Kyle Bass on China’s Major Risks & Opportunities (w/ Grant Williams)


GRANT WILLIAMS: Kyle, welcome back. KYLE BASS: Thanks. GW: It’s been way too long since you and I
had the chance to sit down and talk about the world. It’s great to have you back. And the subject today is China. We’re going to talk about China. You and I had lunch in Dallas a little while
ago, and we were talking about China. I know it’s something that you’ve done a lot
of reading about. And every time you’ve done a little reading,
I want to hear your thoughts are. They’re always so well organized and so well
structured. So let’s talk about how this all kind of coalesced
as an idea for you. KB: Yeah, I think what we try to understand
is the capital flows. When you think about capital flows, what do
we learn 10 years ago, almost to the week, was that flows mattered more than the stock. And as soon as the flows became meaningful,
the stock became important. And so this idea of what happened to Lehman,
what happened to Bear Stearns, what almost happened to Goldman and Morgan Stanley actually
applies in the context of the sovereign realm. There are many more variables to the equation,
but when you think about how China operates and how it operates globally, you have to
bifurcate your thought into two buckets. One bucket is how China operates domestically. They have a renminbi-based economy that they
essentially control. And I think global investors understand that
they can control their internal accounts of RMB, basically however they wish. They can print more. They can recap banks. They can make losses go away. They can make people go away. They can do all kinds of things internally
that we really aren’t privy to and probably won’t ever be privy to. But the kind of the barometer, or let’s say
the arbitrator of China’s cake and eat it too strategy is the exchange rate vis-a-vis
the rest of the world. Now as you know, they’re a massive net importer
of goods, of call it raw materials, whether that is iron ore or crude oil or derivatives
thereof. They need foreign currency to continue to
grow China Inc’s working capital. You think about it as working capital. The way that that works is they need positive
capital flows annually on a net basis. So their current account has to be positive. They have to be growing their wealth, and
they have to be growing it in foreign currency terms, not just in RMB terms. And so what we’ve studied are those capital
flows, and we’ve studied their use of dollars, euros, and yen, and really, it’s mostly all
dollars. The euros and yen are negligible. When we think about dollars, China’s brought
roughly 400 million people out of abject poverty into the middle class, and they’ve taken the
middle class to the upper class and the upper class to the elite, well, what’s the first
right the wealthy Chinese and middle class Chinese want to exercise, and it’s their right
to travel. GW: Right, sure. KB: Because the PRC said, we want you to travel. When they travel and spend abroad, they spend
dollars. They don’t spend RMB, because Jamba Juice
won’t take RMB, and the hotels in London won’t take RMB, and the hotels here won’t either. We’re a long way from that. And when you think about, you look at the
Swift global settlement system, if you look at the most recent report that Swift has put
out, Chinese GDP is around– if you dollarize the RMB at the current exchange rate is about
15% of global GDP. They’re the second largest economy in the
world behind us. But it’s Swift settlement terms, the RMB doesn’t
even amount to 1% of Swift settlements. So they kind of have this– they have this
world that’s of their own conjuring, right, and so, again, when we think about flows,
these Chinese that travel and spend abroad, they actually have this data series between
CEIC and Safe. We use their numbers. So the travel services deficit in China is
almost $80 billion a month– a quarter, sorry. A quarter So they’re $320 billion a year. And that number, if you look at this chart
it just keeps going down and down and down, because what’s happening more and more Chinese
are traveling and spending abroad. They’re not really investing abroad yet en
masse, because the government won’t allow it. So the Bank of England wrote a great paper
on the expectation of Chinese investment abroad, being upwards of $25 trillion by the end of
2025. We all know that can’t happen. A, they don’t have that many dollars, and
B, that’s just too quick of a move. So you have the travel service deficit costing
them, and the most interesting thing, when you really look down at the numbers is their
current account’s gone negative for the first time since 2001. All right, so it’s really 17 years since it’s
been negative, and the first half of this year, it’s negative. And there are a few reasons why, the travel
services deficit, getting the $320 billion, and the second thing when you look at their
current account is they’re such a massive net importer of energy. GW: Sure. KB: So you look at energy. If you remember end of 2014 when crude oil
collapsed from 100 down to 35, and iron ore the base metals went with it, that gave China
a huge reprieve. Their current account was right at 0 at the
end of 2014, and that it bounced back up into the low single digits, because all of a sudden
their raw materials costs collapse. So what’s interesting is the net volume of
crude oil that they import has gone up 45% in four years. And now what’s the price doing? It’s turning. GW: Yeah. KB: So the price of crude has gone from mid
30s to call it 70, and the same for our base metals, iron ore, and lot of the inputs that
they have. So when you look at their current account,
this is not an aberration, right, and the reason they’re fighting so hard on trade is
while they run a big trade surplus with the US, they run trade deficits with everyone
else everywhere else. And so they run a $400 billion trade surplus
with the US, and their current account’s negative. GW: Yeah. KB: Right? And what we’re doing is putting some tariffs
and trying to at least level the playing field on unfair trade practices. And that’s why they’re really pushing back
so hard, because they’re out of dollars. So they are desperately short dollars, and
now their current account’s negative. And so when you think about this fallacy of
China can have its cake and eat it too forever, I think we all know that that can’t happen. And what we’re seeing now is all the preconditions
are set forth for pretty material devaluation. GW: Well, let’s talk– The devaluation story
has been something that you and Mark Hart and people have spoken incredibly eloquently
about, and every time I’ve read those theories, and you lay out the steps, they’re all very
plausible, and they will make perfect sense. But I think what’s probably confused a lot
