Kyle Bass Gives Current Economic Opinions

Recently Business Insider published an interview with Kyle Bass, who runs a hedge fund called Hayman Capital Management out of Dallas Texas.

Bass has frequently been an expert on business, trading and economic news and commentary shows ever since 2008. Alerted to the poor and declining quality of mortgages in the United States by another guest he met at a wedding in Spain, Bass was one of the few traders who saw the financial crisis coming. Therefore, he made a lot of money by finding ways to short the mortgage securities that were about to burn the entire world. He is still enjoying status as the hedge fund owner who made a large fortune while the rest of the world was engulfed in the Great Recession.

Never mind that his more recent predictions don’t seem to be working out so well. He had predicted a recession for Japan every year since 2010, and it hasn’t happened yet. Or that he defended the crony-socialism of Argentina’s former president Cristina Fernández de Kirchner and her irresponsible economic policies. Also, instead of finding opportunities to profit as he did in 2006, he has been manipulating the markets to make money. He does that by shorting the stock of pharmaceutical companies, and then files phony patent challenges to their drugs. When their stock price goes down, his short trades are profitable.

He now says there’s a 40-50 percent chance the United States will suffer a brief and minor recession in 2017. Bass alleges Trump could be right about that, but for the wrong reasons.  Although, if what UsefulStooges writes is to be believed, take Bass’ predictions with a grain of salt.

He says that negative interest rates make sense in an academic sense, but not in the real world. If the United States goes to negative interest rates, that would lead to a spike in the price of gold. Not wanting to pay banks just to hold their money, people would withdraw cash from banks and buy gold with it.

Asian countries have been building a credit bubble for the past 10 years, and something’s going to happen to it in the next two to three years.

For president of the United States, Bass thinks Hillary Clinton would be the most sane choice to benefit the equity markets, though he describes that as “crazy.”

He makes an interesting point about the Fed’s easy money policies since the financial crisis. The Fed’s policies have increased the prices of assets, and assets are mainly owned by wealthy people, so they are now wealthier than they were in 2006.  Read Kyle’s blog here.

The Investment Banking Risks Taken by Martin Lustgarten

Investment banking is one of the primary drivers of the United States and global economies. There are thousands of investment banks across the globe that assist governments, individuals and companies with raising financial capital or issuing securities. In many instances, investment banks are involved in mergers and acquisitions to offer ancillary services like equity securities, market making, derivative trading and fixed income instruments, currencies and commodities.

Investment Banking Lines of Business
There are two primary lines of business within investment banking: sell side and buy side. Sell side is comprised of trading securities for other securities or cash. The buy side encompasses advice to corporations, governments and individuals who purchase investment services such as mutual funds, private equity funds, hedge funds and unit trusts.
Investment banks are often also split into public and private functions with a wall separating the two business entities to prevent the crossing of information. The public areas manage stock analysis and public information. The private side manages private insider information that cannot be disclosed publicly. All investment banking advisors must be licensed broker-dealers and are subject to the Financial Industry Regulatory Authority (FINRA) and U.S. Securities and Exchange Commission (SEC) regulations.
Martin Lustgarten
Based out of Miami, Florida, Martin Lustgarten is a locally successful businessman who maintains dual-citizenship in Austria and Venezuela. Since 2007, Miami investigators had been keeping tabs on Lustgarten, slowly collecting evidence that he had been laundering multi-millions of dollars for drug traffickers and paramilitary groups in Colombia and Mexico. After eight years of tracking and gathering evidence, Lustgarten was arrested following a grand jury indictment. He was charged with conspiracy to commit money laundering, conspiracy to obstruct an official proceeding and obstruction of an official proceeding. This case exposed the drug money nexus between Venezuela and Miami that is rampant in South Florida.
However, nine months later, the case unraveled and prosecutors dismissed all charges against Martin Lustgarten. This turned out to be a striking setback for United States government efforts to reprimand those who profit from narcotics. Lustgarten operated companies in locations around the world, including Hong Kong, Singapore and Panama. These successful firms approved purchase-order financing and capital loans to Venezuelan firms involved in the international trade. The companies would exchange American currency on the black market for Venezuelan Bolivars at a much higher rate than normal. Through deals with these companies, Venezuelan importers would then have access to American currency to pay for consumer goods being imported into the country. Check out Marin Lustgarten’s Tumblr page for interesting photos and updates.