Kyle Bass at Hayman Capital – How does the global debt ponzi scheme end? — War.

Bass makes a whole series of insightful observations regarding the global economy in the attached video, observations of the type one is unlikely to hear expressed on CNBC . But he makes one particularly chilling point. We have never seen peace time debt levels like this. In the past when debt levels spiked, during and just before war, the losers of the war got saddled with the debt. What happens now with much higher levels of debt to GDP ratios than we’ve ever seen, when the world is for the most part at peace?

Some highlights:

-Germany is in bad shape too. Don’t believe the hype. It’s not an island of fiscal sanity.

-The US has recapitalized it’s financial system. Europe hasn’t even started.

– Since the beginning of the financial crisis the world’s central banks have created $10 trillion out of nothing.

-Soveriegn default is not always a political decision. Sometimes the market will force a default with or without the politicians on board.

-“If Japan ever moves to an inflationary bias, they’re finished.”

-When things realy get rolling on the global default train the powers that be won’t tell you. In fact they will lie. Because that is their job. Keep confidence at all costs.

-“There will be a bond crisis in Japan the next 2 or 3 years. And it will be a big one.”

– (Japan) “is at the end of their (debt) rope. They don’t know what to do. They don’t know where to go.”

-“The globe is about to enter into a period of soverign rstructuring. And what does that mean? …People are going to lose a lot of money.”

– China is in real trouble. Chinese banking and stats are not to be trusted. (We have said this also many times.)

– On the positive Bass sees the US as the least ugly girl at the global economic dance.

Plus lots more.

The video is long, just over an hour. But it is worth the time if one really wants (needs) to know what may be heading down the line economically in the near future.

Click here for the video.

6 comments
Shawn Eng
Shawn Eng

What can't be paid, won't be paid. I better start doing push-ups now...

Joy Holowicki
Joy Holowicki

Alot of what he says sounds like applications of Reinhart and Rogoff. I think he mentions them? Check out their book, it's great.

Aidan Haggerty
Aidan Haggerty

The banking system in most countries are in a messy state right now because they got into the derivatives markets. So, they're busy covering their loose ends right now.

John Wright
John Wright

don't know, but we(the USA) should follow Iceland!

Keith Weiner
Keith Weiner

It doesn't necessarily mean war, but right now most people are all-in on the idea that FDR's policies got us out of the First Depression. When those policies fail us now, they could flip to the other myth: that WWII got us out.