of people is this idea that China can’t have his cake and eat it, too, makes sense, but
they’ve had their cake, and they’ve been throwing it down their faces for a long, long time. And so people kind of think, well, maybe this
can go on like everything these days. Can this go on forever? What’s going to be the tipping point for this,
and are we there with this the current account going negative? KB: Yeah, I think, again, the flows really
matter. And when we studied their banking system,
their banking system is called– if you dollarize it just for argument’s sake, if you use current
exchange rates, it’s almost $50 trillion if you include the shadow banks, and they only
have $12 trillion of GDP. We’re talking about 400% of GDP in their banks,
and even the IMF that NPLs, publicly they’ve said they think non-performing loans in the
Chinese banking system are 7%. Well, if 4 times your GDP is in your banks,
and you have 7% losses, you lose a lot of money, and they only have $2 trillion of equity
in their banking system. And so our view all along has been that we
all know that the rolling loan gathers no loss. GW: Right. KB: And the Chinese are experts at rolling
loans, because basically they just grow the loan balance, right, they just term it out. And so no cash is coming in. This is almost a non-sequitur, but you’ll
love this story. When I wrote an investor letter a couple of
years ago, one of the charts that we found in the Chinese data, it was losses by loss
making enterprises. GW: OK. KB: OK? And that was actually cash flow losses. Right, it wasn’t rolling loans and no interest
being paid. It was losses. Those numbers approached 2% of GDP. Well, the total Chinese banking system profitability
was 1.8% of GDP. GW: OK. KB: So they were losing money the entire banking
system was actually reporting its profits. But mind you, they weren’t getting the interest
payments. And once we put that in a, letter the very
next day, the data series disappeared… GW: Is that right? KB: From the Chinese, and they’ve never shown
it again. GW: interesting KB: So again, this idea of
flow is very functionally relevant to this answer to your question about when. When we were saying the Chinese banking system
had grown 1000%, while their GDP had only grown 500%, we know that that can’t last for
long. Right, but you don’t know what turns it. And what turns it is this a desperate shortage
of dollars. And so running a positive current account,
you can keep growing your working capital, and you can keep this charade going, but now
that you have a negative current account and a desperate need for dollars, and the US is
pushing back on trade, you’re really put it into a predicament. GW: What you said that beginning was very
interesting, because I’ve pondered this a long time is I once said if there’s a crash
in China, would we even know about it, because they can pay for this stuff over, and they
can keep– there’s so much opacity there. And in this kind of don’t ask, don’t tell
world that we’re in because everything is kind of floating higher, and we all kind of
know that it’s not real, but everybody’s making money, and so we kind of play along with it. Now, with China, there’s an awful lot of,
yeah, these numbers don’t make sense, and they kind of carry on, and we all kind of
understand that. But everybody’s kind of states– it’s the
Chuck Prince. The music’s playing. We’re all going to dance. And we’re all going to carry on with this. Do you sense that when we’re approaching a
point now where it may not be the end, but we can start to bring it into focus from here? Because it feels, when this happens, it’s
going to happen quickly. KB: I don’t know if you feel it or if you
see it in even the press’s writing, you’re starting to feel the tides turning in the
last, call it, six months, with regard to everyone who leaves and understands and now
knows that the Chinese steal 2 to $300 billion a year from us, whether it’s the trade rep’s
report to the White House or whether it’s the Defense Department’s DIUx report that
they wrote two years ago, they go in and they show you that the state actors are stealing
from us. And what is the US? What is our number one export in the world
or say where’s our EV? It’s in our intellectual property. GW: Sure. KB: And so they’ve stolen $2 or $3 trillion
from us over the years, and we really haven’t pushed back, because to your point, they use
economic coercion with us. Right, they hang that golden carrot out in
front of us, and we chase that carrot, regardless, I think, of ethical or moral behavior. Like we were just talking with another person
here in the studio beforehand. You know, they’ve taken a million people against
their will and put them in concentration camps, re-education camps, and yet the rest of the
world still buys Chinese government bonds. We are funding the Chinese government’s internment
of a million people against their will. There’s actually no logic behind it other
than oh well, their bond’s yield 100 basis points more than ours. GW: Right. KB: And you think, what has this world come
to? Right, so I think the world is finally realizing
a couple of things. Number one, that they don’t act as a global
actor. They act in their own best interests, and
when their interest turns out watch. And if you’re a Westerner that owns a Chinese
equity, or God forbid, you own a Chinese bond, and something restructures, good luck in the
Chinese bankruptcy court. GW: Yeah. And I think we all understand that. And I think people have been making money
in China. This golden carrot idea is so important, because
everyone says it’s the future. China is the future and it’s the only economy
that’s growing. We don’t know what the real numbers are, but
there’s real growth, real growth that you can invest in. But let’s talk about ethical capital, because
that’s essentially what a lot of this comes down to. If real ethical capital flows start to make
a difference, that’s just another push of this snowball down the hill to come pick things
up quickly. KB: It’s hard to get to a place where ethical
capital becomes– I think where it becomes mandatory, or even to become commonplace. But I do think that with sanctions– today
we have sanctions on all three countries in the US, right, so we have Sudan. We have Syria. We have Cuba. They don’t mean much globally as far as investment’s
concerned, especially Western investors in those economies, but when you add Iran to
the mix, which happens, what, November 4th– today’s September, mid September. I think we’re going to see capital flows change
globally. And I think that they should change globally. We should start adhering to the US law. And I think that’s coming literally in the
next few months. So again, that’s another added twist to how
global capital flows work. And I had sent something to you beforehand,
