Kyle Bass Explains The New World Order - Panel Presentation

Tyler Durden's picture

Unlike the broad consensus of prognosticators who feel the road for the US is a decade or more, Bass sees a three-to-five year window for a credible solution to the debt saturation or else kicking the can will cease to have any impact. The reason for the proximity is the acceleration of what happens in Europe and Japan with that respective chronology his central view - which he sees a s critical in understanding for every money manager.

In this extended interview at AmeriCatalyst, he points to the optimistic self-deception biases that leave people unable to comprehend the scenarios as they either lead to a really bad outcome or a nominally bad outcome. Using the Lehman moment as an example, Bass explains how we have been conditioned to believe there is always a backstop or those backstops at a corporate and sovereign level (central banks and the IMF for example) are being called into question in their roles (being seen for what they are - as just promises) and it is the chasm between what we want to believe and what does happen that is enormous and leaves the extreme volatility, risk-on/risk-off market the way it is.

Reiterating how critical the psychology of today's situation, Bass goes on to debunk the optimism of globalization (at least for the Western world), destroy the myth of a 50% greek writedown solution, Japanese xenophobia and savings losses, structural versus cyclical implications for US equity deterioration, US deficits and housing's bottom, global debt saturation and how this tearing at the social fabric of the world will lead to - war.

Click image for video (no embed available)

This extended interview includes some of the following views (among many others):

On Greece:

For those who think a 50% write-down on debt will fix Greece, you have lost your mind. It is only a full wipe-out of the non-TROIKA-owned debt that is the only mathematical way for Greece to have any chance.

On the IMF and its role as global savior

He discusses in some detail Keynes and the IMF formation and the new world order he foresees as our era of the largest peacetime accumulation of global debt has no precedent (as it has historically ended in conflict or been created by conflict).

And how this debt saturation will inebitably play out:

Fundamentally, its about the social fabric of the world...what does this all mean? It means war.

And summarizing for every long-only talking head pitch-man:

This is not a cyclical rebound from a crisis we had two years and you should NOT be buying stocks because a P/E ratio is low relative to historical S&P behavior because the E is wrong. We are going to see declines and people don't know how to position themselves for declines. We are at peak earnings now! Earnings only look good because if you take all the bad assets and put them on the public balance sheet.

We need to delever globally. We haven't delevered. Just now we are seeing marginal delevering in Europe and all hell is breaking loose. An summing up:

Consensus is US low/slow GDP growth - no recession, US better than Europe, Europe mild recession, muddle through, go all in to Emerging markets as that's where the convexity is.


The consensus is never going to be right.


I don't get paid to be an optimist or a pessimist. I get paid to be a realist and the realist negative currently.


Don't believe these governments when they tell you everything is going to fine. The day before Mexico devalued by 60% they denied that they would ever devalue. They can and will never tell you the truth. Find your own numbers.

(h/t EnnuiHenry)

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Prairie Fire's picture

Where are all the fire breathing capitalists out there?

I'm getting sick of seeing this site polluted by these inbred ows commies.

As for the seriousness of the situation--I agree we are in a tough spot--but where you pussies see the sky falling, I see assets that were previously priced out of my reach coming down into a range where I can obtain and exploit them to my and my family's benefit. I'm not specifically talking about stocks/bonds, but there are some great contrarian plays all over (if only I had all the capital I need to deploy!)

You mouthbreathing unionized crybaby scumbags are getting a lesson that you all need to learn--

So fuck you and your backassward solidarity rhetoric.

ebworthen's picture

Two bong hits and blog me in the morning.

yabyum's picture

Prairie is high on government cheese nachos, does it every time.

prains's picture

Prairie, your idea of Gucci capitalism is what fucked everything up

DaveyJones's picture

calling the state of the economic world a "tough spot" qualifies for your accusation

likewise, the fact that you can make "contrarian plays" is an strange definition of a healthy and viable market

infinity8's picture

gonna "exploit" the situation!

slewie the pi-rat's picture

take 3 bong hits and blog me in 5 minutes, you "moron", eb!


Ragnar24's picture

I hope this is sarcasm. If it's not...

This site is full of capitalists who wish we had a country where we could express freemarket ideals.  And if you think America has an economy remotely close capitalism, then you need to brush up on econ 101 (Austrian).

In case you hadn't noticed, the Fed fixes the price of capital and the largest owner of residential mortgages is a wholly-owned subsidiary of the US government (Fannie/Freddie).

I hope your contrarian investment is farm land.

Conrad Murray's picture

Even better is that the FRN is backed by sub-prime MBS. Fucking Benny Bucks.

Bansters-in-my- feces's picture

The FRN is backed by the USMilitary.

I thought bullying was being banned.

Prairie Fire's picture

Ugh, why isn't this obvious--

Markets are broken. Yes, I agree. You know where it's broken right? I do, I imagine you see it too.

Are you telling me you can't figure out what direction a broken market will take? I can. No problem. In fact, the fact that it's broken makes it much easier. You have to be nimble of course, and right now is no time to be long-long term on anything.

Do I think America or any country has an efficient free market...of course not.

