By Charles Biderman
Yesterday Zero Hedge had a link to Kyle Bass’ one hour brilliant dissection of the present disastrous condition of the global financial world that he says within two years will result in a fiscal collapse led by Japan and followed by Europe, including Germany, China and of course the US.
Kyle, who runs the Hayfield Capital Management hedge fund, goes into great detail to explain how the collapse of the government Ponzi bond scheme that I’ve often talked about will result in the coming international fiscal disaster. Some of you may want to reference Wikipedia while watching to understand some of his acronyms and terms.
In the video he references actual numbers delineating the how leverage banks are to ever growing piles of government debt. Kyle also explains in simple terms why Japanese government bonds are likely to be the first to collapse. He points out that German and Chinese banks’ debt leverage are at secular highs, more than wiping out current equity. Kyle also points to today’s zero interest rates amid global monetary printing as the beginning of the end.
I have been delivering the same message as Kyle, but I must add that I also learned a great deal from the global financial data and personal contacts he shares in this video. And the most important takeaway for me is Kyle’s premise that what has allowed the government bond Ponzi scheme to go on this long is the prevalent positive magical psychology dominating the financial markets. In other words: Since it has always worked out well in the past, it will all eventually work out this time as well. Of course what this really means is we can keep kicking the can down the road forever.
That insight alone for me was worth the one hour to watch this video.
Tags: Biderman Bonds Bong Market Economics Economy Europe fiscal cliff government bonds japan Kyle Bass Ponzi Scheme TrimTabs Wall Street