you know, again almost a non-sequitur. But in February of 2018 BNP Paribas CLSA reached
a billion dollars for a debt issuance for an entity called Poseidon Finance. And if you read the prospectus, Poseidon Finance
was newly formed November 2017 in the Caymans, but the sole owner of Poseidon Finances is
China Ship Building Industry, CSIC. CSIC is wholly owned by the PRC and run by
the state council of China. And they build the military apparatus for
the Chinese Navy. So somehow in some way, Western capital is
giving the dollars, not the RMB, the dollars, for the Chinese military to build their ships
and their weapons systems to basically oppose us in the South China Sea or to oppose order
around the nine dotted line. Again, it’s just another example of holy shit,
did that really happen? Did someone really buy those bonds? GW: But this wasn’t hidden. I mean this is all there. The prospectus– KB: But Grant,How many people
you know that read prospectus? GW: That’s my point. That’s exactly it. I mean, we’re all complicit in this, because
people don’t read prospectus. KB: They say, oh, it’s– you’ll love this. It was fully collateralized by China post
shares. So you had an entity that fully collateralized
with shares that share trading, and they just needed a billion dollars. GW: Yep. KB: So again, further evidence. If you look at the Bank of International Settlements
report, Chinese corporate borrowing in dollars has spiked over a trillion dollars. They borrowed $250 billion last year alone. So when you think about dollars, they’re fungible. So if a company in a foreign nation borrows
dollars, those dollars hit that central bank, and they can use it as their own working capital,
if they need to. GW: Sure. KB: And they do. And so this fascinating capital flow is enabling
some of the global actors to become more assertive militarily. It crosses the Rubicon of here we’re talking
about well, which should we buy or sell, how should we invest, how do we make better returns. Importantly enough, it’s allowing this geopolitical
assertiveness to continue. GW: Yeah. KB: And whether you like the current administration
or not actually doesn’t matter. You need to look at what they’re doing, right? Not what they’re saying, what they’re doing. Our administration. Whether you voted for President Trump or not–
I didn’t vote for him. I don’t like the guy. I think he’s got some real personal issues,
just like everyone does. But if you look at what he’s done with NAFTA,
with China, with Canada and Mexico, he’s done more than the last 15 presidents combined
in kind of trying to push back and level the playing field. GW: But it’s interesting that that is couched
as Trump getting tough on trade. Do you think– I know you speak to the higher
ups in government. You have good lines of communication open
with those guys. Do they get this, or is this– are they sleepwalked
into a really crucial area here? KB: No, they get it. It’s the prior administration’s, all the way
back to Kissinger and Nixon. Kissinger and Nixon pivoted to China to counterbalance
Russia’s influence around the world. That was a strategic . Decision and we basically
opened the kimono to China and prostrated ourselves, and we’ve never looked back, and
we’ve never readjusted that relationship, and we allowed China to ascend in the WTO
in 2001. We lost 4 million jobs in literally a nanosecond,
as far as geopolitical time is concerned. And interestingly enough, that’s what gave
rise to President Trump. The Rust Belt flipped from blue to red, and
that’s why he got elected. GW: Yeah. KB: And it’s interesting but the inaction
with China is actually what produced this kind of president that I don’t think many
of us approve of. However, the people say Trump’s starting a
trade war. It’s laughable, because there’s been a trade
war since 2001, and we haven’t been fighting. GW: Yeah, right. KB: We’ve just the losing. And so the fact that he’s leveling the playing
field is the right thing to do. GW: As an investor, you’re like me, you have
to take these emotions out. You have to take any feelings about positive
or negative about someone like President Trump, you have to put those aside, right? And that’s so difficult to do, because he
makes it so difficult to do. And so when you talk about what he’s trying
to do, his agenda, if you want to call it that, there are a lot of positives in it,
but people just can’t see through that to the base issues, because of the smoke and
the clouds around it all that come from his personality. How do we get through that and talk about
the issues here, as opposed to the political rhetoric? KB: Yeah, it’s the hardest thing that I can
do. When you go meet with– you know, as you know,
I live in two places. I live in Dallas and San Francisco, and I
come to New York a lot. The hardest thing for people to do is to force
their hatred for the man running the show and think about things objectively. Think about this. When you think about the stock market this
year, the two biggest down days in the stock market this year, I believe, and I don’t know
this is an absolutism, but knowing– I was participating in them. So in my memory, they’re the two biggest down
days in the market this year. They were 4 and 500 point down days, were
the days that he announced the 232 decision in tariffs and the 301. And for some reason, no one believed that
he was going to do it. He told you he was going to do it when he
campaigned. He initiated the investigation. The investigation had a finite timeline, and
it had an announcement day, and he called a press conference, and then the market dropped
450 points. And we looked at each other and said, well,
he told you he was going to do it. GW: He’s that unique thing. He’s a politician that does what he says he’s
going to do. And I know it’s flipped. You’re right. We don’t know how to handle it, because it’s
real. KB: But it’s really hard to divorce your–
whether you are an ideologue or whether you’re someone that just hates him, it’s really hard
to be objective in your analysis, because that– my mom was a flight attendant before
she met my dad, and she was at American Airlines in the good old days, and there are only three
things you are not allowed to talk about on those flights. And you know what they are? GW: Well, I’m
guessing one of them was politics. KB: So religion, politics, and money. Everything else was free game. You would not– literally, the company wouldn’t
allow you to talk about those three with people on the plane, because those are the things
that elicit such a visceral response from people. And of course, religion and politics, I think
are much greater than money, I guess because we talk about investing all the time. I’m passionate about it, but it doesn’t bring
me to arguments across the dinner table. GW: Well, you learn to divorce emotion from