Yes, I have been purchasing farm land in Saskatchewan, as well as vacant lots.

Short term I'm bullish on the USD and short gold. I posted that info about 2 months ago here--along with my prediction that all economic data coming out of the US would be positive (even though in reality it's negative) because you don't want to shake the consumer's faith in the system, especially before christmas.

That was pretty obvious to me. The market is lying, and it's pretty easy to see and profit from it.

Ragnar24's picture

I suppose that I, along with those giving you red arrows, took issue with the presumption that somehow we're considered OWS for hating a corrupt crony capitalist system.

There's nothing wrong with agreeing with the fruatration that OWS represents -- namely its anger at an unconstitutional banking cartel. Where I assume (and hope) many on ZH diverge is literally at the location of the occupation: 33 Liberty instead of Wall Street. ZHers know that you don't hate the beneficiary of a bailout, you despise the distributor of it.

Believe me, just because we're voicing our outrage doesnt mean we're not profiting from the predictable outcomes of this failed Keynesian philosophy.

DaveyJones's picture

what he said and I know it's strange, but some of us care a lot more about a healthy economy, country and future for our children than a great market play.  

Ragnar24's picture

Not sure who "he" is in your reference, but Prairie definitely did NOT say anything of the sort -- quite the opposite. He was mad that we were identifying the CAUSE of this disease (Fed and it's incestuous relationship with high level banksters) so we might actually cure this once and for all.

my position is the one that will create a healthy and thriving TRUE capitalist system where my kids will EARN as much as their talents will allow them. But this idea of a future is entirely dependent on enough adults opening their eyes to the REAL culprit of our current predicament: the Fed (and to a lesser degree, Congress; but if you destroy the Sugar Daddy, you handcuff these politicians to a balanced budget).

DaveyJones's picture

you're the he. We're on the same page. Now let's rip theirs

MarketWatchTerrorist's picture

Obama's kids will succeed even if America fails.  He said so himself.


That's why they go to the $40,000 a year private school in D.C. with the other children of the elite.  America (public schools) will fail, but his children will be indoctrinated into the neo-feudal aristocracy in exchange for what he is doing to the U.S. and the world right now, thus ensuring his lineage a place at the table of the elite.

FEDbuster's picture

"The FRN is backed by the USMilitary.

I thought bullying was being banned."

This is just the PC way of taking whatever we want from those we bully.  No need to invade and steal (looks bad), we just defend the reserve currency status of the dollar, then we electronic transfer ("print" is so last century) and steal.  We can kick the can forever, as long as we can kick "their" asses.  Just don't talk of demanding gold for your goods or oil, that will get you killed.

Mr Lennon Hendrix's picture

Prarie Fire,

Obviously you aren't talking about stocks/bonds, we know that.  In fact, we know what you are meaning already, so don't write it, because you don't write it well.

And who are you refering to?  Everyone?  Everyone of the OWS?  You are taking them all on right now?  Right now?  Should I grab some popcorn and wait to be awestruck?

Or are you going to lump all OWS into one group and call them,

unionized crybaby scumbag inbred ows commies


Because that is an overgeneralization.

Prairie Fire's picture

That's the most polite way I could express what I think of the ows bowel movement.

I agree that there's some substance to the movement in the us. Not much, but some. Of course, I'm in Canada, and the ows bowel movement that spawned up here was equally the funniest and saddest things I've seen in awhile. I was fortunate enough to be in Vancouver on business when they evicted the camp from in front of the art gallery--I cheered, along with what seemed to be the majority of the people there. I got home to Edmonton in time to see that eviction too--all nine people of it. I cheered again and gave the leader Mike Huddema supreme shit for the disgusting mess they left behind in the park--of course as he informed me, it wasn't their responsibility to clean the park up after they had been evicted. Hypocrisy, sweet irony, idiots with iphones wearing american fashion labels produced in China shouting about freedom this, equality that, solidarity for everyone. Fucking scumbags.

I don't feel any sympathy for any moron that leveraged their house to the hilt to buy shit, and now thinks that it's the responsibilty of those that acted more prudently to help them out of the nasty situation they got themselves into. I'm a fairly compassionate guy, but stupidity should not be rewarded.


tumblemore's picture

"I don't feel any sympathy for any moron that leveraged their house to the hilt to buy shit, and now thinks that it's the responsibilty of those that acted more prudently to help them out of the nasty situation they got themselves into."

Just like the banks then - except the harm caused by any one individual moron is nothing compared to the harm that's been done by the Wall St. crime syndicate.

DaveyJones's picture

and they didn't need to bitch in the street, just collect at the window 

the prarie limits your vertical perspective  

weinerdog43's picture

Shorter Prairie:  "I can't wait until I can get out my brown shirt and march around telling other people what to do."

ViewfromUndertheBridge's picture

"the responsibilty of those that acted more prudently to help them out of the nasty situation they got themselves into. I'm a fairly compassionate guy, but stupidity should not be rewarded."

So, you are upset about the trillions of dollars from the public purse that went to and continues to go to insolvent banks...and you are expressing your discontent by attacking OWS?

.gov troll? you fucking fool.

Bansters-in-my- feces's picture

Prairie Feces......

