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.