it. That’s it. KB: So I think that, being objective and your
analysis is really difficult. It’s hard for me to see the way some of these
government actors work, for me to think that we can engage with them once again. I mean, there are reports, just recent reports
that show that when the Chinese found 12 of our State Department employees sending information
back to the US, they pulled them out of their workplace and executed them on the same day
in front of their coworkers. Like me, if I were working in the State Department,
I don’t know how I would engage my interlocutor the next day. GW: Right. KB: Yeah, what did you guys do that for? You’re thinking I thought we were friends. GW: Yeah. KB: You know, so I don’t know how you engage
with people like Kim Jong-un or like the Chinese after they execute 12 of your people. GW: Well, it’s different. I’ve lived in Asia for much of my life, and
I understand things are different over there, and there is definitely a kind of never the
twain shall meet. But we’ve been forced into this bipolar world
now by the rise of China, where to your point, you have to try and engage– you know, I don’t
want to use the term enemy pejoratively, but you have to engage someone who is actively
seeking to do things that are in their best interest, which have to be against yours. And there’s a certain degree, I think in the
West of fair play and laissez faire, and we need to do the right thing. And in the East, they’re not at that level
yet. Society hasn’t reached the point where we
are trying to make it fair for everyone. We are trying to maintain 1.7 billion people,
and there’s 9 guys in charge, and they know where we live, and we have to be really careful
that everything is good for them. And so screw everybody else. It’s domestic first. So any time that you tell me you’ve been doing
analysis, I love it, because I know the depth and the thoroughness of the work you do. So let’s talk about where that analysis has
led you to think this goes and how it plays out, because it’s happening now, and it’s
going to be slow, slow, quick, quick, slow, so to talk about the roadmap as you see it. KB: Sure. So one comment you made about how we tend
to be in our kind of academic institutions and our media want to be laissez faire. We want to be a globalists, and free trade
is good for everyone, but unfortunately, that’s just not the case. And if you run a country, you realize that
if you allow someone else to subsidize power and give away land and sell something to you
at prices that are so far below what you could possibly produce it here, they can actually
put your whole industry out of business, and then it becomes a real problem. That free trade, you just lost your whole
aluminum industry. Well, you might need to lose aluminum strategically. So a lot of times, these aren’t economic arguments. GW: No. In fact, they rarely are. KB: These are national security arguments,
and I think that the communications department of the Trump organization is terrible, because
it’s really easy to describe or elucidate that narrative to the people. GW: Well, they did it in the campaign. KB: They do it, but they do it so poorly. You know, Trump will tweet, you know, trade
wars are good. That’s the worst thing you could possibly
say. How about say we need to keep our aluminum
industry for strategic reasons. GW: Yeah. KB: That would have actually played a little
better in the press. GW: Yeah, for sure. KB: So anyway, again, you asked where were
all of this work takes us to. GW: Yeah, the road… KB: You know, we’re having a little bit of
an EM crisis, as we speak. The dollar has appreciated. More importantly, various EM nations that
run twin deficits have fallen apart and continue to fall apart, whether you’re Turkey or whether
you’re Brazil. There are a number of these, Romania, that
have just fallen apart, because they’ve run out of dollar reserves, they’ve borrowed a
lot in dollars, and they run twin deficits. It’s like a redo of 1998. So when you look at what’s happened in the
world in the last decade, there’s this anomalous scenario in Hong Kong, a place you know pretty
well. GW: Yeah, I do. KB: But a lot of people aren’t paying attention
to what’s really happening in Hong Kong, so in the financial crisis, you know, Hong Kong–
let’s go back 36 years. They pegged the US dollar to create a hub
of stability in Asia, and they pegged because they were, as you probably know, this was
when Thatcher was negotiating with the Chinese to return Hong Kong back to Chinese rule from
the British. And another fun fact, you know, Thailand devalued
the day after the handover. So money was leaving Asia because of that. So they pegged at the dollar, and here we
are today. And we are in a scenario where Hong Kong’s
economy used to move with the US economy. The US led the world. So as the US did better, Hong Kong did better,
and as the US did poorly, Hong Kong would do poorly. They were essentially the Southern export
hub for Southern China itself. They were a massive US dollar based goods
exporter, and they ran a huge current account surplus. Fast forward to the financial crisis, China’s
relative importance to Hong Kong kept growing and growing and growing, and China was also
building out their own Southern port infrastructure. And so to have a currency peg, you have to
have approximately the same interest rates. GW: Sure. KB: So in a financial crisis, US took rates
to 0. Hong Kong imported US monetary policy. They took their rates to 0. At the same time, their biggest trading partner,
China, went to the gas pedal. So the last 10 years have been the best 10
years in Hong Kong’s history, bar none. Well, the exact opposite is happening now. If you look at the IMF’s Article IV review,
the last review of this special administrative region in Hong Kong, one of the key risks
they say is the fact that almost every loan in the Hong Kong banking system is now floating,
and it floats at 1 month HIBOR plus a spread, and it resets monthly. So factor in the Asian crisis, the exact opposite
was true. Almost 95% of their loans were fixed. GW: Fixed, that’s right. KB: So they could actually move rates around
and not grenade their banking system. Now you have a scenario where their rates
are tied to ours. Our monetary policy, we’ve emerged from our
crisis, and inflation is starting to show, we’re raising rates, we’re raising in September,
we’re raising again in December. We’ve already raised a few times before now. And in just the last couple of months, three
month HIBOR in Hong Kong’s gone from 1% to 2%. Well, interest costs have almost doubled in
Hong Kong this year. And the most expensive real estate market
in the world and Hong Kong’s banking system is 900% of their GDP. GW: Yeah. And you’ll see it. KB: It’s probably higher than it was before
