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Kyle Bass On China's "Contraction" And "The Fed's Worst Nightmare"

Tyler Durden's picture


Via Robert Huebscher, originally posted at Advisor Perspectives,

For the last several years, nobody has been more outspokenly bearish on Japan than Kyle Bass. In a recent talk, Bass reiterated his doubts about Japan’s chances of averting a debt crisis. What’s more, he also said China’s economy will fall below expectations.

Bass changed one aspect of his outlook on Japan. Instead of predicting a collapse of the Japanese bond market, he focused on a severe weakening of the yen – without predicting when that might happen.

His predictions for China were equally distressing. He said that its banks will be saddled with non-performing loans and that its economy is actually contracting.

“I don’t think the markets are discounting what’s really happening in China,” he said.

Bass is the founder of Hayman Capital, a Dallas-based hedge fund. He was featured prominently in Michael Lewis’ recent book, The Big Short, for profiting from investments during the sub-prime crisis, which he accurately predicted.

He spoke on May 19 at in San Diego at the Strategic Investment Conference, which was sponsored by Altegris and John Mauldin.

I’ll look at Bass’ predictions for Asia’s two biggest economies – and how Bass believes investors can profit from their plights.


China’s economy isn’t just slowing down, according to Bass: It’ contracting. While China’s published rates for annual growth are still positive, Bass said the nation’s economic growth was negative from the fourth quarter of 2013 to the first quarter of 2014.

That is a result of excessive government spending on unproductive sectors of the economy. Bass said the People’s Bank of China (PBoC) has been more aggressive in its quantitative easing (QE) that the Federal Reserve has, but much of that money has gone into unproductive credit expansion.

China’s banking assets have grown to over 100% of its GDP in the last three years, according to Bass. If the U.S. had engaged in similar policies – which he said would translate to $17 trillion in lending over that time period – it, too, would have achieved more than 7% GDP growth.

China’s banking assets now total approximately $25 trillion, or almost three times the size of its $9 trillion economy. Its low default rate on bank loans – about 1% – is about to rise, according to Bass. Much of that lending is construction-related. Bass said that 55% of China’s GDP growth has been in the construction sector. The marginal return on those loans must be very small, he argued.
“A rolling loan gathers no loss,” Bass said, “and that’s what’s been going on in China for the last few years.” He said it is impossible to believe China could “manipulate” the inputs of its financial system without losing control of the outcomes.

Deflation is also threatening China. Bass said that its GDP deflator is now below zero. He expects the PBoC to engineer a devaluation of the renminbi as a way to stimulate exports and avert further deflation.

Bass said that if non-performing loans go from 1% to historical norms “somewhere in the teens” with loss severities of 100% for the worst loans, then China would delete its $4 trillion of foreign exchange reserves. Bass implied that China would need those reserves to stabilize its banking system, though he did not say so.

China’s leaders are fully aware of the dangers its economy faces, Bass said, and they hope to slow growth in a measured fashion, including through the restructuring of its banking system. “The jury’s out whether or not they can do it,” he said. “We actually believe they might be able to do that and that GDP [growth] is just going to slow down a lot more than people expect.”

“I’m not saying it is a calamity, a disaster or it’s going to end badly for the world,” Bass said. “All I’m saying is China is slowing down a lot faster than people think, and you need to think about how to position your portfolio for this.”

Bass advised against shorting Chinese equity as a way to capitalize on his forecast. Instead, he said, investors should look at China’s trading partners – Australia, New Zealand and Brazil. Those countries will be forced to loosen their monetary policy, raising rates and creating carry-trade opportunities.


For several years, Bass has maintained that Japan faces an imminent crisis in its bond markets – an uncontrollable upward spike in interest rates. He has been wrong. In this talk, however, he focused more on what will happen to the yen.

Bass expects Japan’s reform program to fail. That program is based on “three arrows”: aggressive fiscal policy, which is causing Japan to run a deficit that is 10% of its GDP; aggressive monetary policy, which is the “Abenomic” pursuit of QE that has doubled the monetary base in pursuit of 2% inflation; and structural reform, which Bass said hasn’t happened and isn’t likely.

None of those arrows, either individually or in combination, will be sufficient to normalize the Japanese economy, according to Bass.

Japan recently instituted a consumption tax, which Bass expects to push inflation up to 3%. But that will cause real yields to be negative, since Japan’s 10-year bond now yields approximately 60 basis points. Bass said that would lead to selling of Japanese government bonds.

The Bank of Japan (BoJ) might step in to buy those bonds, he said, effectively monetizing the debt through QE. Japan’s QE is enormous relative to that of the U.S. Bass said Japan’s is 140% of tax receipts, 170% of its fiscal deficit and 14% of GDP, versus 13% of tax receipts, 62% of fiscal deficit and 2% of GDP in the U.S.

But that QE, he contends, will cause the yen to depreciate.

“It’s my supposition that at some point in time, once the currency depreciates enough and capital flows leave Japan’s current account that you can’t hold the bond,” he said. “When this happens I don’t know. But I can tell you this: The yen is going to do nothing but weaken from here.”

Bass said the BoJ is already the primary source of liquidity for Japan’s bond market. When it recently stepped away from the market, not a single bond traded for a day and a half, according to Bass.

One way out of this predicament would be to allow interest rates to rise. But Japan can’t afford that. It already spends 25% of its tax revenue on interest expenses. A hundred-basis-point increase would cause the country to spend all of its revenue on interest.

Japan has been able to pursue QE because it ran a current account surplus for the last 31 years. Bass said that string has ended, and Japan’s balance of trade is continuing to worsen. This creates a paradox for Japan, he said. Either it must buy foreign bonds in order to weaken its currency, or it must invest in capital goods (machinery and equipment) to foster the “animal spirits” that would stimulate growth.

Either way, Bass said the money would have to come from the banks, as they sell their government bonds. That will force the yen to weaken.

Implications for the U.S.

With the Fed tapering and both China and Japan’s currencies likely to weaken, the net impact on the U.S. will be deflationary, Bass said. That trend will be accelerated by the improvement in the balance of trade for the U.S., which had its current account deficit shrink due to increased hydrocarbon production.

The crucial moment will come when the U.S. reports a sub-6% unemployment rate, meeting the target it has set for normalizing its monetary policy by ending QE and raising rates. He predicted that will come in July.

That will be the Fed’s “worst nightmare,” he said.

Raising rates would stifle growth and recreate unemployment problems, which would be disastrous politically, according to Bass.


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Mon, 05/26/2014 - 21:38 | 4797101 HUGE_Gamma
HUGE_Gamma's picture

like MH370.. it just doesn't add up

Mon, 05/26/2014 - 21:52 | 4797155 TeamDepends
TeamDepends's picture

In both cases, simply ask Rolls-Royce what's going on.

Mon, 05/26/2014 - 22:08 | 4797206 DoChenRollingBearing
DoChenRollingBearing's picture

I respect Kyle, and he may be proven right in the end, which may not be too far away.  But, gold and the Asian markets are not sweating anything (gold stable, Asian stocks are up).

Jim Rickards smells deflation coming too...

