China has built an economic system based on a growth bubble in a way very similar to America’s own proceedings prior the 2008 financial meltdown. It’s not a one-to-one comparison, but the similarities are there; namely: providing financial reach to those with no ability to reimburse their spendings. Kyle Bass believes that this expanding credit bubble will result in an economic implosion. He doesn’t think it’ll be like what was seen in America during the 2008 financial meltdown. Bass has said he doesn’t see a “Lehman Brothers Moment” in China’s future. He does, however, predict that there’s a forty to fifty percent chance an economic downturn in China will affect the United States economy by the end of 2016. He says the collapse must come in the next two to three years.
All that sounds like qualitative analysis, till one realizes that a fifty percent chance is basically binary: either or, a flip of the coin. A forty percent chance is even less likely. Or look at it this way: there’s a fifty to sixty percent chance there won’t be an economic downturn based on China’s economy by the end of 2016. Kyle Bass has basically said a non-thing any person with even a passing familiarity with economics could say. Every year there’s technically a fifty percent chance of economic downturn in any country; it just depends on the factors involved in economic development that year. Consider the Fukushima nuclear meltdown in Japan–that certainly wasn’t planned.
But Kyle Bass is no stranger to market manipulation, as this must be; else he demonstrates a level of incompetence. Bass started CAD, the Coalition for Affordable Drugs. CAD uses politics to decimate pharmaceutical prices facilitating stock declination and allowing Bass to short-sell his holdings for millions in profit. He legally manipulates the stock market and gets away with it.
Bass is also closely tied to Cristina Fernandez de Kirchner. De Kirchner is known worldwide for defaulting Argentina’s economy twice in only thirteen years. Yet Bass continuously praises her financial endeavors. His own Argentinian heritage is no excuse; if anything that makes it more perplexing he would praise a leader destroying his country.
With these things in mind, when Bass makes a market prediction, consider the possibility he’s playing an angle.