I'm sitting, I guess, exposing myself to the usual dose of afternoon comedy, as a watch an interview with hedge fund manager Kyle Bass on CNBC where he's warning of the big bust in Japan and explaining how he's shorting Japanese bonds right now so that he can take advantage of the coming crisis.
Bass just got introduced by CNBC Capital Markets Editor, Gary Kaminsky, who I thought was a pretty smart guy (now I'm having doubts), but I am floored when I hear Kaminsky accord him such reverence, saying that he's "honored" to be sitting in the midst of such "brain power." If that's brainpower I'd hate to see what Kaminsky considers to be stupidity.
Bass begins by saying there's going to be a huge bust in Japan because there's no way the country can avoid a bond market crisis, insolvency, default and/or, severe hyper-inflation.
Never mind that people have been making this same, misinformed, prediction for the better part of the past 20 years now and despite the fact that Japan's debt is three times that of the U.S. yields on 10yr JGB's are a paltry 0.88%. In addition, Japan's inflation rate is, like, ZERO, and the yen has been so strong that it's caused Japan's monetary authorities to have to intervene (something they are loathe to do) to try to get the damn thing down and that hasn't worked very well.
Is Bass blind? Are all these debt guys blind??? It is my humble prediction that it will only be a matter of time before he is relieved of all the money he is managing. And that would be a good thing. I mean, seriously, this is such a rookie, misinformed, ignorant, unscientific prediction that I can't believe Maria Bartiromo herself doesn't call him out on it. Even SHE knows better!
What really amazes me, though, is how guys like Bass have the ability to con investors into giving them these enormous sums of money to manage. I want some!! How do these guys do it?? Japan...a curreency issuer...defaulting?...becoming insolvent? It's mind-numbingly stupid.
By the way, Bass had one other forecast: he predicted an even worse scenario for the United States, where the debt was "approaching five times revenues" (which, is a pretty normal, comfortable, ratio for the average homeowner with a mortgage) he said. Insolvency, bankruptcy, hyperinflation...the end!
Do yourself a favor, go buy some JGB's and Treasuries. It's almost your duty. We have to make sure these guys never manage money ever again and we all deserve at least a piece of what they're about to lose. A fool and his money...