Mon, 05/26/2014 - 22:10 | 4797218 Dr. Richard Head
Dr. Richard Head's picture

His premise on his conclusion leaves me scratching my head. QE tapering would appear to be a misnomer, unless you of course believe Belgium is that hungry and has the wallet for that much US debt.

Mon, 05/26/2014 - 22:22 | 4797258 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Dear CBs, printing your way to prosperity does not work!

Mon, 05/26/2014 - 23:18 | 4797347 markmotive
markmotive's picture

Kyle may get his wish after all.

Marc Faber: China's Colossal Credit Bubble Is Deflating

Mon, 05/26/2014 - 23:37 | 4797388 SafelyGraze
SafelyGraze's picture

kyle bass is always better when he youtubes than when he's in print

and hearing him say 'optical backstop' in person is to die for

the university of texas endowment 

Mon, 05/26/2014 - 23:42 | 4797399 Pinto Currency
Pinto Currency's picture


Prolonged low interest rates cripple an economy - research 'capital based macroeconomics' and 'time preference'.

There is no recovery from low interest rate policy as it mal-structures the economy such that it cannot function properly and eventually collapses.

There needs to be an orderly write-down of debt and shuttering of the too big to fail banks which will blow up when the write-down occurs.

Then the central bank debt-based money needs to be replaced.

Tue, 05/27/2014 - 00:02 | 4797442 SafelyGraze
SafelyGraze's picture

+1 for "mal-structures"

orderly write-downage and shutterfaction .. which will upblow ..

too big to fail seems due for an upgrade .. maybe "having already failed but still being inflated even bigger"

Tue, 05/27/2014 - 00:06 | 4797446 prains
prains's picture

kyle's forehead is getting bigger or his hair is getting smaller, this can only mean one thing.......he's in finance of some description

Tue, 05/27/2014 - 01:36 | 4797545 Bay of Pigs
Bay of Pigs's picture

"With the Fed tapering"

Fuck off...

Tue, 05/27/2014 - 01:53 | 4797557 Spitzer
Spitzer's picture

I've almost lost all my respect for Kyle Bass. He is a USA Inc bull. Even though its the US's creditors that he is so bearish on.

So Kyle, how does that work ? China and Japan are going to burn to the ground before they sell some US debt ? Yeah right

Tue, 05/27/2014 - 01:58 | 4797560 Yen Cross
Yen Cross's picture

 You're a little housebroken Europeon. You just got what's left of your manhood handed to you this weekend.

 What are you going to do 'tough guy' ? You've got a 30% margin of dissent?  I hope you're Scottish.

Tue, 05/27/2014 - 02:58 | 4797597 Spitzer
Spitzer's picture

I am not a Eurpean you fool

Tue, 05/27/2014 - 03:06 | 4797601 Yen Cross
Yen Cross's picture

 I thought you were Eurpeon?  My Mistake.

Fri, 06/06/2014 - 02:51 | 4829221 I MISS KUDLOW
I MISS KUDLOW's picture

u guys r mising the end game scenerio

Tue, 05/27/2014 - 03:07 | 4797603 Ghordius
Ghordius's picture

Yen Cross, just one little thing: our electoral system allows dissent. all those dissenters get seats in the EU parliament, for example

we even have national parliaments where fistcuffs happen, often between dissenters from various sides. manly enough for you?

Tue, 05/27/2014 - 03:10 | 4797604 Yen Cross
Yen Cross's picture

 Just let me play with him Ghordo.  I'm having some fun with the Eur/peon. :-)

Tue, 05/27/2014 - 10:38 | 4798264 GardenWeasel
GardenWeasel's picture

Uh, actually, it looks like your just being an ass.

Tue, 05/27/2014 - 08:03 | 4797799 DerdyBulls
DerdyBulls's picture

Does voting matter in Europe? Congratulations.

Tue, 05/27/2014 - 02:24 | 4797573 Ahmeexnal
Ahmeexnal's picture

Yep. Kyle should worry more about the "contraction" of his hairline than that of China's economy.

Tue, 05/27/2014 - 11:40 | 4798532 Panafrican Funk...
Panafrican Funktron Robot's picture

"printing your way to prosperity does not work!"

Printing your way to nominal prosperity does work.  

Mon, 05/26/2014 - 23:09 | 4797337 Buck Johnson
Buck Johnson's picture

Yea and not the Fed giving Belgium money to buy our debt.  We are done.

Tue, 05/27/2014 - 00:16 | 4797459 Tabarnaque
Tabarnaque's picture
Interesting. Bass is indeed a smart guy. Although, humbly disagree with a few points:   First: I don't think that the US can raise interest rates in any meaningful way without collapsing the OTC derivative market, the US government budget (debt service) and collapsing the US economy (which lately looks like turning back into recession mode).   Second: There are founded suspicions that the Fed is in fact not tapering but expanding its QE through proxies such as Belgium.   Finally, we have to keep in mind that in the global picture both force of inflation and deflation are present everywhere all the time. We have clear evidence of inflation in; food, health, energy, tuition fees, rent, house prices etc, etc... If there is deflation it is in non performing loans write offs, businesses closing down, etc. So I bring again my point of a stagflation; general inflation with slowing down economy.    No matter what Blass says, I haven't come across any deflation where I live. Prices of everything are going up like crazy.
Tue, 05/27/2014 - 09:16 | 4798012 tarsubil
tarsubil's picture

In our magic money world, cheap credit will lead to a steady increase in prices. The subsequent credit implosion will lead to a sudden drop in prices. Schiff is right to say prices do not inflate or deflate. Credit inflates and deflates.

Tue, 05/27/2014 - 20:46 | 4800305 mkkby
mkkby's picture

We had a credit implosion in 2008.  Did you see prices decrease?  No, you didn't.

Why?  Because businesses have gotten very good at matching supply with falling demand.  Hell, they've had the last 40 years to practice.  And those that couldn't react fast enough are gone. 

Sure, houses came down -- but not rent.  And the banks/fed have pulled out all the stops to ponzi that back up.

You'll lose a lot of money following Shiff.  He only half understands what's going on.  Fatal.

Tue, 05/27/2014 - 11:48 | 4798566 Panafrican Funk...
Panafrican Funktron Robot's picture

Yep, the idea that the Fed can meaningfully pull back from continuing to increase the money supply is just silly, unless the purpose is to intentionally re-crash everything in order to mop up more tangible assets.  

Tue, 05/27/2014 - 20:42 | 4800285 mkkby
mkkby's picture

I have a lot of respect for "Nickels" Bass... but if he thinks the US fed will raise rates this July he is smoking some STRONG weed. 

Everyone knows higher rates kills off the fake recovery and probably forces every bank to need another bailout.  Therefore, they will print until forced to stop.  Forced to stop means some kind of monetary crisis.  That won't happen as long as every other large central bank is competing to devalue their currency at the same time.

Protect yourself with hard assets.  And stocks if you can stomach the risk.  They'll keep a bid under stocks as long as they can to keep the sheeple hoodwinked and quiet.

Tue, 05/27/2014 - 06:18 | 4797690 luckylongshot
luckylongshot's picture

You can't taper a ponzi scheme

Mon, 05/26/2014 - 22:17 | 4797233 hungrydweller
hungrydweller's picture

Sure, but why do these retards keep equating money printing with growth?

