What if the boy who cried wolf was right the first time, and not the third time? What if he yelled: “Wolf! Wolf!” And there was a wolf! But then after the fact, he was so enamored of the public response he got, that he then began to call wolf whenever he wanted attention? Well then that boy might be named Kyle Bass–but it’s a heavy “might”. He seems to have found a trail of the recession wolf leading to and through China, but it’s hard to tell if he’s really after some evil pack carnivore, or a regular old fluctuating economic dog. Their paw-prints look so similar! See, China has a three trillion dollar bond market that seems to be freezing right now. Kyle Bass has predicted that the Chinese economy would be forced to devalue their currency soon. He’s been making negative predictions about China since the fourth quarter of 2015, but here it is July, 2016, and nothing has come of those predictions yet. Earlier in the year, Bass predicted that there was a forty to fifty percent chance of the Chinese economy experiencing the collapse he predicted, forcing currency devaluation which would cut the US economy by twenty percent. But he doesn’t think there will be a “Lehman Brothers” moment in China–he doesn’t foresee economic “Armageddon”.
The reason people are not sure how to take him is 2008’s own financial collapse whose ground zero was Wall Street–the first “wolf” Bass called out. He short-sold during that time betting against the sub-prime lending industry, and made enough of a positive return to become famous.
But Kyle Bass has a long history of doing shady things of a market-manipulative kind. UsfulStooges covered many of them in The Frantic Investments of a Desperate Gambler. Consider CAD, the Coalition for Affordable Drugs. Bass uses this pseudo-humanitarian organization to force stock-drops on Wall Street. This is done at the expense of the infirm, and the public involved in their plight. When the pharmaceuticals Bass has targeted with CAD lose money, they’ve got to cut departments like R&D, which suspends medical breakthroughs indefinitely. With a history of practices like that, his statements regarding China’s economy are almost certainly informed by ulterior motive.