Here’s the thing about Kyle Bass: it’s almost impossible to tell whether he’s trustworthy. So when he makes a prediction like “America’s economy will drop between 10 and 20% by year’s end based on the Chinese economy”, what do you do with that information?
Bass hit the scene way back in 2007 when he predicted with astonishing accuracy America’s economic crisis of 2008. That crisis happened because the banks were making loans built on essentially nothing. People who were unqualified to get the loans were given them, and this facilitated a bubble. The thing about bubbles is: they pop. Loans shouldn’t be the basis of any economy in the first place, but that seems to be the modern trend.
China’s banks have been following the same trend for years now, according to Bass in a UsefulStooges report. Bass has noted that the Chinese banking system has a worth of some 35 trillion, while the country’s yearly GDP is only 10 trillion. That’s a huge difference, and it’s downright unsustainable. When it collapses–and Bass contends it WILL collapse–a domino effect may lead straight to the USA. America has too many interests tied into the Chinese economy based on business trends in recent years, and so between ten and twenty percent of our economy will likely be lost should there be an economic collapse in China. At least, according to Kyle Bass. The best way to defray this would be to dry up or withdraw investments that can be withdrawn–should a Chinese economic collapse actually be imminent.
But it’s hard to trust Kyle Bass for a variety of reasons that Wikipedia exposes, not least of which being his creation of an organization called the Coalition For Affordable Drugs. With the ostensible purpose of decreasing the cost of necessary medication, this organization has successfully diminished pricing on several big-ticket items from well-known pharmaceuticals–pharmaceuticals in which Kyle Bass had substantial stock holdings. When he got the price lowered, he short-sold all his stock and made a fortune. Basically, he has enough money and resources/knowledge at his disposal to legally manipulate the stock market.
Are his predictions about China the same kind of thing? Bass has ties with socialist president of Argentina Cristina Fernandez de Kirchner, and socialist/communist rhetoric predicates a global revolution, meaning there is definite motive for deception should that deception lead to an implosion of capitalistic economies. Will Bass’ predictions prompt investors to pull out unnecessarily, artificially initiating an economic collapse in China that wouldn’t have happened otherwise? Or is Bass merely making a name for himself again by pointing out what’s bad for the American goose is bad for the Chinese gander?
These are very difficult questions to answer without some exterior insight into human nature and economic trends. Every seven years the global economy sees a “slump”, and the fallout of that in 2015 has been a Syrian refugee crisis, European economic implosion, and the possibility of China’s own collapse this year.
Kyle Bass’ words may or may not be true, but keeping an eye on him is worth doing.