Must Watch Kyle Bass Interview On CNBC

Posted By on August 17, 2010

From     08/17/2010

The one must watch interview of the week (if not of the year) features Hayman Capital’s Kyle Bass.  Bass, who correctly called the subprime implosion (and profited handsomely from it) as a iconoclast contrarian to conventional wisdom, tells David Faber that “given my outlook on the world, I don’t know how I can be long stocks.” Themes touched upon in Bass’ interview are the inevitable restructuring of untenable sovereign debt, the nearly $5 trillion in new global debt that needs to be issued just to plug near-term deficits, and the European stress test along with and the ongoing insolvency of the European banking system which is multiple times bigger than its U.S. equivalent, the imminent downward revision of Q2 GDP to sub 1%, the Fed’s conflicted position as a political authority whose sole purpose now is to keep interest rates as low as possible, as even the slightest shift to higher short-end rates will be seen as a black swan, indicative the Fed is losing control over the economy, and ultimately the futility of Keynesian theory band-aiding of a world caught in a toxic debt death spiral. In short, Bass sees no way the world can get out of its current state absent a huge reset. If Bass is eventually proven right the existing financial system will no longer exist, everything will be restructured.

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