’98 when they had a complete collapse. So one of the interesting or most interesting
casualties of this EM crisis, dollar resurgence, US rates going higher, and Hong Kong’s golden
period, one of the most interesting, I think, problems that the world is going to see is
going to be in Hong Kong. GW: Well, it’s somewhere– I mean, there’s
been a lot of people who’ve talked about the Hong Kong XE being vulnerable, and people
have attacked it periodically over the last 10 years a number of times. KB: But which way? Were they saying it needed to re-evaluate
stronger? GW:Exactly. KB: Because the RMB was growing stronger. GW: Exactly right. And now things have flipped around. But it’s still– you’re right. It’s a pressure point that has kind of been
flagged so many times, I think now people are looking past it and saying, well, we’re
past the problems. It won’t happen. KB: So I’ll say look at the flows. Flows are super important. And so when you look at the flows, people
look at Hong Kong and say they have an FX reserve number of hundreds of billions of
dollars. GW: That’s exactly what they say. KB: They’re fine. GW: Yep. KB: But what’s lost in that dialectic is when
you have a currency peg, for every US dollar, you have to have a Hong Kong dollar. For every Hong Kong dollar, you to have a
US dollar if you’re going to keep a peg. GW: Sure. KB: So what you have to look at is what they
call excess reserves. The excess reserves is kind of their war chest
that they have to defend their peg. How much of their war chest do you think they’ve
spent defending their peg since June 1st of this year? We’re in September. GW: Yeah, significant. KB: 70%. GW: That much? KB: 70% of their war chest is gone. GW: OK. KB: Today it sits about 82 billion Hong Kong
dollars, so at an exchange rate of 7.75. GW: 7.75, yeah. KB: About $11 billion. GW: Yeah. KB: That’s all that got left. GW: Yeah, that’s not a big cushion. KB: So guess what. They’re six innings into a baseball game that
they don’t want to see the end of. GW: Yeah. I mean, is that something that when you look
for an end game, because presumably if that starts to go, what do the Chinese do? Because the Chinese, it feels like they’ll
have to get involved somehow because– KB: So why does Xi’s little colony still peg to
the dollar? GW: No, it’s a great question. KB: It makes no sense to me. GW: You’re absolutely right. KB: And 90% of their GDP faces China. When you look at Hong Kong today, Hong Kong
10 years ago was 25% of China’s GDP, 25%. GW: Yeah. KB: Today, it’s less than 2. Their current account’s headed to 0. Hong Kong is a net goods importer, believe
it or not. GW: I struggle to believe that. KB: Net goods importer in a pretty big way. They’re a services exporter, net goods importer. So the entire complexion of their economy
flipped in 2009, and to untrained eye, one would say, oh the financial crisis did something
to Hong Kong. Had nothing to do with that. It was the Southern port– GW: Yeah, yeah. KB: –and Southern China that just took the
business away from Hong Kong. So now, when you look at Hong Kong, it’s a
giant question mark. It’s not on the front page of any newspaper. But I promise you, it will be. GW: So let’s talk about why that matters,
then, because if all that’s gone away, obviously you have got arguably the expensive property
market in the world, which is coming apart rapidly. If you look into the South China Morning Post,
for example, there’s all kinds of stories about how quickly that’s unraveling. KB: Yeah. GW: Why does Hong Kong matter so much now? KB: So that’s a great question, and I don’t
know if our hour of allotted time is– GW: That’s right. KB: This goes back to Admiral Liu’s– kind
of when you think about the first island chain, the second island chain, and Chinese kind
of primacy in the Naval powers in the South China Sea. You have Hong Kong and Taiwan that China really
wants to essentially annex and get back. And when Hong Kong has a real problem financially,
when you think about the mechanism to re-peg the RMB, first of all need a pretty meaningful
devaluation. We believe it should be as much as 30%, maybe
more. That will allow you to peg your overnight–
and we’re getting more technical. But it will you to pay your overnight rate
to the Chinese overnight, because again, if you’re going to have a peg, your rates have
to be close to the same. But China could effectuate that change in
literally the time it took for them to buy the US dollar reserves of Hong Kong with RMB
at the current exchange rate. GW: Right, right. KB: So one day. They could literally re-peg the time it took
to settle that trade. GW: how would that ripple? If they did that, how does that ripple through
the global economy? Is it just– KB: Well, I don’t think it does. I think– think about when Switzerland did
its revaluation, of course, the other way. It was a shock. It caught some people with their pants down
and closed a few businesses, but did it really matter? GW: But this is slightly different. KB: This is geopolitically more important. GW: That’s my point. This ripples because it’s a sign that there
are things– things are becoming unstable. There’s a sense of a loss of control. There’s a sense of having to step in, not
necessarily wanting to step in, and make what would be a pretty drastic move on the part
of the Chinese. So how does that kind of fold into your roadmap
for how those destressors manifest themselves? KB: I think there’s been a big protest globally
about how much money has been printed, whether you’re the BOJ, the BOE, the ECB, or the Fed,
you’ve printed more money than you ever printed before. Right. And so when you look at global M2 as the numerator
and global GDP is the denominator, we’re now at 110%. Never been there before in world history. And we normally vacillate somewhere between
30 and 50, and now we’re at 110. And so when I think about the financial crisis,
and how do we solve a debt crisis, well, we issued some more debt. GW: You’re exactly right. So.. KB: When we get to kind of these points of
global instability, it’s interesting to me that there’s almost a coincidental, but it’s
not a coincidence, but a coincidental uptick in geopolitical rhetoric from, call it, the
physical side or the kinetic side at the same time that it’s happening on the economic side. And I believe throughout history, that those
two things are one and the same, or one is causal. I think the economics cause the kinetics throughout
world history. And so I think we’re at another historical
point. But again, as we sit here today in the business
that we’re in or that I’m in and that we talk about a lot, it’s really difficult or naive
to think that you can call a global turn with any kind of accuracy. GW: Of course. KB: Given the continuum of time, what’s 1,
2, 3? What’s even 5 years? It’s nothing. So it just takes a while for these things