Mon, 05/26/2014 - 22:19 | 4797243 DoChenRollingBearing
DoChenRollingBearing's picture

How dare you!  I am not an economist nor a bankster!

Tue, 05/27/2014 - 00:24 | 4797464 hungrydweller
hungrydweller's picture

No disrespect DoChen!  I like your comments and know where you are coming from.  We are on the same page.  My comment is pointed toward Bass being right or wrong.  In my opinion he is already wrong and his article is meaningless once equates QE with the ablility to create growth.

Tue, 05/27/2014 - 01:12 | 4797524 DoChenRollingBearing
DoChenRollingBearing's picture

I gotcha, I just like yankin' chains sometimes...  smile,,,

+ 1.618

Tue, 05/27/2014 - 01:58 | 4797559 TheRideNeverEnds
TheRideNeverEnds's picture

makes sense, you know what they say about gold right?


ya can't eat and ya cant fuck it so what good is it?



Tue, 05/27/2014 - 11:06 | 4798378 BigJim
BigJim's picture

Erm... cuz you can eat and fuck what it buys?

Mon, 05/26/2014 - 22:09 | 4797209 knukles
knukles's picture

Uh... The Fed said several weeks ago that the 6.5% U threshold is no longer active... with something about "em" or "un"employment, labor market conditions,and other nefarious garf becoming the indica of the modus operandi.
This is exactly the confusion I wrote about here on ZH, mere days after the Fed originally cited a hard economic statistic as a trigger for future policy.
And indeed, the waters have become murkier as opposed to more transparent, Fed and governmental credibility has deteriorated as opposed to improved.

And they ain't gonna tighten anywhere near yet.  The Economy is still suck-o to justify and major withdrawal of monetary stimulation

Moreover, I'd send you over to Paul Graig Robert's website wherein he does a magnificent job of reconciling the Belgian depository/custodial purchases of treasuries versus an "undefined" like increase on the Fed's balance sheet again,l as I'd suggested weeks ago.

No, there is no recovery, there is no withdrawal of money from the Liquidity Trap and rates, people, are going to continue to fall.

Mon, 05/26/2014 - 22:34 | 4797240 ZerOhead
ZerOhead's picture

I expect they will soon spread the buy orders out amongst the "indirects" in the future to preserve the illusion of the taper actually working. People might start asking questions when Belgium owns over $1T of T's.

I think foreign CB liquidity swaps is the way the Fed will arrange it as it has in the past..

Mon, 05/26/2014 - 23:08 | 4797335 disabledvet
disabledvet's picture

I have no idea what knukles and you just said but because there are girls around i'm going to pretend like i know, nod approvingly and agree with everything. (shhhh, don't tell anybody.)

Mon, 05/26/2014 - 23:24 | 4797362 knukles
knukles's picture

Insightful, Zerohead....

Tue, 05/27/2014 - 11:19 | 4798434 BigJim
BigJim's picture

I think the Western CB's will all start buying up each others' sovereign's debt, thereby in essence widening 'reserve currency status' from the US to include all its partner countries' currencies. We'll see every-day price inflation picking up (what is it now, 10% for the average person's cost of living?) but the MSM will keep telling the voters i) look, all our currencies are in the same trading range, and ii) official CPI is only 2%, so any talk about high inflation is conspiracy nonsense... and because all the Establishment pundits agree, the average schmoe will just tell himself he's imagining things and his belt is magically getting longer.

This will work so long as our OPEC satrapies keep demanding USD; so we can see more Western warmongering to remind the OPEC dictators who it is keeping their heads attached to their shoulders and their harems stocked. Eventually, it will all collapse but fuck knows when. Maybe they'll have destabilised China's periphery sufficiently that the Chinese will be embroiled there and the USD will stagger on.

China and Russia need to get a move on destabilising the West if they're not going to suffer the same fate at our hands. They need their own Al-Qaeda.

Tue, 05/27/2014 - 03:31 | 4797618 buyingsterling
buyingsterling's picture

I think you're probably right, and also, the US will scrape along because there are other dominoes to be pushed over first. But lately I'm wondering if the last few years have been mostly about recapitalizing the banks, and takng the US the way of Greece, except harder and faster because we're too big to bail out. Fire sale on all US assets and then the reset. I don't know how to reconcile this with Belgium. But I think there's room for them to really push austerity while still leaving us as the last domino, so I wouldn't be surprised to see genuine tightening in the not too distant future (not due to any recovery, of course). 

Tue, 05/27/2014 - 06:46 | 4797705 negative rates
negative rates's picture

So you say QE will end sometime in sept, and not how others predict?

Tue, 05/27/2014 - 06:44 | 4797702 negative rates
negative rates's picture

The Fed, always wrong, but never in doubt.

Tue, 05/27/2014 - 11:02 | 4798359 JRobby
JRobby's picture

What choice do they have? Keep the balls in the air at all cost is the mission. Until it isn't the mission anymore and they will all be in hiding then. Counting on them doing what they have been doing as the bubbles pop up here and there in the air mattress is what will occur.

Mon, 05/26/2014 - 23:19 | 4797353 Honey Badger
Honey Badger's picture

The fed has said that their forecast of various metrics is what they are looking at...their forecast. Shitshow.

Mon, 05/26/2014 - 23:25 | 4797363 Frilton Miedman
Frilton Miedman's picture

To add to Knukles point about the 6.5% U/E threshold, Yellen also more recently hinted that wage growth might be a new addition to Fed criteria.

This might 'splain Bernanke's recent "concert tour", stating to expect low rates for all eternity.

From a Fed policy angle, it would be insane to raise rates when median wages are $3K lower than 2007, participation rate is dismal and household debt to income ratio is still above 105%.

Kyle Bass was spot on seeing the oncoming CDO crisis, but I think that may have been his crowning moment.



Tue, 05/27/2014 - 07:19 | 4797734 Abitdodgie
Abitdodgie's picture

Kyle Bass the money behind G4S.

Mon, 05/26/2014 - 21:54 | 4797159 French Frog
French Frog's picture

Come on....

The Fed will do exactly like the BoE did a few months back when the unemployment rate got within a whisker of its 'target': they decided that after much thought, the unemployment rate was 'too narrow' as an indicator and that the people would be best served with a combination of data including the CPI, the unemployment rate and others...therefore giving themselves as much room for manoeuvre as possible.

We all know that rising/raising rates will decimate the current house of cards but the general public had no objection to this change of stance by the BoE. Ignorance is bliss as they say...

Mon, 05/26/2014 - 21:59 | 4797179 QQQBall
QQQBall's picture

Think back - that was part of the spin for Yellen - that she did not hold UE rate as the holy grail. They will just shift the gaol line

Mon, 05/26/2014 - 22:14 | 4797226 NoDebt
NoDebt's picture

Being a stickler for details, I don't recall the "target UE" being 6% for the Fed.  I do believe the number was 6.5%.  In fact, I'm quite certain that was the number.  And we're basically there.  

I hate it when ANYONE changes the number and then pretends that was always the original number.  Even Kyle.

