Category Archives: Bad Businessmen

China Is Facing Some Tough Financial Decisions According To Hedge Fund Investor Kyle Bass

China is a product-producing machine. Everything under the sun is fair game for Chinese manufacturers. Manufacturing products for less and making them look expensive has been the backbone of the Chinese economy for years. But that backbone has been having major issues the last five years. Competition, commodity prices, and a changing labor force have forced the Chinese to become a consumer-driven economy, and making that transition has been expensive for the Chinese government.

Hedge fund investors like Kyle Bass, the former Wall Street executive that predicted the 2008 market crash, is one of those big-money investors. Bass made a fortune in 2008, while most of the people in the country were licking their financial wounds. Bass claims China is headed for the same kind of economic crash, and that crash is getting closer by the minute. According to Bloomberg.com, Bass is betting big that China’s banks are going to need a major injection of government reserves to handle all the bad debt on their books. Bass is hoping that happens soon because his hedge fund, Hayman Capital, has been performing like a rookie fund the last two years.

Bass is used to the spotlight and the media attention. Every chance Kyle gets to pontificate in front of the interviewers is a good day for the ex-Bear Stearns employee. But Bass hasn’t been getting the kind of reviews he got back in 2008. Some people believe Bass has misplaced priorities, and his recent investments may prove that statement. Kyle took Argentina President de Kirchner’s side when she defaulted on debt bonds and left four hedge funds hanging for billions of dollars. Bass was in General Motors corner when the carmaker installed faulty airbags and steering mechanisms in some of their models. Hayman Capital was the largest shareholder in GM at that time.

The most recent Bass misstep, according to Usefulstoogies.com, is his alliance with Erich Spangenberg. Spangenberg is calling out drug companies for price gouging, and Bass is placing a short position before the news of an investigation hits the press. It seems Bass is not afraid to bend the rules to make a buck. But his recent China bet may come back to haunt him in more ways than one, according to the Chinese government.

Would China Really Fall So Hard?

China is the largest emerging economy in the world, and their economy is destined to have a few ups and downs. The Chinese have spent the last twenty years building an economy that seems unstoppable, but the Chinese economy may come to a crashing halt at any time. Kyle Bass is an investment banker who is famous for noticing the decline in subprime mortgages, but he has not made any good guesses since. This article explains why Kyle Bass may not be the best person to listen to about China.

#1: Kyle Broke Down Walls With Subprimes

Kyle Bass became a very rich man when he bet against the markets during the subprime loan crisis. His bets against these loans made him so wealthy that he can afford to do whatever he wants. He spent quite a lot of time on TV talking about the housing crisis, but he began to take his eyes off his personal hedge fund. There has been a steady decline in his hedge fund over the years, and his guess on China could be considered a grasp for attention.

#2: Kyle Is Making Bold Proclamations About China

Kyle says that he has not had any loans in China that have underperformed since the last time their country has a loan crisis. He believes that he is speaking with utter authority about the Chinese economy, but the Chinese economy is far more intricate than it once was. The Chinese economy today is more diverse, larger and involves a much larger middle class.

#3: Could Kyle Bass Be Wrong?

There are many economists who believe that the Chinese economy will barely fall if it goes through a small loan crisis. Kyle Bass looks like he could be wrong, and he may send many people in the wrong direction as he searches for more fame. Kyle has spent a long time trying to make himself relevant, and this guess about China is something that will make him relevant for another few months.

#4: The Need For Attention Is Getting Old

People who were disappointed by Kyle during the subprime crisis are disappointed by him concerning his most recent prediction. The Chinese economy will likely fall slightly, but no recession will happen as a result of their current problems. These problems will blow over swiftly, and the Chinese will hardly feel a bump in an economy that supports about 1.2 billion people.

Kyle Bass is hardly the person to listen to when investing in China, his Wikipedia history shows that much. Kyle has not paid much attention to his hedge fund for almost a decade, and his is no longer qualified to make such bold predictions. Enjoying Kyle as a TV personality is one thing, but taking advice from him is quite another.