to happen. And then they happen all at once. GW: Well, that’s exactly it, and that leads
to my next question, because you know, our mutual friend Mark Hart had several funds
that were looking to make money from a Chinese devaluation. The logic was incredibly sound, and you know,
Mark eventually in his own words, found religion, and said, I just can’t fight this trade anymore. So how do you position yourself to kind of
figure OK, how do I put a trade on here that will give me the maximum time, because I may
need 5 years in this trade. Is it too early to do that yet, or are there
stresses such that you have to kind of have something on the table in case it does happen
really quickly? KB: I think you have to be there now with
everything you have at this point in time. What we miss, what Mark missed early was when
they’re running a giant positive current account, and they’re willing to put another turn or
two of GDP on their banking system, they can push this off 3 to 5 years. In our business, every month, every day–
GW: It’s a lifetime. KB: Every day, every week, every month, every
quarter is an eon in terms of the investment time continuum. So there’s a duration mismatch between the
investment time continuum and kind of geopolitics. GW: Well, and expectations, which have compressed
now. I mean, for you running and having to deal
with investors, if you’re not making money yesterday for me, why not, right? So that’s a really tricky position for you
to be in. KB: I’ll give you a great anecdote. I met with someone in the Russian finance
ministry. And we became– we shared information. This isn’t a collusion thing. We were talking very specifically about this
the geopolitical economic situation and our work in Asia. And they were keen to understand a few of
the points that I had made at a conference. At the conclusion of the call, and I’d never
really spoken at length with these people before, but I know exactly who they are. And I think they were brilliant in understanding
flows. They’re the best I’ve ever spoken with, which
is really interesting. And at the end of the call, they said, well,
you may be right, but we’re Russia. We’ll be here when it happens. We don’t know if you’ll be there when it happens. We had this great information exchange and
what I thought was a very productive call, something that’s going to be the beginning
of a two-way flow that I was going to enjoy. And at the end, he just made sure to let me
know that I’m in a business that is a fickle business and that they run the Russian Finance
Ministry, and they’ll be around. GW: I mean, it is interesting, but it’s a
valid point. But when you say you’ve got to be in now,
how do you do that? Because obviously, you’ve got currency strains,
you’ve got the bond strains. But you’ve also got this ability that the
Chinese have to pull levers that we don’t even think about, and you’ve got that tailwind
for them and that people will sit and believe any number that comes out of China, because
it’s generally accretive to their own investment position. If the Chinese say our GDP is 8%, no one’s
going to argue. They don’t want to cause bullshit. People say well, you can’t prove it. So how do you position yourself to have skin
in the game that is manageable? KB: You just have to try to time it. I mean, that’s the best answer I can give
you is you have to try to time it. GW: But is it currency? Is it the bond market? Is it equities? KB: It’s currency. Again, the only arbiter of the Chinese position
is going to be their currency. Right, if you’re in the Chinese stock market,
or if you’re the Chinese bond market, they can manipulate that market. They’re big enough, they’re smart enough. You think about Hong Kong and the financial
crisis, you remember the HKMA bought funds. GW: The tracker fund. Absolutely right. KB: And they bought a lot of them. And so if you are short equities, they can
ban short selling. They can manipulate. They can purchase. They can do anything they want to do. But again, the ultimate arbiter is what is
the world willing to exchange an RMB for $1 for. GW: Sure. KB: Because in the end, even though it’s less
than 1% of the Swift settlements, there is still a number. And if all of these things play out the way
we think they’re going to play out, then that number’s going to be dramatically different
than it is today, and it’s going to be a lot weaker. Here’s an interesting thought. Back when China did its mini devaluation,
and a trillion dollars left their reserves, quickly, if they were to have devalued at
that point in time, it would have looked like a major moment of weakness, a move of weakness
by Xi and his regime. Interestingly enough, given our trade conflict,
today we’ve served up an interesting plate to President Xi or Emperor Xi, whatever you
want to call him, Winnie the Pooh. The way you look at it now is we’ve put him
in a position where if he were to do, if he were to weaponize the currency, and that’s
how the world would see it, it would look like a move of strength, and we all know he
has to do it at some point in time. He wants to be the one controlling it, not
some hedge fund guy in the US, or not some other government. He wants to be the one that makes that decision
and he wants it to look like a move of strength. By the way, the people in China, they’ll barely
feel it. GW: That’s right. KB: It doesn’t matter. Right. Look at what Russia when Ural’s crude collapsed. They masterfully made that adjustment in their
currency, and it moved a huge– it moved massively, right? From 20 or 30 to 80. And basically, the Russian people took that
deval. And I think the Chinese people are going to
take their deval. GW: When you think through what the Chinese
need to do to manage this, because it feels like it’s something– I think we all know
this that some point, they are going to lose control of this thing. It’s too big for them to be able to maintain
this iron grip over it forever. At some point, the real world is going to
have an effect on it. And that’s when I think it starts to happen
quickly. How do they think about that? How do they think, OK, here is how we are
going to manage this problem? Because they must see it. KB: I think the number two guy in China, as
we all know, is Wang Qishan. Wang Qushan is an economic historian. He’s a very capable economic leader, and he’s
the one who essentially orchestrated the whole restructuring of the Chinese banking system. From ’98 to 2002, he recapped all the banks. And he knows how to put Humpty Dumpty back
on the wall with the duct tape. He knows how to get it done once he falls
off. But I think if you look back then, it cost
them 30% of GDP in 2002, the BIS concluded. Well, 30% of GDP today would be $3 1/2 trillion. They only have $2 trillion of equity. So they lose 1 1/2 times their equity in their