I do agree with the conclusion, though.  The US is going to face DEFLATION, at least of imported plastic consumer goods.  Food and energy- the REAL costs to the economy, will continue to rise.


Mon, 05/26/2014 - 22:57 | 4797308 DanDaley
DanDaley's picture

Like Rickards said of Fed-speak: a threshold is not a trigger. They can lie 'til the cows come home and then lie some more. People have short attention spans these days.

Mon, 05/26/2014 - 23:04 | 4797327 MATA HAIRY
MATA HAIRY's picture

yes, bass is wrong on two counts--it was 6.5, not 6.0%, and also the Fed has already ditched the numerical unemployment threshold they gave of 6.5%....he is not really someone I would listen to, although he may be right for all I know...

Mon, 05/26/2014 - 23:43 | 4797396 Frilton Miedman
Frilton Miedman's picture


Nodebt, I agree on probable deflation.


It's either that, or a substantial jump in wages - not gonna happen with globalization.

After six years of Fed policy only serving to keep service costs of household debt at bay, no wage growth, 4% lower participation rate & 6.3% U/E, I agree.

One example, the historic ratio for home prices being at 2.2X median wages.

In terms of mean reversion - With median home prices now at $170K & median wages @ $50K, either wages have to go up 45% or home prices must fall 40%.

The ONLY thing keeping households above water is lower service costs, the Fed knows this, they can't be that stupid.

The single positive note, households are deleveraging vs conspicuous borrowing, as lack of inflation shows.


Mon, 05/26/2014 - 23:52 | 4797425 Non Passaran
Non Passaran's picture

It was 6.5% until the FOMC meeting last December, IIRC

Mon, 05/26/2014 - 23:59 | 4797434 TrustbutVerify
TrustbutVerify's picture

Just make an effort and refuse to buy cheap plastic, or otherwise, imported goods.  Imagine spending money invigorating the US manufacturing economy.  What a concept! Ever bought an US made shoes?  Do an internet search.  "You can do it!"  (...instead of sitting around whining.)

Tue, 05/27/2014 - 01:54 | 4797558 HaroldWang
HaroldWang's picture


Tue, 05/27/2014 - 06:54 | 4797713 Lionhearted
Lionhearted's picture

The KEY statement in this article is,"Raising rates would stifle growth and recreate unemployment problems, which would be disastrous politically, according to Bass." If it is POLITICALLY disasterous then the Fed will not do it. We know this to be true. This will only end when everyone realises that FIAT currency is not worth the paper it's written on and runs for the exits.

Mon, 05/26/2014 - 21:42 | 4797113 Everyman
Everyman's picture

What the hell does he mean "recreate the unemploment problems"?????  We have not fixed the structural employment problems AND 100 million is all that is working.  Below 1978 participation rate, and that was NOT a good year.

Mon, 05/26/2014 - 21:51 | 4797127 ZerOhead
ZerOhead's picture

Kyle has been taking "crazy pills" again...


The crucial moment will come when the U.S. reports a sub-6% unemployment rate, meeting the target it has set for normalizing its monetary policy by ending QE and raising rates. He predicted that will come in July.

That will be the Fed’s “worst nightmare,” he said.

 Somehow I don't think the Federal Reserve would mind if unemployment was actually under 6% officially... considering unofficially it's closer to 23%. Besides didn't Ben Bernanke just say not to expect rate normalization during his lifetime?

Mon, 05/26/2014 - 21:52 | 4797154 Caviar Emptor
Caviar Emptor's picture

With sub-6% they could claim mission accomplished. Then crash markets and ride to the rescue again

Mon, 05/26/2014 - 22:13 | 4797172 ZerOhead
ZerOhead's picture

< Print till she blows

< Crash then print till she blows

My gut tells me they have to temporarily crash the markets just to validate the subsequent need for the Mother of All Extreme Wealth Transfers...

Then again on the other hand Ben is saying between mouthfuls that they will merely continue to print it out until it blows...

Mon, 05/26/2014 - 23:38 | 4797391 booboo
booboo's picture

Since we ALL know to take what Ben SAYS and toss it out the window and instead WATCH what he does why would anyone believe him or his protege when he/she says that they will print it out till it blows". For Gods sake, they lie for a living, why start believing them now.

Mon, 05/26/2014 - 23:58 | 4797436 willwork4food
willwork4food's picture

I agree Zero. They will crash when it suits them best and create a temp deflationary situation that is very painful to the middle class. Then after they rake in the cash, they'll go back in for the ultimate QE of ages, with a chicken in every pot and a car in each garage +10.

Tue, 05/27/2014 - 07:41 | 4797760 Seer
Seer's picture

And here's what they come up with:

EVERYONE will have one; gasoline will be $10/gal and everyone will be unemployed.

The entire notion that TPTB are looking to rake everything loose from us for their gain has a problem in that it's about participation, and as more and more of us end up sitting in chicken-cars, starving, the less likely TPTB have any real control (and they themselves end up being chicken dinner [after their heads are chopped off]]).

I'll stick by my forecast that the bankers will roll over and play dead to save themselves from the mobs.  In exchange they retain their lives; and, the "deal" will include contracts to retain some semblance of power (perhaps reduced, though relative to everyone else's decline they'll STILL be looking pretty good).

The Fed eats up crap assets until it bloats and croaks.  It's just a wrapper corporation dealing with fake shit.  It blows up and take a bunch of debt with it.  Make NO mistake, some sort of debt Jubilee is certain.  And it's the beauty of the Fed in that it has had the good fortune of playing with a currency that cannot be easily unplugged from the global economy (though this is starting to erode the USD is still holding well in the glue factory beauty contest).

I have no idea why Bass thinks there is any chance that China can manage its way though this.  China was predicated on high growth rates- PERIOD.  Fast up.  Fast down.

To finish my ramble... It ultimately can be judged as though one's borders are totally closed to trade, how capable a country would likely be.  I see ONLY the US, Canada and Russia having any chance of continuing with anything remotely approximating today's world.  For China and Japan it is cear what their fate is/would/will be.

Tue, 05/27/2014 - 06:49 | 4797710 negative rates
negative rates's picture

You are going to over think this thing and exhaust your brain out.

Mon, 05/26/2014 - 22:06 | 4797203 dryam
dryam's picture

The Fed will never taper regardless of a low unemployment number.  There will always be some excuse.  They MUST print to keep interest rates low because rising rates would mean the grand game is over.

Mon, 05/26/2014 - 22:31 | 4797274 SilverDOG
SilverDOG's picture

Nobody here is even considering the great leveler WW3.

Everything else is distractionary, in order to gain possession of ALL.

Your house, your assets, your income, your food, your RIGHTS, and ... your life.

Why..? cuz the majority(sheeplesessesss) will deem it is needed loud and clear.

"I know they took my neighbors away. But they will not come for me." 

Yeah right. We all read those quotes before. 

It is 1938. NOW.



Mid term elections will fix everything, no worries. sarc.

