Update: Here is the video of the BBC Hardtalk program referred to below (Mish’s link is to the BBC audio).

[yframe url=’http://www.youtube.com/watch?v=K-F_QF1XTXI’]

If you live or work in Japan, you might be interested in this BBC interview with hedge fund manager, Kyle Bass. From “Mish”(click the link below for the audio). I agre with Mish that Bass does a very good job of defending himself, without losing his temper, and keeping his sense of humour. Full marks to him. What is happening now in Europe will happen in Japan. When? Will you be ready?

The interviewer tries to express uncomprehending indignation at what Bass is doing. I suppose there are two possibilities. Listeners could

  1. vent their indignation and outrage, blame the “capitalists”, the “speculators”, or
  2. follow Bass’s example and prepare themselves for the inevitable disaster.

How will listeners respond?  How will you respond? “It’s just a matter of time”. How much time? And will you be ready? Here’s Mish (click the link below the excerpt to read the entire blog post):

The BBC has an excellent interview with Kyle Bass – Founder, Hayman Capital Hedge Fund on Europe, mortgages, monetary printing, “gold and guns” and Japan.

At times the interviewer is openly hostile to Bass, blaming him for making money on the US mortgage mess, then again when Greece blew up.

Bass defends himself quite nicely.

His latest play is an asymmetric bet on Japan, based on demographics, interest rates, and ability to service debt. I happen to agree with Bass, that it is just a matter of time before the Yen blows up. I must also point out people have been predicting this for a decade.

via Mish’s Global Economic Trend Analysis: Interview with Kyle Bass on Gold, Hugely Profitable Asymmetric Bets on US Subprime and Europe, and his next Asymmetric Bet on Japan.

Key points:

  1. “All the asymmetry in the world lies in Japan”…
  2. “You’ve already predicted Japan as the next big place that’s going to fall and fall big time…”
  3. “indisputable: Japan has the single worst on-balance-sheet problem with sovereign debt in the world.”
  4. “they’re the most xenophobic society in the Western world, they have an inexorable population decline, they’ve lost about 3 and a half million in the last 4 years, they’re going to lose some 27 million people in the next 40 years, they have the worst demographics of any nation in the world..” (note the implied analogy of government spending with a Bernie-Madoff Ponzi scheme)
  5. (BBC interviewer’s objections) “But Japanese savers are sitting on 15 trillion dollars of savings, they hold more than a trillion dollars in currency reserves… and they like their own government’s bonds…”
  6. “… this is the first time in history that the country’s sovereign debt has exceeded the private assets of the individuals…Japan has, when you look at their central government’s revenues and their interest expense… Japan spends 50% of its tax revenues today on debt service today, of which half is interest… if interest rates move… 2%, their debt service will exceed their revenue.”

The BBC interviewer introduces her guest (hedge-fund manager Bass) as someone who “saw what was coming, and made a fortune from it“. But from another point of view he prepared himself and his customers against it. Apparently, this view escapes his interviewer: all she wants to know is how much freaking money he made on this, with the implication that a) this is immoral and probably illegal (or should be), and b) such reckless greed probably caused the crisis in the first place, not the governments who overspent and the voters who voted for them oh no  (she should ponder the wisdom of Dickens’ Mr. Micawber: “Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”)