banking system. That’s worse than we did in our financial
crisis. Again, orders of magnitude, you have just
think about the constructor that market. And so will they be able to do it? Absolutely. Will they be trade competitive once again
if they devalue enough? They will. Will it cost US consumers money? No. Will the price of the US dollar based goods
go up because China devalues? No. That’s where the press has it wrong. GW: Why do they have it wrong? Because this is not a complicated thing to
understand. Once you understand what the problem is, the
dominoes fall in a pretty linear fashion. There’s no kind of quirky– why is that people
have it wrong? KB: I’m going to sound conspiratorial, but
I’ll tell you there are a lot of reports out there on Chinese influence and our think tanks. I know of a few instances personally where
the Chinese either pay the think tanks, or more importantly, they pay a think tank writer’s
spouse to teach Chinese elite English. GW: OK. KB: And they pay that spouse way more than
the person that the think tank earns in a year. GW: Right. KB: And so they have a lot of influence, both
in the media. They have a lot of influence in the think
tanks and in the universities of the US, and so when the narrative comes that US trade
spats with China are going to increase the price of goods here, it just doesn’t happen,
and it won’t happen, because the devaluation of the Chinese currency will spread that tariff
out amongst the Chinese people. I can’t imagine any goods here moving up in
value. GW: But it’s interesting. You think that the perception will be you’re
being conspiratorial, which in many ways is a victory, because we all know this stuff
goes on. Of course, it does. But it goes in both directions. The West has less influence in China, because
it obviously is much harder to get in there. It’s not an open economy. But this idea that thinking about this stuff
makes you conspiratorial is a massive win. KB: It is. GW: Because it shouldn’t be that way. This is– KB: It’s becoming better though. I mean– GW: It is a little bit. KB: Take the press narrative in the last six
months. GW: Yes, that’s true, but again, that’s almost–
the pendulum didn’t swing. The pendulum’s just gone from all over here
to all over there suddenly. And now, it’s OK to think that everything
is a conspiracy, and everything is influenced everywhere. I mean, there’s no middle ground anywhere
at the moment. But in something like this, where it’s a case
of either making money or losing money, that’s not necessarily the worst thing. Having that clarity is probably a good thing. When you look at the currency positions and
trying to actually capture this, obviously, we’ve seen these long term trades get exhausted
and the times run out. Is there a way to do this effectively? You know, is it forwards? Is it currency options? How are you looking into it– without giving
away the secret sauce obviously, but how are you thinking of positioning yourself so that
you have some time? KB: So one of the things we use in our firm
is you know what the definition of a long term trade is? A short term trade that went bad. GW: Right. You’re not the only one, I’m sure. KB: But you know, look at the convergence. One of the other things that’s really working
against this currency pair, and we keep focusing on China, is you look at SHIBOR as it approaches
dollar LIBOR, you know that SHIBOR used to be 400 basis points higher than dollar LIBOR. Now it’s only 100 basis points. You’ve had rates convergence. So when you look at the forwards, the implied
forward rate in that marketplace in the offshore, CNH, so you look at the 12 month forwards,
the negative carry costs have come down to literally some peanuts. And in the past, you had a significant negative
carry. So you have this confluence of events where
the carries have come down to be negligible at a time in which the current account’s going
negative over there, and the world has been lulled sleep thinking that this currency pair
is going to be fairly solid, and now this is when things happen, right, when these flows. I’m not saying it’s tomorrow. I’m just saying that their current account’s
in a bad shape, we’re imposing tariffs, and we haven’t even started to discuss the bill
that we’re going to put in front of them for all the IP theft. GW: Well, let’s start about that, because
I know you and I spoke about this before, and I know it’s something you’ve done a lot
of work on. But let’s talk about that bill, because again,
it’s something that’s kind of sailed under the radar, surprisingly to me, because it
is such an important aspect of this whole dynamic, and yet, you barely read anything
about it. KB: I think they wanted to get somewhere on
trade first. I think they tried to get to NAFTA first,
because we have this wild man– you know, Lopez Obrador is probably a bigger wildcard
than Trump is, given his prior rhetoric. So I think they were trying to get things
done with NAFTA. I think they’re trying to get things done
with trade. And then when we start talking about intellectual
property, I found the Defense Authorization bill that just passed in the US, which was
a little bit of a rejigging of CFIUS and then changing maybe a little bit of the way that
that foreign investment is being viewed here in the US. That bill passed like 407 to 8. It passed in the biggest bipartisan way I’ve
seen since September 11th. So you’re starting to see this idea of reparations
almost for intellectual property theft and trade, happens to be a nonpartisan idea, which
is something that is fascinating to me. GW: Is that– I wonder whether that’s an understanding
of the depth of the problem, or I mean, it doesn’t matter which way it is. Or is it convenient, OK, look over here, here’s
a guy we can both have enmity towards? We don’t have to fight each other. Here’s a guy over here that we can rally around
and come together on. KB: It’s hard for me to say, because since
it’s something that I spend a lot of time on, the people I meet in DC, whether at the
Defense Department, the Treasury, or State, they all fully understand. In fact, they understand so much more than
has been put in the press, as to what’s really going on. And so I feel like there’s cohesion. I haven’t met with a lot of the politicians,
right, meaning in the House or the Senate. I stick with the agencies, and the agencies
get it. GW: Yeah. And when you have those conversations, are
you are you talking the same language, or are you having to educate, and then they understand
it, or are they on the same page as you and it’s like– KB: Again, it depends who the
audience is. If it’s someone that is deeply in the weeds
with financial flows, they actually know them better than we do. We’re just trying to give them rationale for
