSunshine's picture

Anyone who truly believes that there will be any default on U.S. debt fails to appreciate the great kabuki theater that is the false left-right paradigm of our faux republic, and the nature of the Matrix, generally speaking.

They've already worked out a deal that will let the banking/WallStreet-MIC-CronyComrades feast the expense of the actual productive class.

Criminals don't throw themselves (through their installed puppets) out of power, don't 'ya know...

Leonardo Fibonacci2's picture

"Criminals don't throw themselves (through their installed puppets) out of power, don't 'ya know..."


But pitchforks can sure prick 'em real hard!!!!!

Muppet Pimp's picture

Puerto Rico would be a great turnaround story in the right hands.  They have a beautiful coastline, potential to be a trading center for the carribean, great fishing.  It is one of lifes great mysteries why Puerto Rico has not lived up to its potential.  They even have a little rainforest and some elevation.  It is a big job, but could be something very special.  In the right hands, something very very special indeed.

Good airport infrastructure, cheap labor, bigger than all the other pissant islands, some cool history.  Could be vaction land.  Lots of flights.  Build some big ass casino resorts with nice marinas.  dont know the seas nearby, but ther is deepwater and presumably some tuna grounds.  Do some big prize tourneys.  It is a real diamond in the rough.

Based on my conversations, they are not all that into 51st statehood.  They might be all about being an offshore confederate state though. Their flag is curiously similar to both texas and cubas.

akak's picture

Plus, in Puerto Rico they have all those blood-thirsty, diabolical chupacabras running around, and everyone knows how the banksters just hate competition, especially when it comes to blood-sucking.

Squid-puppets a-go-go's picture

one question, king of simpletons...

If there were no bad consequences for increasing the money supply, why do governments in good financial health strenuously refrain from the practice?

MisterMousePotato's picture

Hey ... I, too, am a simple person. With a simple question. Why, if OvomitCare is so fucking great, do they have to force people to sign up at the point of a gun?

WonderDawg's picture

And why did Congress exempt themselves and a bunch of other federal employees?

PP's picture

On Oct/09, China signed 350 billion RMB / 45 billion Euro currency swap with ECB! A new bretton wood system is coming! this is very shock news!!!!!!!!

J Pancreas's picture

45 billion is chump change in the grand scheme of things. Better to start small I suppose, its gotta begin somewhere. Source?

Richard Head's picture

Why haven't they lived up to their potential? The place is full of Puerto Ricans!

Serenity Now's picture

It's a welfare state.  They don't have any potential to live up to.  

enloe creek's picture

sounds like new jersey really except NJ has highways and proximity to NY so how about we let PR be and work on jersey
or ohio or oregon or michigan

IndyPat's picture

Yikes! Poor choice of venue.

Grassy knoll sends a better signal....or has better "optics" as they say...

Lost My Shorts's picture

Hey, that's great, the Alamo thing.  I would suggest the following reading as preparation:

Not all your problems come from socialists in Washington.  But go ahead and secede, we are rootin' fer ya.  No civil war this time.  Kick ass going away party, promise !!

BlankfeinDiamond's picture

Yes, I hear that the armed Texans will be meeting in the Alamo's basement.

Harbanger's picture

Since time and memorial Kings in power exist by grace.   The Lord controls all, gives us free will and uses his enemies for his purpose.  Christ was crucified by the greatest power the world had ever known.  The same power served the Lords purpose by spreading his Gospel.

I am a Man I am Forty's picture


Lost My Shorts's picture

On the other side there is Jimmy Cliff:

They tell me of a pie up in the sky

Waiting for me when I die

But between the day you're born and when you die

They never seem to hear even your cry.

HoofHearted's picture

Look, a default is inevitable, whether it is an honest one or through inflation. I don't believe we'll see a default on US debt within the next ten days, though I'd welcome it. Things would suck for a while, maybe a few years even, and then we could pick up the pieces and start over. My guess is it has to get a helluva lot worse before the politicians allow the reset, though. It seems bad everywhere, but I'm confident it will get a lot worse...

JLee2027's picture

If that's true, then announce the deal.

I agree it's hard to tell what's staged and what's not. But some in the House are not kidding around. Is it enough?

sessinpo's picture

TruthInSunshine    "Anyone who truly believes that there will be any default on U.S. debt fails to appreciate the great kabuki theater that is the false left-right paradigm of our faux republic, and the nature of the Matrix, generally speaking."hat p



And what makes you think there wouldn't be paradigm or some other paradigm with a default?

The true left right paradigm works regardless of what happens to us, as long as it doesn't threaten them.

TruthInSunshine's picture

Can you describe what this new paradigm will be & how it will unfold?

Otherwise your statement/question is complete conjecture.

Inertia is a potent force.

Who or what is going to "undo" the present structure, structural theft - and when?

Everyone (well, most) are getting caught up once again in the pre-scripted Panem et Circenses.

edit - I don't understand why anyone is getting pissy for your stating what you did, nor for my asking you a sincere question (i.e. What will this new paradigm be and how will it unfold?).

