Economic markets are co-dependent on one another in the same way the man standing on another man’s shoulders is dependent on the fellow below keeping his balance. The United States is like the acrobat atop the shoulders of a dozen other gymnasts, and China is like one of the guys on the corner of the pile having a cold that’s knocked him out of balance. In a word, the entire pyramid is compromised.
Kyle Bass has seen as much, understands why the compromise is happening, and has never been shy in expressing his views on the subject. Recently on Half Time, Bass and other financial expositors considered the Chinese economic market. Some felt as though it would be in a natural state of decline due to a natural peak. Bass felt the problem was much deeper, and pointed out that the Chinese economy bears striking resemblance to the European economy before its own bank-facilitated collapse. Likewise, China’s banks have been lending in substantial excess to the country’s Gross Domestic Product, or GDP. Bass pointed out on Half Time that China’s banks have the country down $35 trillion dollars, and that their yearly GDP is only $10 trillion. Bass has also pointed out in other interviews that countries which surround China have been lending to the ancient province “aggressively”, and Bass believes this will likewise lead to an economic implosion with global impact. According to Bass, China’s implosion will happen this year, 2016, and will affect the United States economy such that it declines between ten and twenty percent. The bears will be on Wall Street, as the saying goes.
There’s good reason to trust Bass’ judgement of China, even if Bass himself is slightly suspect. The man is from Argentina and currently works as a hedge fund manager out of Texas. Bass has ties to Cristina Fernandez de Kirchner, a well-known socialist leader of Argentina. Furthermore, Bass has been involved in the manipulation of the United States stock market through a “human rights” group that lowered pharmaceutical drug prices and subsequently the stock of those organizations–against which Bass short sold his own stock. Everyone became familiar with Bass in the financial world when he predicted America’s financial meltdown in 2008 through cogent understanding of the market on which the housing bubble was based. Bass also predicted a different economic meltdown in Japan that resulted in stimulus packages, and so the things he’s saying about China should make anyone paying attention to financial trends arch an eyebrow. Although the verdict is out on whether Bass can be trusted or not.
The question becomes, though, whether or not Bass is even now trying to manipulate the market in his favor one way or another. It’s impossible to tell directly, but whatever the case, Chinese investments may not be the best idea for 2016. More information about Bass can be found on Wikipedia.