Monday, March 18, 2013

Japan and Kyle Bass

Have posted about Japan and Gundlach here
And about Bass here.

Another new video (start from the 10 minute mark or so) of Bass at the Booth School


Madoff taught us well - You can keep making promises to some if you have inflows from others coming in :)

In Japan, it is about to change after 5 years of spending double of their income. 

Ha! And hilarious bit at the 17 minute mark where he calls someone named 'Anil' - 'Anal'

He goes on and says that 95% of the debt is held internally, and 95% of 95% held by institutions like the Japan Post, etc. 
If we are right about the demographics changing, we will find sellers of bonds with not enough buyers at good prices.

The China Japan equation has deteriorated rapidly and potentially secularly.

"When things move, they will move all at once."

If we are right about Japan, their social fabric is going to be torn.


China: Their banking system is 350% of GDP and NPLs are less than 1%. The average NPLs over the last 20 years has been 19% 

There is no lender of last resort for Japan. The IMF wasn't made for Japan. 

Japan is already in the zone of insolvency. 
You don't see 10 finance ministers in 5 years unless there is something horribly wrong - and the aged population is going to see so much of their purchasing power eroded; it's going to be horrible.

About central bankers: He quotes Juncker. "When it becomes serious, you have to lie."



Apparently, they have bought USD 500 Bn of options for Japanese insolvency?

And apparently, the sellers wanted to close out those positions at a huge loss because those banks 

ran some new 'stress tests' wrt Japan's debt crisis.


One advice he had for a potential retail investor wrt this impeding crisis - if you want to go away for 

10 years - was sell the yen and buy gold and go to sleep.

Interesting throughout. Video was well worth my time (in gold?)

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