Seems more suiting.

Thomas.2012's picture

Prairie, dont be so angry!

You have bought land, you make tons of money shorting the markets, you even invested in a small vacation business, you seem to have a nice job where you can travel around the world and I guess you are certainly free of any debt.

And on top of that comes you great attidude ... lol ... what a perfect life ;-)

eureka's picture

Chill & Peace Be With You, Prarie - Million Dollar Bonus is joking - all his posts are satire, sarcasm - i.e. exagerations to ridiculous proportions of the opposite of his real and most ZH'ers POV - which is "let freedom range" - but not bailout-, lobbyist-rigged-, corrupt-, corporate-, bankster-, militarist-, crony-capitalism.

happy weekend -

rufusbird's picture

to far down the list to answer

riley martini's picture

 Parie Fire . If you only  had some money ha ha . O to be 20 and dumb as a rock to the ways of the world . I bet those union workers have money they didn't get by letting all the money go to the executives.

Al Gorerhythm's picture

"Where are all the capitalists out there?; followed by I wish I had some capital to deploy". It sounds as if you want some credit to lever rather than capital to deploy. Dear oh dear. Your idea of capital accumulation is that which you wish to strip from someone else, rather than create wealth for redeployment. That's not what capitalism is. Vulture economics is what you are advocating and what got us here in the first place.

YBNguy's picture

Gotta disagree with Kyle on Japan. All their hate will be focused on their own lying government when the deaths in the near future show how bad Fukishima really was/is...

LawsofPhysics's picture

"END THE FED - END the ONE WORLD GOVERNMENT and free the people of the world, including the U.S. people"

fixed it for ya.

whatsinaname's picture

And now CNBC battles ZH on yahoo finance..look at the ZH reference and the humbug comment..


The central banker of the country most famous for hyperinflation, Zimbabwe, is warning that the US may be on the wrong path and urging his country to adopt the Chinese yuan as its currency.


Reserve Bank governor Gideon Gono has warned that Zimbabwe's nascent economic recovery is at the mercy of the United States dollar, which is facing new pressures from the Euro-zone debt crisis.

Gono says Zimbabwe should in fact be looking to the Chinese yuan as its main currency, while urgently seeking to restore its own currency which was abandoned in 2009 after a dramatic loss of its value.

Speaking in Gweru last Saturday, Gono said: "The extraordinary happenings in Europe where economic power houses in the euro zone have been hit by a debt crisis deserves extraordinary measures, especially here in Zimbabwe where we have adopted the US dollar as the major currency in our multi-currency regime.

"With the continuous firming of the Chinese yuan, the US dollar is fast ceasing to be the world's reserve currency and the Euro-Zone debt crisis.

Zero Hedge reads this as a warning for the US. Even Zimbabwe sees we're headed toward inflation!

Bah humbug!




ucsbcanuck's picture

CNBC is unhappy that the serious people read ZH. CNBC wants ZH along with Meredith Whitney and Kyle Bass out of the picture, because they are too honest for CNBC. Reality doesn't make ratings.

Comay Mierda's picture

the presstitutes gotta keep people ignorant of the biggest wealth transfer in the history of the world.  hyperinflation will decimate the savings and lifestyles of everyday people.

"no, no, really, printing a fuck load of money to bail out the banks and monetize deficit spending wont create inflation"

they are engaged in full-on assault of truth tellers now

no life's picture

One morning I had CNBC on for some strange reason and, I shit you not, Cramer must've blabbed about ECB printing money to bailout Europe about 35 times in the space of two hours.

Bokkenrijder's picture

"Unfortunately, this video is not available in Germany because it may contain music for which GEMA has not granted the respective music rights"


Fucking New World Order...!

Freddie's picture

Kyle rocks.  The idiot ex-IMF guys is a big f*g.

Old. No. 7's picture

Curb your man crush, they're cut from the same cloth. You just don't know it. Like you don't know

the "Mooslim" Orhama was installed by the Chicago Zionist Mafia.

hampsterwheel's picture

Its all here in this guys work - a masterful explanation about money and why ending the fed is only 1/2 right - its much bigger than the fed... a must watch - and share...

covert's picture

the arabian empire will be the new world order, enslaving the sheeple.


DK Delta's picture

This title is bound to generate a lot of attention's picture

Everybody wants to know where that New World Odor is coming from.

UP Forester's picture

Not everyone knows that BO is only a telling symptom of disease....

Jordan Kanter's picture

The momentum grows: DEBTORS REVOLT – intentiona­­l *default-e­­n-masse* to hasten the collapse of the predatory lending system and the plutocracy into which our country has morphed.

Join us. Simply refuse to play their game, and repudiate your debts – just walk away. The system, as it has transforme­­d over the past 15 years, is simply rigged against you and offers you no mercy. So show no mercy in return; just default. Watch what happens – their power depends upon OUR cooperation, and our continued fear. Reset and rebuild from there.

DEBTORS’ REVOLT — DEFAULT EN MASSE.   Critical mass approaches. 

Zymurguy's picture

and pull all your cash out of the bank and stop paying taxes... let's crash this beeeoooootch!