Bass started making predictions about the Chinese economy back in 2015, toward the end of the fourth quarter, and as yet those predictions have not been verified; though it does seem there are some markers which indicate Bass isn’t totally out to lunch on this one. Most significantly, the steadily freezing bond market of China.
China has a three trillion dollar bond market, and it’s quickly coming to a standstill. Bass points to this as evidence of his prior claims; though he does seem to be softening his tune a little.
Kyle Bass predicted that there was a forty to fifty percent chance of economic implosion from the Chinese quarter by the end of 2016. He said it was definitely going to happen within the next two to three years, but that Americans should expect the drop to come by the end of this year. He qualified this statement by saying that there probably wouldn’t be a “Lehman Brothers Moment”, that China wouldn’t experience “Armageddon”, but that the government would very likely be forced into devaluing the currency, which would end up dropping the United States economy by a factor of about twenty percent.
The thing is, it’s July right now, and Bass has yet to be fully vindicated in his prediction. Sure, the bond market isn’t doing well, but it’s more “cold” than it is “frozen”. Since Bass has around a billion tied up in his bet against the Chinese economy, he’s also got incentive to help goad American investors into restraining their investiture in the company. Bass has a media platform to affect the economy from, given to him when he short-sold his holdings related to sub-prime lending prior the 2008 collapse. He became famous for that, and since then has become a regularly received voice on the international economic stage.
But Bass also supports a socialist despot in Argentina, his home country. Christina Fernandez de Kirchner, who has defaulted Argentina twice in thirteen years, never hears a negative word from Bass regarding her financial decisions. And that’s not to mention his pseudo-humanitarian group CAD, the Coalition for Affordable Drugs, who uses public sympathy and chicanery to force stock-drops Bass can short-sell. The man has some clever schemes up his sleeve, but they tend to be based around under-ethical practices.