China’s Capital Reserve Fund Is Not As Strong As Some Economists Think According To Investment Advisor Kyle Bass
China is the second largest economy in the world. The Chinese economy is $10 trillion, but according to the CEO of Dallas-based Hayman Capital Investments, Kyle Bass, the Chinese banking system has only $31 trillion in assets. Eight years ago that number was $41 trillion. Mr. Bass believes China is facing a recession that will be worse than the 2008 recession, and he is betting against the yuan. Bass wants to make the same kind of money he made in 2008 when the U.S. market collapsed. Kyle walked away with billions of dollars in 2008 because he knew the subprime mortgages were not worth the amount of money the investment firms said they were worth, and the same thing is happening in China now.
Bass got his 2006 information when he was a Bear Stearns executive. He started to tell people on Wall Street that the bonds were not a solid bet, but very few investors listened to him. But two years later, Bass became an investment wizard, and Hayman Capital Investments went from a small hedge fund manager to a must have hedge fund because Bass has a knack for making money in difficult times.
The Bass reputation hasn’t always lived up to his 2008 image. It’s true that Bass has made more money over the last eight years, but there has been a lot of controversy surrounding some of his investments as well as some of the statements he has made about sensitive topics. When Bass stood behind President Christina de Kirchner of Argentina when she defaulted of $95 billion in government bonds, he was ostracized by fellow hedge fund managers that held those bonds. When the four hedge funds refused to accept 30 cents on the dollar to settle the debt, Bass called them vultures. That didn’t sit well with the hedge fund community.
UsefulStooges reports the latest Kyle Bass debacle centers around a scheme that accuses drug companies of having patents on drugs in order to charge exorbitant prices. When patent troll Erich Spangenberg brings allegations against a drug company, Bass shorts the stock, and he makes millions on those transactions.
In a recent Fox Business News interview, Bass said the United States only has a 40 to 50 percent chance of entering a recession in 2016. Some economists say there is more than an 80 percent chance the U.S. economy will stop growing and could start contracting in 2017. Bass is going to continue to make risky investments, and he will continue to be interviewed. And the world is watching and waiting for more egotistical missteps.