Kyle Bass jumped on the scene in 2008 when he successfully predicted the sub-prime lending crisis which eventually was responsible for an economic collapse in the United States. A hedge fund manager from Argentina, Bass has controversial ties to the country’s president, Cristina Fernandez de Kirchner; a well-known socialist. Bass has also been involved in stock-market manipulation of an entirely legal variety. He started a group called the Coalition For Affordable Drugs which successfully decreased the cost of several big-ticket pharmaceuticals’ output. He then short-sold all the stock he had in those given pharmaceuticals and made a great deal of money. Bass has plied this charade in multiple ways across the market and come away successful, and so many have begun to follow his financial egress with interest.
Currently Bass is predicting the Chinese economy will stunt America’s economy by ten to twenty percent in the next year. He believes this because Chinese spending/loans/etc. come to about $35 trillion, but the country’s Gross Domestic Product is only $10 trillion. As Bass puts it, a “credit cycle” is imminent, and since America’s economy is tied up in China’s currently, that indicates the USA will feel a loss as well.
Whether or not Bass is right, the man is definitely knowledgeable about banking systems, and China’s in particular. He knows his numbers, he knows economy, and he knows how markets work. Bass believes the economic diminishing won’t have anything to do with China’s profits hitting their peak; or at least that won’t bet he primary catalyst behind economic meltdown.
The question becomes, with all this information in mind, what Bass’ actual aims are. Granted, he has successfully predicted a number of economic “disturbances”. In Japan, he predicted economic trouble that would result in the government meting out stimulus packages. Again, he was correct. But with the ties he’s got back home in Argentina, it’s difficult to say whether or not Bass’ understanding of economy is something directed by an entrepreneurial spirit, or something that is beholden to puppeteers hiding in the wings. Cristina Fernandez de Kirchner casts a strange light on all his activities.
Whatever the case, Bass has been right before, and it looks as though he’ll be right again. The only cogent thing to do would be to wait and see. Should Bass be correct, those involved in Chinese stocks may do well to short sell them in the very near future. Only time will tell, and by the end of the year Bass will either be proved correct, or incorrect.