Kyle Bass: BBC Interview on the U.S., Europe, Japan, Gold and Tearing of Social Fabric

An excellent interview with Kyle Bass, founder of Hayman Capital Hedge Fund, on his take on “global debt scenario and what’s likely to happen going forward.” He made highly profitable asymmetric bets on the U.S. subprime mortgage crisis and Greek default.

He calls for “massive debt restructuring” in Europe. He’s saying “you have to have atonement for the ridiculous levels of spending both the U.S. and Europe have gone through. The spending idiocy of the world is going to catch up to itself.”

He is bearish on Japan, making his next asymmetric bet on Japan.

"Buying gold is just buying a put against the idiocy of the political cycle. It's that simple"

His Interview on BBC:

http://www.bbc.co.uk/iplayer/console/p00lh2jc

His points in his letter to investors back in May 2010 have been proven to be correct.

From his letter:

This weekend, the EU and the IMF effectively went all in with a bad hand in the highest stakes game of financial poker ever played with the world. We believe the agreement released was nothing more than a Potemkin agreement in order to placate bond investors. In the end (and there will be a reckoning for many countries) nations, including the United States, need to dramatically cut spending and get their fiscal balances in order. Unfortunately, our elected officials are on the hamster wheel of electoral cycles and are not able to make tough decisions like this as they would likely not be reelected without a “sea change” in public opinion towards government spending and deficits. We are therefore on the path to significant currency devaluation around the world that will likely result in significant inflation. We increased our holdings of gold on Monday morning as well as taking other steps to position ourselves for the most likely outcome over the next few years. Interestingly enough, based upon the market reaction in the last 36 hours, it seems the law of diminishing returns applies to bailouts as well.

http://www.zerohedge.com/news/blast-past-kyle-bass-was-right-about-everything-again