Kyle Bass Warns "All Hell Is About To Break Loose" In China

SteveM said:
Out of all the guys who became famous predicting the 2008 crisis (John Paulson, Roubini, Taleb, Bass, Burry, Meredith Whitney, Eisman).....Kyle Bass has the best track record in terms of getting macro calls correct in the post-crisis time period, while guys like John Paulson have been revealed to be one-hit wonders. Just my opinion.
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I think that predicting a crash (with the open positions to back said prediction) is indicative of a bad trader with good luck. Doom and gloom naysayers are always around (even in 2009 and '10), but a big systemic bearish play on America is usually sorely punished. The question is, can that massive one-off win really offset all the tiny losses while waiting?

Don't get me wrong, I'm not above protective puts and strategy adjustment, but I know if I had been bearish during any 3-month period during the proceeding year, I would have left more gains on the table than I would lose if it hit the fan tomorrow. (and seriously, I do insurance, I've considered far worse than anything in the Dow's history)
 
beerntrading said:
I think that predicting a crash (with the open positions to back said prediction) is indicative of a bad trader with good luck. Doom and gloom naysayers are always around (even in 2009 and '10), but a big systemic bearish play on America is usually sorely punished. The question is, can that massive one-off win really offset all the tiny losses while waiting?

Don't get me wrong, I'm not above protective puts and strategy adjustment, but I know if I had been bearish during any 3-month period during the proceeding year, I would have left more gains on the table than I would lose if it hit the fan tomorrow. (and seriously, I do insurance, I've considered far worse than anything in the Dow's history)
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I agree. I believe in America; earnings are pretty strong. But what scares me.... and admittedly this is not my area of expertise.... is the Federal debt.

You just can't get something for nothing. Its like physics. Newtons Laws... or something. But its true. Its a universal truth.

I look at our companies like classic cathedrals built out of granite. Designed by the best architects and engineers; built by the finest masons; towering majestically for all to see... but sitting on a foundation that is in essence.... sand. The footer is missing.

Thats what scares me. Someday the sand has to shift. But when? And what will be the catalyst? Until then.... we party on I guess. 800 sqf residential shacks in San Fran will sell for $1M plus.

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beerntrading said:
I think that predicting a crash (with the open positions to back said prediction) is indicative of a bad trader with good luck. Doom and gloom naysayers are always around (even in 2009 and '10), but a big systemic bearish play on America is usually sorely punished. The question is, can that massive one-off win really offset all the tiny losses while waiting?

Don't get me wrong, I'm not above protective puts and strategy adjustment, but I know if I had been bearish during any 3-month period during the proceeding year, I would have left more gains on the table than I would lose if it hit the fan tomorrow. (and seriously, I do insurance, I've considered far worse than anything in the Dow's history)
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Dude, Bass is not a doom and gloomer, he has been bullish us stocks for 4 years. Please, if you are going to pontificate, please lay the facts before you first. Thanks.
 
vanzandt said:
I agree. I believe in America; earnings are pretty strong. But what scares me.... and admittedly this is not my area of expertise.... is the Federal debt.

You just can't get something for nothing. Its like physics. Newtons Laws... or something. But its true. Its a universal truth.

I look at our companies like classic cathedrals built out of granite. Designed by the best architects and engineers; built by the finest masons; towering majestically for all to see... but sitting on a foundation that is in essence.... sand. The footer is missing.

Thats what scares me. Someday the sand has to shift. But when? And what will be the catalyst? Until then.... we party on I guess. 800 sqf residential shacks in San Fran will sell for $1M plus.
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National debt looks much more terrifying in a linear chart than a logarithmic one. In 1972 it was about equal to Apple's market cap today. Today it's about 12 Apples. About the same growth rate as AT&T, but excluding the dividends. I'd be furious if I own T and didn't get my distributions.

I don't see a problem with continuing to carry the debt, it's some of the lowest interest debt in the world. And it's not something for nothing, it's cash now for interest later. And, carrying that debt provides the basis for a vital underpinning for American (and world) markets.
 
Maverick74 said:
Dude, Bass is not a doom and gloomer, he has been bullish us stocks for 4 years. Please, if you are going to pontificate, please lay the facts before you first. Thanks.
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Did I say he was? I thought from the context it was clear I was agreeing with a post contrasting him with one-hit wonders.
 
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beerntrading said:
National debt looks much more terrifying in a linear chart than a logarithmic one. In 1972 it was about equal to Apple's market cap today. Today it's about 12 Apples. About the same growth rate as AT&T, but excluding the dividends. I'd be furious if I own T and didn't get my distributions.

I don't see a problem with continuing to carry the debt, it's some of the lowest interest debt in the world. And it's not something for nothing, it's cash now for interest later. And, carrying that debt provides the basis for a vital underpinning for American (and world) markets.
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Hmmmm. I'm not an economist.... but something doesn't sound right here.
What does "cash now for interest later" mean?
Constantly spending beyond one's means year after year, be it an individual or a government, is in fact....."getting something for nothing". It would be like you having a credit card with no limit that you never had to pay down. I mean basically thats whats going on.

I don't know. Common sense says something has to give at some point. Who knows... maybe not.
It sure seems illogical to me though.
 
vanzandt said:
Constantly spending beyond one's means year after year, be it an individual or a government, is in fact....."getting something for nothing". It would be like you having a credit card with no limit that you never had to pay down.
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The US does have creditors...there's people lined up to take on that debt. That could dry up for sure, I mean, China alone pulling their cash from the market would spike the rate nicely.

You're right about spending beyond means, but I just don't think we're there. 105% of GDP isn't that huge in the grand scheme of things. It's high compared to a mortgage when considering government revenue, but government is different.
 
beerntrading said:
It's high compared to a mortgage when considering government revenue, but government is different.
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I think the critical difference is that with a mortgage, principal gets paid down every month. With government, the best you can hope for is a balanced budget in the best of times, and of course, more deficits most other years. Its kind of like those mortgages where you only pay the interest and not the principal. How did those turn out? :D

Of course since the government never dies, and the debt can just be rolled over onto the next generation, then the need to pay back isn't as immediate, but I'm sure that the officials secretly pray that nothing bad happens on their watch, and that they can just inflate the debt away without anyone noticing.
 
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