Mon, 05/26/2014 - 23:34 | 4797376 SafelyGraze
SafelyGraze's picture

+1 for distractionary 

+10 for sheeplesessesss

distractification sheeplesaurus 

Tue, 05/27/2014 - 07:46 | 4797772 Seer
Seer's picture

GROWTH IS DEAD.  It is not a game of Monopoly going on, only in the sense of country vs. country, which will translate through trade restrictions as currencies attempt to be defended.  As I'd mentioned not too long ago, any next great war will be about bits and bytes- cyber stuff to the point that all currencies are basically turned meaningless and only physical resources mean anything (and countries will increasingly turn protectionist of them).

Mon, 05/26/2014 - 22:33 | 4797277 remain calm
remain calm's picture

I find it amusing that a bunch of computer jockies actually think they know more than Kyle Bass. The guy is one of the brightest guys I have ever met, thinks independently, and is a contrarian.  I will admit I am biased because I have my money invested with him, but fuck 99% of you if you even think you're even close to his league, you guys are the one taking the crazy pills.

Mon, 05/26/2014 - 23:07 | 4797334 MATA HAIRY
MATA HAIRY's picture

ok, let's get down to facts. Bass says the fed threshold stated was 6.0. Wrong. It was 6.5%. And the fed already said that the 6.5% number was not going to be used anyway. Are you disputing those facts?

Mon, 05/26/2014 - 23:44 | 4797409 Everyman
Everyman's picture

You getting a "tingle running up your leg" Chrissie?  You guys and your worship of inside trading criminals is beyond me.  Why do you think he is smarter then anyone else?  Because he got rich ripping people off like all these fuckers  including Warren idiot!


Just go and blow the guy already

Tue, 05/27/2014 - 02:52 | 4797594 jmk
jmk's picture

I couldn't agree more.  Kyle Bass has made more money by accident than you dumbasses ever will on purpose.

You lurkerjerks just don't know genius when you trip over it.  You're too busy having boat accidents and losing your precious stacks.

When deflation grabs hold in the US we will see just how sagacious accumulating all that metal really was!!



Mon, 05/26/2014 - 21:42 | 4797114 TahoeBilly2012
TahoeBilly2012's picture

Wow that was boring.

Mon, 05/26/2014 - 21:55 | 4797163 orangegeek
orangegeek's picture

Sure - you could pay $29.99 a month for some NYT or WSJ slog and pick up coverage of something like this in about 2 week from now.



Mon, 05/26/2014 - 22:12 | 4797223 Dr. Richard Head
Dr. Richard Head's picture

I love Kyle for the most part, as he speaks well on the subjects. He often refers to government statistics to prove his points, but those government statistics is worth about as much as a republican running for office in Cook County, IL.

Mon, 05/26/2014 - 22:58 | 4797313 MrSteve
MrSteve's picture

Rahm seems to be doing OK as a closet Republican. For instance, he has the Chicago School Teachers' Union out to hang him!

Mon, 05/26/2014 - 21:45 | 4797121 maskone909
maskone909's picture

Increased hydrocarbon production is a myth

Mon, 05/26/2014 - 22:06 | 4797196 ZerOhead
ZerOhead's picture


Iraq's oil capacity could reach 12 million barrels per day (bpd) in six years, the country's oil minister says.

Tue, 05/27/2014 - 10:14 | 4798173 thestarl
thestarl's picture

Hopefully they can Zero but what worries me is depletion rates amongst other major producers.

Come in Crash.

Mon, 05/26/2014 - 21:47 | 4797131 Confundido
Confundido's picture

Is this the same Kyle Bass that recommended going long gold vs yen as a long term investment?

Mon, 05/26/2014 - 21:55 | 4797166 Al Huxley
Al Huxley's picture

If he's right and the Yen weakens substantially and you're long gold and short yen you might still be doing ok, even if gold goes down in USD price.  So not sure what would be wrong with his 'recommendation'.

Mon, 05/26/2014 - 21:49 | 4797135 intric8
intric8's picture

They can creatively adjust the participation rate numbers to keep unemployment just above 6%, and mantain QE for all eternity if they so desire

Mon, 05/26/2014 - 21:51 | 4797143 migra
migra's picture

The fed knows it cannot increase rates. Its absurd to think they would honestly consider such a dissasterous move. They know damn well its all a house of cards.

Mon, 05/26/2014 - 21:51 | 4797147 reader2010
reader2010's picture

All assholes and motherfuckers of Wall Street want the "Easy Money" from the Fed. Plain and simple. 

Mon, 05/26/2014 - 23:18 | 4797346 disabledvet
disabledvet's picture

Now THIS I agree with. "Just give me the money. Now everything else is your problem."

That sounds like Wall Street.

Needless to say "if you have to ask how the food was prepared you might want to eat the meal first and tell me how it tastes."

Mon, 05/26/2014 - 21:58 | 4797170 Osmium
Osmium's picture

Did he say Hymen Capital?

Mon, 05/26/2014 - 21:59 | 4797178 stant
stant's picture

Good nite irene

Mon, 05/26/2014 - 22:21 | 4797249 GoinFawr
Mon, 05/26/2014 - 22:03 | 4797188 socalbeach
socalbeach's picture

Why does Japan need a foreign account surplus in order to continue with QE?  A foreign account deficit didn't stop the US from QE. Continuing with QE should weaken its currency also.


"Japan has been able to pursue QE because it ran a current account surplus for the last 31 years. Bass said that string has ended, and Japan’s balance of trade is continuing to worsen. This creates a paradox for Japan, he said. Either it must buy foreign bonds in order to weaken its currency, or it must invest in capital goods (machinery and equipment) to foster the 'animal spirits' that would stimulate growth."

Mon, 05/26/2014 - 22:20 | 4797234 pashley1411
pashley1411's picture

Just as the end-point for QE for the dollar is when noone wants the dollar anymore (not only trade deficits, but a new trade standard), teh end point for Japanese QE is when the Yen is no longer a valuble currency, thru trade deficits.  

Mon, 05/26/2014 - 22:21 | 4797250 hungrydweller
hungrydweller's picture

Because Japan doesn't have the luxury of printing the "reserve currency".

Mon, 05/26/2014 - 22:02 | 4797191 rsnoble
rsnoble's picture

How is the unemployment rate going to be the Fed's worst nightmare when all of it is BS anyhow?

6.00001% sounds good and will be the lowest it goods for a very long time.

Mon, 05/26/2014 - 22:04 | 4797199 Tinky
Tinky's picture

I am certain – certain – that Bass knows full well how bad things are, and that he simply cannot publicly express what he knows because he is constrained by the large sums of money that he must invest somewhere on behalf of his clients. When the S really does HTF, though, count on him and most of his clients being better positioned than most who have significant wealth to protect.

Mon, 05/26/2014 - 23:25 | 4797364 disabledvet
disabledvet's picture

Is it me or has the Zero Hedge "Rage Against the Machine" suddenly just struck a nerve with human existence itself?

probably just me....

Mon, 05/26/2014 - 22:06 | 4797205 Yen Cross
Yen Cross's picture

   The BoJ is fubar. Kyle was calling for June. I'm thinking more September /October .