Squid-puppets a-go-go's picture

Criminals don't throw themselves out of power, true. But factions split, and with such imbalances being fostered by the Fed et al, the time is so so juicy ripe for a faction to secretively position itself to betray and oust the primary faction 

..and have the primary productive class beleive them to be heroic for doing so

Rick64's picture

Why is no one talking about how the dollar is gaining strength while we are facing default???  This is a market correction which will probably coincide with the dog and pony (debt/budget) show. 

edwardo1's picture

The problem Kyle has is that he's a professional who can't bring himself to get off the treadmill. The event horizon of the black hole is going to suck everything into its irresistible gravitational field and the only way to get through to the other side without getting crushed into something so small that it can't be detected without a very powerful microscope is to not have one's assets in the system.

One must pull one's chips off the table and convert them into tangible wealth not paper proxies denominated in a currency that is destined to have a few zeros lopped off it. Kyle knows this yet he plays in the (most rigged) casino (around) and gambles on crap like JC (we can't make a stinking) Penny. Gold, Kyle. Gold. Get physical and look up in ten years. You said something like that earlier this year, but it appears you may be having difficulty following your own advice. With that in mind,

This one's for you:

Kyle Bass is hedging his bets

Says gold is as good as it gets

"Just look up in ten years"

You'll avoid lots of tears

While others have drowned in their debts.






fonzannoon's picture

Kyle has made it clear that the best assets to own going forward are oil wells and multi family apartment complexes. So there you go. Just get yourself one of those. What's the problem?

Wahooo's picture

Oil wells and apartments, yep, that's in everyone's 401k. We are fucked.

fonzannoon's picture

Do you think Kyle has a 401(k)?

greatbeard's picture

>> Kyle has a 401(k)?

Why not?  It's a huge tax dodge for the uber wealthy.  Romney certainly had a huge one.

fonzannoon's picture

That was not a 401k. Not even close.

Troll Magnet's picture

yeah but if you end up with deadbeat tenants...

in4mayshun's picture

I have literally already seen people exchanging rent-for-labor in the cities near where I live in Ca. True capitalism will always rise to the surface. (Eventually)

Theosebes Goodfellow's picture

~"I have literally already seen people exchanging rent-for-labor..."~

It'll have to be that seeing as getting paid rent money in phony-baloney completely devalued US Dollar bills ain't gonna' cut the mustard. So is one to become a share-cropper landlord or just own the tenants' asses outright? Methinks the slumlord idea may not be such a good one. Now owning farmland for sharecroppers to come work would be a much more viable business proposition.

TruthInSunshine's picture

No one knows what the future holds, but both of the asset classes you mention have been subjected to vicious and sustained episodes of value destruction.

The world economy is a complex mechanism with many moving parts, affected by many unforeseeable events, and while it's good & well to attempt to hedge against risk of wealth destruction by acquiring stakes in the two asset classes you mention, there is no holy grail that's a "sure thing."

The inevitable boom-bust cycles inherent in an article of faith fractional fiat reserve system is a literal minefield for even the most savvy person seeking to protect & preserve wealth.

As long as a select few have the power to conjure monopoly fiat from thin air, at zero cost, and directly influence how it's used and to whom it's distributed, the economy is criminally rigged.

"Give me control of the volume of money & I care not who writes the laws."

tarsubil's picture

He has pallets and pallets of nickels. Anyone can collect those. My sister has a crazy uncle tars nickel jar for her kids.

SubjectivObject's picture

So what's the rationale for holding a large mass of US nickels?

Will it become inflation's penny?  Or?

Swarmee's picture

The idea is that inflation will make the Ni and Cu content of the coin more valuable than the face denomination, and worst case, still worth the $0.05 face value. Think hoarding Ag quarters in 1963. Also based on the idea that in a currency redenomination the coins would not be revalued, thus retain their purchasing power vs printed paper fiats. While the redenomination concept is sketchy, there was a point in the last two years where the melt value of nickels did technically exceed face value by about 20%. It's a long term play at best and a hell of a weighty way to hedge currency devaluation.

prains's picture

sounds like Kyle lives in Texas

in4mayshun's picture

What tipped you off?
It wasn't the tag that said "Larue Texas- Live" on the TV was it?

prains's picture

yeah i know level 4 sarcasm can whiff

Serenity Now's picture

I ordered my oil well from Amazon.  Should be here in 3-5 days!  Yay!  

donpaulo's picture

I agree Hoof, I started losing interest when Kyle said there wasn't anything the "average" guy could do about the coming troubles.

Really Kyle. Thanks for the update. Do nothing...

TruthInSunshine's picture

Striving for self-sufficiency, in whatever form that takes, given one's passions, aptitude, skills, resources & willingness to learn & adapt, is the best hedge against loss (during busts, especially since the self-reliant are less likely to have assets that are able to be debased) and enabler of the ability to accumulate & preserve wealth.

The more valuable (i.e. in-demand & scarce) the skill(s), the better it/they will help you accumulate & preserve your wealth.

I refer to this as "in sourcing."