Kyle Bass’ Comments On China Seem Inert

In a recent Bloomberg interview, Bass said that if China “materially” were to have a currency devaluation, current economic collapse concerns may not have the weight he’s previously imputed. He said whatever happens in the next two to three years, it won’t be “Armageddon”. He further pointed out that should the material devaluation happen, it would be an exciting time to invest in China.

Contrast this with an earlier statement he made where he gave China’s economic collapse a forty to fifty percent chance of happening by the end of 2016. Then dial it back to October of 2015, when first he began calling doom and gloom on China for their expanding debt bubble, and a clearer picture emerges. Financial vocabulary swept away, all Bass has really said is that China could do good, or they could do bad; which basically means nothing. Bass has compared China’s economy now to that in America pre-2008, when the Great Recession hit. That’s kind of spurious, considering China’s population is 1.3+ billion, or more than four times that of the United States. That is a ubiquity of human capital which is definitely not being accurately represented on paper. It’s likely that an economy with such a population can grow a bubble with much greater tensile strength then that blown by America’s sub-prime lending faux pas. The point is, even if he’s right, and China’s economy does resemble America’s during this time, he may have neglected to consider that timetables for them will necessarily differ from those in America.

But maybe he does recognize this, and he’s trying to manipulate the market such that fringe investors bearing substantial capital may withhold their investment, and thus artificially facilitate the collapse Bass has seemed rabid to produce since at least October, UsefulStooges reports. His media influence and past history would certainly make such a scheme within the realm of possibility. Between running a hedge fund, regularly supporting a socialist leader in Argentina responsible for twice defaulting the country (Cristina Fernandez de Kirchner), and undercutting banks like Bear-Stearns on Wall Street in a way which led to personal profit, Bass has a sordid history of financial dealings. It is recommendable, then, to consider his China predictions in the same light.

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