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Kyle Bass’ Analysis of the Macro Environment

http://www.youtube.com/watch?v=JUc8-GUC1hY&feature=player_embedded

I appreciate his fact-based thinking. Take the time to listen to his analysis, it’s worth it.

Some quotes:

  • Debt has grown with CAGR of 11% over the last 10 yrs.
  • We sit today at the largest accumulation of peacetime debt in world history
  • You know how this ends right?…..This ends through war…I don’t know between who and who…
  • War is just is just economic intrepid playing out to its logical conclusion….
  • Southern Europe and Japan is going to restructure
  • Social fabric of the world is going to be stretched or thorn within 2-3 yrs
  • But there is a general reluctance to admit we’ll have to go through this

On Germany…

  • The country is much riskier than perceived…
  • Germany defaulted twice last century
  • They have on-balance sheet sovereign debt of 82% of GDP
  • Their banks are 340% of GDP…

Japan:

  • There’s no chance Japan can ever repay its debt
  • Xenofobe society
  • Social security funding debt is the cancer on their income statement
  • more adult diapers sold than kids diapers
  • In the next 2-3 yrs they cannot hang on
  • the 10th finance minister in the last 6 yrs
  • from the Japanese budget plan: the pensions will be financed through future radical reform (!!)
  • they don’t know what to do and don’t know where to go…
  • retail ownership decreases from 5% to 3.5% because population is dissaving..
  • this it how it all ends

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