  This guy has some interesting insight. BOJ's Sato proposed highlighting risks on price target: minutes | Reuters

Mon, 05/26/2014 - 22:07 | 4797208 JR
JR's picture

Bass warns, the crucial moment will come when the U.S. reports a sub-6% unemployment rate, meeting the target it has set for normalizing its monetary policy by ending QE and raising rates. He predicted that will come in July. That will be the Fed’s “worst nightmare,” he said. Raising rates would stifle growth and recreate unemployment problems, which would be disastrous politically...

Listen, everybody. If it’s the Fed’s worst nightmare or disastrous politically, then bring it on. Meanwhile, the Fed will always do what’s best for Wall Street and the politicians, and the economy can go to the Devil. 

And who trusts the Fed except the insiders, anyway? The Fed said at its December 11 meeting that it would keep interest rates low "well past" the time unemployment rate hits 6.5%, especially if inflation remains below the central bank's target of 2%, with Bernanke emphasizing that any tapering would be "data dependent."

According to TheStreet at the time:

“Speaking at his final press conference, outgoing Chairman Ben Bernanke emphasized that the central bank was "tapering" not tightening. The central bank was continuing to add to its portfolio.

“He also cautioned that the employment rate of 6.5% was a threshold not a trigger. While Fed officials expect unemployment rate to fall to 6.5% by the end of 2014, they will look at a range of measures including hirings, quits, labor force participation rate, wages and so on in determining whether the employment market was strong enough to allow for a tightening in monetary policy. …

“The Fed is particularly worried about inflation being too low and would take "appropriate action" if it fails to meet the target 2%.

Mon, 05/26/2014 - 22:17 | 4797237 DoChenRollingBearing
DoChenRollingBearing's picture

Which seems to imply pretty much what Rickards says, ZIRP for a long, long time.  Jack those rates up, banks get crushed.

Deflation may be good for us as people (esp. savers who have been careful).  Good for banksters?  Ahh, not so much.

Mon, 05/26/2014 - 23:20 | 4797354 JR
JR's picture

Exactly, DoChen.

“And one day, Alice.  No really, one day, the markets and investors and anyone else that wants to participate, will wake up and smell the coffee. And it’s then that they will realize that dollars and yen are losing purchasing power by the truckload…”

That’s the way Chuck Butler put it recently in Daily Pfennig, where he also said that John Williams says the U.S. economy is headed down.

Butler wrote in April that Williams “notes that the government puts out optimistic data and then a month or two later revises or adjusts the data to tell the truth. For instance, in a recent message Williams writes, ‘Payroll and employment numbers remain at horrendous quality, generally not comparable to earlier reporting.’”

Butler then included this little vignette on investing virtue from Bill Bonner –

“’All the world is moral,’ said Emerson. It is moral in the sense that if you are careless enough to step on a hoe, the handle will hit you in the face.

“One generation takes the virtuous path. The next is likely to slip off, honoring the old virtues in speech, but not in act. The oldest generation of Americans remembers the Great Depression. They borrowed reluctantly, saved eagerly, and made the United States the greatest power on Earth.

Their children still talked their parents’ talk, but didn’t mind walking off in a different direction when the wind was at their backs. And their grandchildren? The new generation seems to have no regard whatever for the virtues of their grandparents or the futures of their grandchildren. They disregard the wisdom of the dead, and load up the unborn with debt.

“The end of the US Empire of Debt may be near or far. We don’t know. Washington will probably not be sacked anytime soon. But the imperial currency – the dollar – is in grave danger. America’s central bankers not only fail to protect it, they invite the barbarians to destroy it…slowly.” – Bill Bonner, Diary of a Rogue Economist

As Williams said nearly a year ago, “Simply put, the Fed is propping up the banking system. Bernanke is using the cover of a weak economy to do that because the concept is not politically popular, but it's what the Fed has to do because the underlying system is just as broken today as it was in 2008… Domestically, there is no safe investment where you can beat the rate of inflation.” As for inflation:

No. 627: April CPI, PPI, Industrial Production, Real Retail Sales and Earnings  

May 15th, 2014

• Headline Reporting Showed Weakening Economy with Rising Inflation • April 2014 Production Plunged 0.6%, Real Retail Sales Fell 0.2%, Real Earnings Down 0.1% • Production Drop Reflected Some Reporting Catch Up • Soft Sales and Earnings Pummeled by Inflation April Annual Inflation: 2.0% (CPI-U), 2.0% (CPI-W), 9.7% (ShadowStats)

Mon, 05/26/2014 - 23:28 | 4797371 holdbuysell
holdbuysell's picture

And thus the stealth print will continue at all costs.

Mon, 05/26/2014 - 22:09 | 4797213 SweetDoug
SweetDoug's picture




Sub 6%! Here we come!





Mon, 05/26/2014 - 22:10 | 4797215 Ignorance is bliss
Ignorance is bliss's picture

What are you going to save in? The tanking Housing market? The tanking currency? the tanking stock market? The JGBond market? buy tangible gold / silver and wait for the dust to clear.

Mon, 05/26/2014 - 22:15 | 4797231 OC Sure
OC Sure's picture

If the Fed did not have a corner on interest rates, then where would buyers and sellers price short term corporate paper and what point of reference could they use?

Mon, 05/26/2014 - 22:22 | 4797257 Cabreado
Cabreado's picture

There is influence, and where there is influence it must be directed at points of corruption and control.

Societies eventually effectively whither and die when those of influence treat economies as sport.

Mon, 05/26/2014 - 23:28 | 4797369 JR
JR's picture

They seem to think that the economy is their playground, that the people are just some sort of a resource and that the comings and goings of all finance are of interest only to the effect that they will have on people in the financial world – whether they be hedgers, investors, insurers, or whatever… but surely not savers, property owners, small businessmen, et cetera.

Their attitude is disturbing...

Tue, 05/27/2014 - 00:05 | 4797435 Yen Cross
Yen Cross's picture

  J.R. what most traders fail to recognize, because the UST market is so large, is Japans' debt/gdp ratio.

 If the Fed. owned the Treasury market (60%+) the wheels would come off the cart! Japans' yen isn't a reserve currency.

 Matter of factly, I'm putting together some overlays showing Japans "export safe haven" play is breaking down. Japan demographically and culturally has boxed itself into a "Trading cul-de-sac".

Tue, 05/27/2014 - 00:27 | 4797466 JR
JR's picture

A powerful and yet sad observation, Yen.
And one wonders at the same time the amount of bond purchases the Fed is disguising by laundering its buys through Belgium to keep the world from losing confidence in the dollar as reserve currency.

Tue, 05/27/2014 - 00:43 | 4797490 Yen Cross
Yen Cross's picture

 I wonder who the BoJ proxy will be when the short end of the (JGB) curve inverts J.R.?  Zimbabwe?

Tue, 05/27/2014 - 01:28 | 4797536 disabledvet
disabledvet's picture

Japan has no massive Empire to finance.

The question that I am asking...answering "is the fact that the USA is expanding its Empire to its greatest extent imaginable which by definition means truly stupendous amounts of debt must be issued mean the treasury market rally will now go into overdrive?"

I have always found this question fascinating because it is so utterly counterintuitive.

I "sold" my treasury position (in my head) a hundred times...but never for real and find myself amazed that in spite of the "on its face" insanity of the view...I stick with it. If I had the ability I would not be expand the trade...but I have found myself drawn deeply into the "meaning" of being right...and not just being right.

