Kyle Bass Destroys The Ponzi-Prone Debt Sustainability Arguments Of The Status Quo...And Why Germany Can't Save The World

Another noteworthy Kyle Bass moment as he discusses debt sustainability among major global sovereign nations. Simply and proficiently, the hedge fund manager describes how a dwindling current account surplus in Japan, US welfare economics, and the peripheral-to-core European stressors are all Madoff-like and unsustainable. Switching from broad-brush terms to the idiosyncratic complexities of each region, Bass offers his inimitable take - in a mere six minutes - on how the status quo is quivering under its own self-deception. His rightful conclusions remain extremely worrisome and should be required reading/watching for every central banker and politician trying to keep the dream alive.

Comments

[Peter K]

Logic correct. Just replace Banks with the Political Establishments, and you will be on the right path.:)

[besnook]

japan is safer than the rest because it's financing mechanism is the same as using greenbacks. they will print all the money they need and there is little pressure to pay it off. if you borrow money from yourself why do you need to pay it back since you just gave it back to yourself. it is a rather ingenius way of thwarting the reserve currency advantage.

there will be a full page headline this week that europe will print with a byline that says europe has sold itself to goldman rather than the chinese.

[MeanReversion]

The irony of Japan is that the lonf term low interest policy meant to offset sluggish growth is going to be responsible for its downfall.  This policy created a long term yen carry trade, and now as a result of that trade, traders move like lemmings into the yen in times of market distress.  The idea of the yen being a safe haven is hysterical based on fundamentals.  In any event, this stronger yen will over time reduce Japan's current account surplus.  Japanese companies have moved and are moving operations offshore.  Eventually domestic demand for its sovereign debt will evaporate sending Japan into a very fast tailspin.  When you spend twice what your revenues any significant movement in government bond yields will wipe you out in short order.  The Japanese economy is an even bigger ponzi scheme than the U.S. economy.

[cobber]

Tyler - saw this the other day.. V good as per usual. Any word if there is anything online from the Americatalyst earlier this month?

Last year he was pretty spot on with how the last 12 months have played out. (not that any sane person didn't expect Greece to default)..