According to Kyle Bass, China is on the verge of a serious banking crisis. In a recent interview with Fortune, Bass gave his reasons as to why the crisis will happen though according to him, it is going to be much bigger than the US crisis in terms of the assets at risk. He also pointed out that currently, the hedge fund business is not very forgiving. Bass also pointed out that China does not depend on foreign reserves as its only source of capital and that it can sell bonds to print more money.
He says that China is very exposed because it has three times its GDP in bank assets. Bass views are that China is an emerging market and the last time it had a non-performing loan crisis was in the year 2002 and it suffered loses of over 30% in assets across the entire banking system. Now that it has grown 400% in eight years, it might experience bigger loan loses. He also said that emerging markets are not supposed to be higher than markets that are developed in terms of bank assets to GDP.
Kyle became a public figure in 2007 by becoming among the very few hedge fund managers to make a killing out of the US financial crisis, a lot of which he’s talked about on his Blog. In fact, many people considered him a genius who could do nothing wrong because prior to joining the hedge fund arena, he was a movie director who got nominated for a director and script writer award for The Sixth Sense.
However, time has not been very kind to him. He has particularly become very involved in appearing on television stations giving his ‘professional’ opinion on different market trends most of which have been proven wrong with time. On top of making bad calls, he has also been involved in not very good alliances for his professional image. One of his bosom friends is Christina Kricher who has made very big economic mistakes that have made people in her country suffer. While many of Bass’s peers in the hedge fund arena consider her as economically illiterate, he does not waste an opportunity to defend her actions knowing too well that they are not in very good light.
Bass also likes making easy money. According to UsefulStooges, one of his most recent money making schemes involve short selling pharmaceutical firms stocks and challenging their patents through an organization he started for that purpose. The end result is the pharma companies being unable to maintain their cheap prices therefore making those that depend on their drugs suffer.