Not a good place to be if you're a trader...but if you truly are's a terrifyingly stark place to be "in theory."

Tue, 05/27/2014 - 01:27 | 4797539 JR
JR's picture

And get this, Yen, from Bloomberg 6 hours ago: Zimbabwe Heads for Recession as Factory Shutdown Spurs Deflation:

“Cash-strapped Zimbabweans aren’t spending, deflation has taken hold, factories are being shut and the economy is heading for recession less than a year after President Robert Mugabe, 90, was voted back into office to extend his 33 years of rule.”

It's a mad, mad (manipulated) world...

Tue, 05/27/2014 - 01:33 | 4797543 Yen Cross
Yen Cross's picture

  Thanks J.R. I think DAV missed the boat. Disabled Vet, I was speaking of the "inability" of the Japanese government to prop up their levered 250% GDP currency through future printing.

    I'm growing wary of your decay! Do some homework before you hypothesize! (sp)  Idiot!

Mon, 05/26/2014 - 22:33 | 4797276 Space Animatoltipap
Space Animatoltipap's picture

A pyramid ponzi scheme needs to be fed continually otherwise it collapses. Press the keys for another 2 trillion or so currency units a year. Of course. It perhaps will be a surprise to many. Not to us.  

Mon, 05/26/2014 - 22:37 | 4797285 q99x2
q99x2's picture

The crucial moment will come when the U.S. reports a sub-6% unemployment rate

If all the FED has to do is say the unemployment is sub 6% and it has reached its target. Then I have to say that whoever is translating this article is not interpreting it properly or Bass has been bought off.

Ya, Bass has been bought off. Last video I saw of him he was talking like Dick Bove about buying up US Bank stocks.


Mon, 05/26/2014 - 23:03 | 4797320 Space Animatoltipap
Space Animatoltipap's picture

I reckon this happens to more of these analists/commentators/journo's. Otherwise they get "special treatment" from the government. But also, some of these people are just plane stupid or just sometimes stupid. When they have their monthly period for instance.

Mon, 05/26/2014 - 22:39 | 4797289 eddiebe
eddiebe's picture

Oh no, deflation. Don't make us pay less for food or fuel. Please save us.

Mon, 05/26/2014 - 23:22 | 4797359 TradingTroll
TradingTroll's picture

Deflation in the US means more of what you already have.


In other words, amidst dropping house prices (individuals largest assets), and the re-emergence of the US as a net exporter of oil, oil prices are rising.


Deflation of everything you invested in (your house, career, wages) and inflation of everything you consume (food, energy)

Tue, 05/27/2014 - 00:51 | 4797502 Yen Cross
Yen Cross's picture

 You're confusing devaluation and deflation my friend.

Mon, 05/26/2014 - 22:59 | 4797314 freedom5000
freedom5000's picture

if the gov of japan owns all of it's own debt, well who does it owe the interest to? itself. therefore why worry about interest costs? It is better that they owe debt to themselves than to someone else, this way there is no interest. They just buy all of their own bonds and keep the sharade going til the the yen goes to zero, probably the same day the US dollar and the british pound go to zero. 

it's all a big joke. 

Mon, 05/26/2014 - 23:21 | 4797344 AdvancingTime
AdvancingTime's picture

The one thing all these countries have in common is they all have a shit load of debt. they have up to now been able to keep pushing dealing with the issue ever father into the future, but this debt is not some kind of mirage, it is real.

A mirage is a naturally occurring optical phenomenon in which light rays are bent to produce a displaced image of distant objects. Joining the idea of a mirage and contagion with the reality of collapsing debt forms an interesting subject. It is important to remember all debts and obligations do not come due at the same time. More on this subject in the article below.

Tue, 05/27/2014 - 06:59 | 4797722 negative rates
negative rates's picture

Because he also said that 25% of the country's tax money goes to paying just the interest on the back of the public, a transfer of wealth from the poor to the rich. He also said that if rates rose by just 1%, then the interest payments would be 100% of the collected tax money, which is a percentage the politicians can not afford to discuss. Ergo the low interest invironment until the bitter end. The same thing is happening here, execpt we owe the foreigners the interest money rather than locals for the most part cause our debt is out of this world as far explanation is concerned.  

Mon, 05/26/2014 - 23:04 | 4797323 lasvegaspersona
lasvegaspersona's picture

Since the rules will always change, prediction is a fools game. The way things 'ought' to happen requires a stable, lawful system. We have neither.

Tue, 05/27/2014 - 00:11 | 4797451 Space Animatoltipap
Space Animatoltipap's picture

A stable mind it is what it is about. Hare Krishna! Automatically there is no matrix for you anymore.

Mon, 05/26/2014 - 23:07 | 4797329 ebworthen
ebworthen's picture

What does "politically disastrous" for the U.S. mean?

It means we change the right hand for the left or vice-versa. 

Both sides pummeling us "folks" with vicious blows to the gut and jaw.

End the FED, restore Glass-Steagall, and summarily and forthwith hang: Jamie Dimon, Jon Corzine, and Hank Pulson.  Then flush all branches of government and restore The Constitution.

Come on Armed Forces, don't you want to fight for democracy and freedom and fulfill your oath?  Stop dicking around doing M.I.C. and Bankster work.

I believe in you.

Mon, 05/26/2014 - 23:34 | 4797381 Herodotus
Herodotus's picture

You are correct.  At some point the Army will make their move.

Tue, 05/27/2014 - 00:26 | 4797465 napper
napper's picture

make their move ... against government OR against the protestors, i.e., the people? 


who owns / controls the army? the people or the government (or should I say the MIC, Wall St, and Big Oil)?



Tue, 05/27/2014 - 00:59 | 4797507 Herodotus
Herodotus's picture

The Army is the oldest entity in the government.  It knows where its duty ultimately lies.  In the country's critical hour of need, it will act.  And when it does, it will NOT be to serve the "MIC", "Wall Street", or "Big Oil".  Of that you can be sure.

Tue, 05/27/2014 - 13:33 | 4798906 napper
napper's picture

Why are they waiting till the country is at the point of collapse before acting?


Why not act earlier? Like in 2001 when the rogue elements of the government murdered 3000 Americans in the 9/11 false flag terrorist operation? when the Fascist "Patriot Act" was being made into the law? or in 2003 when American soldiers are being deployed under false pretenses to invade countries in the Middle East?


Exactly who among the army have the wisdom and courage to act?

Tue, 05/27/2014 - 00:03 | 4797444 Hulk
Hulk's picture

Russell Means would agree with you Eb. We are all Indians now.

AN hour and a half with Russell, well worth the time.

Tue, 05/27/2014 - 00:30 | 4797469 napper
napper's picture

A bit too optimistic I suspect.


People with brains are hard to come by in the military. Brainy Senior officers with rebellious tendencies even rarer. The NSA surveillance programs and the CIA listeners are everywhere now. Not 1776 any more.



Tue, 05/27/2014 - 01:07 | 4797519 JR
JR's picture

I, too, believe, eb. Which makes it interesting that The Washington Times reported on May 13, 2014, that the U.S. military is only taking about 20% of applicants who want to enlist in the armed services, chalking it up to “applying a stricter set of standards as it pertains to physical fitness, appearance (i.e., tattoos), intelligence test results and an applicant’s criminal history.”

Also, “The tough environment for potential recruits is due in large part to troop reductions in Iraq and Afghanistan, as well as the Pentagon’s plans to cut the size of the active duty Army.”

But, in truth, says AFP, the military’s able-bodied men of the Army our fathers used to know are being replaced in large part by “homosexuals, illegal aliens, criminals and feminists.”

Regardless, according to The Washington Times almost exactly one year ago, May 20, 2013, to be exact: “More military men than women are sexually abused in the ranks each year, a Pentagon survey shows, highlighting the underreporting of male-on-male assaults.”

Reports the Times: “When the Defense Department released the results of its anonymous sexual abuse survey this month and concluded that 26,000 service members were victims in fiscal 2012, which ended Sept. 30, an automatic assumption was that most were women. But roughly 14,000 of the victims were male and 12,000 female, according to a scientific survey sample produced by the Pentagon.”

Mon, 05/26/2014 - 23:19 | 4797352 AdvancingTime
AdvancingTime's picture

 Japan continues to slide towards an economic abyss with each passing day. The writing is on the wall. Japan is facing a wall of debt that can only be addressed by printing more money and debasing their currency. This means paying off their debt with worthless yen where possible and in many cases defaulting on promises made. Japan's public debt, which stands at around 230% of its GDP and is the highest in the industrialized world.

 The moment the Japaneses stock market fails to rise enough to offset inflation this will turn into a tsunami of  money fleeing Japan and constitute the end of the line for those left holding both JGBs and the yen. This has been a long time coming and I contend the cross-border flow of money leaving Japan is why some stock markets have remained so resilient . When Japan crumbles it will be felt across the world. More on this subject in the article below.


Mon, 05/26/2014 - 23:44 | 4797407 NoWayJose
NoWayJose's picture

The only DE-flation will be in the OVER-inflated assets held by the big banks across the globe.

Mon, 05/26/2014 - 23:48 | 4797419 Frilton Miedman
Frilton Miedman's picture



Someone, please explain how Kyle feels a 3% Japanese consumption tax will lead to inflation?

Was that a typo?


Mon, 05/26/2014 - 23:50 | 4797423 luna_man
luna_man's picture



Face it yawl, Ain't nothin changing...


Still, "dead man walkin"!!

Mon, 05/26/2014 - 23:52 | 4797426 bankonzhongguo
bankonzhongguo's picture

Having actually worked inside one of China's state banks for many years and monitored a-many SOE and all their offshoots, China (Asia) has the political culture to hide and rollover any and all non-performing debt. Fukishima, Godzilla or the ghost of Qin Shi Wang is not going to alter the status quo anymore than QE is sparking a revolution on Main Street.

Frankly it is not much different than the USA, expect what if Amerika only had 5 prime banks.  Smells like TBTF doesn't.  Same thing.

The losers are the one without political cover.  The winners are allowed to rollover all this bad loan quarterly - just like Japan is still doing since 1999 and before.

The creepy thing is that despite all the China princlings that went to work at GS and JPM, it seems the banking, Fed and political establishment in the West want to go the way of China, Inc and with that corporate governance is out the window when you are existing in a single-party system where criticism alone is enough to end your career.

China can (should) do whatever they want.  Nobody outside the country will ever understand the hows or whys and frankly neither does anyone beyond 10 miles from the China decision-makers. 

Heaven is high and the emperor is far away.


Mon, 05/26/2014 - 23:56 | 4797433 enloe creek
enloe creek's picture

armed forces are just as interested in maintaining the garavy train as wall street. they get a pension in US $ they work for contractors or the fed govt. after a career in the service. not a bunch to look to for altruistic society saving.

Tue, 05/27/2014 - 00:07 | 4797448 Herodotus
Herodotus's picture

The country will learn that it can be governed more effectively from Fort Belvoir than from D.C.

Tue, 05/27/2014 - 00:35 | 4797476 kurt
kurt's picture

The Lie

The US will have a sub 6% unemployment rate in July.



Bullshit Alert. Send this Texas Asshole packin'

Tue, 05/27/2014 - 01:15 | 4797528 JR
JR's picture

Shadow Stats Alternate Unemployment Rate* through April 2014:  23+%

Official (U3): 6+%. Broadest (U6) 13%.

*The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.

Tue, 05/27/2014 - 12:07 | 4798659 kurt
kurt's picture

Ok, So which rate is the LIE?

Tue, 05/27/2014 - 15:24 | 4799261 napper
napper's picture

Both are lies. It's a cliche but it's true - it's easy to tell when US government officials are lying: when their lips are moving.

Tue, 05/27/2014 - 00:39 | 4797489 Magooo
Magooo's picture

Fed cannot tighten - because amongst other things - this would stop


Shale Drillers Feast on Junk Debt to Stay on Treadmill



Independent US oil producers will spend $1.50 drilling for every dollar they get back.

Tue, 05/27/2014 - 01:05 | 4797514 Atomizer
Atomizer's picture

Raise Fed rates so I can return my TARP investment.


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Tue, 05/27/2014 - 01:22 | 4797527 alfbell
alfbell's picture



Will we have inflation, deflation or stagflation?

Answer: Yes.

And, interpolate into the above... pension crises, sovereign debt crises, currency devaluations, currency crises, medicare crises in US, social security crises in US, healthcare crises, bank failures, bankruptcies, debt write-off, etc.

And, somehow we'll all live through it all in one form or another. This is the chaos that will ensue as a result of our collective sins and then the various crashes will then allow for some resets.


After the reset in the USA will it be one of more democracy or more Marxism and authoritarianism? That is an outcome to be concerned about. 

Tue, 05/27/2014 - 02:02 | 4797563 Yen Cross
Yen Cross's picture

 We have stagflation. Devaluation of purchasing power through monetary expansion, without demand.

  Thanks for the wasteland Mr. and Mrs. Chairsatan have left for our children...

Tue, 05/27/2014 - 07:52 | 4797782 topspinslicer
topspinslicer's picture

Alfbell- collective sins? Collectivism brings it down to the lowest common denominator doesn't it?

Tue, 05/27/2014 - 02:08 | 4797565 Harbourcity
Harbourcity's picture

Kyle seems to be putting on the pounds... Chicks and blow.

Tue, 05/27/2014 - 02:24 | 4797575 Yen Cross
Yen Cross's picture

 European banks are x3 undercapitalized. Japanese banks are 10-15x undercapitalized.

  What part of the bond vs BoJ(balance sheet) expansion did you miss?

  I'll do your homework for you. This is chronological.

  Kuroda plans huge bond binge for BOJ | The Japan Times

  JBIC to expand bond backstop programme -

  UPDATE 1-Japan GPIF to expand investment to foreign high-yield debt, emerging market bonds | Reuters

Tue, 05/27/2014 - 02:50 | 4797592 Bingo Hammer
Bingo Hammer's picture

About a year ago Kyle was saying WAR was coming mention above, so has something changed in his analysis?

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