why they’re happening that way, and the converse is also true. If it’s someone that is a state actor that
doesn’t spend a lot of time looking at the flows, then you’re educating on flows, and
they’re telling you why the flows are happening. GW: Yeah, you’re right. KB: We don’t believe that we have more expertise
than anyone in DC. I just believe there are certain pockets in
which we may know a little bit more, because we’ve studied it for such a long time. But I think in the bigger picture, I think
they know more about the bigger picture than we’ll ever know. GW: I find that interesting because you can’t
help but feel as though not just DC, but in the UK, anywhere you get around government,
there’s so much chaos and so much noise and so many distractions that I struggle to get
a sense that anyone really understands what’s going on, because how can you? It’s like how can Jamie Dimon know what the
hell is going on JP Morgan? It’s such a gigantic institution with so many
moving parts. So you know, to hear you talk that when you
meet with these people individually, they really do get it, you then have to hope well,
OK, but when they escalate this thing to who knows where, can that person process all these
different strands of information in a way that you can, because that’s your training,
that’s how you’ve built a successful career is on processing information into a solution
to it. Can they synthesize this, or are they going
to need help doing that? KB: The better question– that’s a great question. There’s actually a better one. GW: I’m always up for a better question. KB: The second derivative of that question
is when you talk to the people that, let’s call them the rank and file, the people that
aren’t the leaders of these departments, that have things really figured out and have them
really dialed in, and they understand all the inner workings of what’s happening, and
they go to their superior, who let’s say, the president appointed and said, I’m going
to anoint you to run this department, and that superior might have completely ulterior
motives. That person might have been financing films
his whole life, and the Chinese might be the ones financing them. And so it doesn’t matter what you say to him. Can tell him exactly what’s happening, and
there might be a motive that once that person is out of that seat, they just hope they can
finance some more films. GW: Yeah, sure. KB: You see what I’m saying? GW: Absolutely. KB: So I think the variables that come into
play aren’t necessarily logical. They aren’t necessarily financial, and they
can be not only purely political. They can be purely personal. They can actually be greed and avarice over
everything else, which is exactly the way some of the state actors that are non US understand
that that’s how we think. And that’s why they’re so effective in implementing
their strategies against us. It’s like your Neo in The Matrix and you start
to see you start to see how the whole matrix is put together, and then you just want to
do what your friend did and go to New Zealand and– GW: Right. KB: And realize that this is an equation–
you know, it’s not the Pythagorean Theorem that has an answer. It’s more of a Mandelbrot set that you never
get to the end of. GW: Greed and avarice around the circles of
hell. Who would have ever thought such a thing could
exist, right? Karl, it’s been a fascinating hour. I’ve got to let you go. I know that otherwise you and I would end
up talking all day. I can’t thank you enough for taking time out
of a crazy schedule to come and talk to us. KB: Thank you. GW: I really enjoyed it. Thank you. KB: Enjoyed it.

100 thoughts on “Kyle Bass on China’s Major Risks & Opportunities (w/ Grant Williams)

  1. At least a generation of malinvestment coming home to roost. Thank you Kyle, et al.
    “The curious task of economics is to demonstrate to men how little they really know about what they imagine the can design.” ― F. A. Hayek, The Fatal Conceit: The Errors of Socialism

  2. Re: Difficult to like Trump.
    I voted Trump because he drives exactly all the right people barking dog mad. And they never recovered which is not my fault!

  3. All numbers don't make sense, because you are looking at it from free market angle. Remember China is very different from western. You have to get real first if you want defeat you compitator.

  4. Greed powers the western economy. Communists take advantage of American greed. And the communist enslave cheap workers and enrich themselves. Corruption takes a huge chunk of their economy.

  5. This is why I'm willing to spend several times more on a non-Chinese product than on one made in the totalitarian, Red Ponzi.

  6. It isn't bad enough China is snookering "legendary investor" Kyle Bass. Bass wants to spread his bitter-boy investor philosophy to the rest of us. Kyle: This isn't the 2007 US housing market you are betting against. China is a closed, Communist regime, with a "President for Life." A fully-rigged, manipulated and controlled government isn't going to take being shorted lightly.

  7. "China is the future?" Really? A closed, Communist regime, with a "President for Life," is the future? Whose future? All these US corporate oligarchs that handed over the most powerful economy ever in history to our enemies, and destroyed the American Middle Class? Whose future? George Soros' and all these un-elected, rogue billionaires with their NGOs and Open Borders destroying the sovereignty of western nations by bringing in tens of millions of illegals, who don't speak the language, don't even have a high school education, have no marketable skills, and will never be contributing members of society? That future?

  8. china is controlled opposition, it's test ground for new world order. find out who financed, helped Mao into power, search "Mao Yale" Mao Skull and Bones, Mao Israel Epstein, Mao Jaco Schiff Rothschild,

  9. Oh yeah Real Vision, keep uploading videos of this clown who got one contrarian call right and has a bunch of miserable failed predictions since. Guess being right one time gives you all the benefit of the doubt unconditionally for the rest of your career, huh?

  10. They praise Trump, but don't discuss that Trump manufactured all his apparel in China and that abandoning TPP was like shooting ourselves in the foot.

  11. You who invest in China are feeding CCP with their dictatorial regime who sends ppl to internment! You will be the ones who are funding their military against the west, our future, our children! all for your greed. Keep this up it will be more dangerous world than the first cold war.

  12. To rephrase it, China doesn't need dollars, they don't need anything from anyone, but they import energy and resources when they can get it for free, the easiest way to get that is to sell us their products (which are free to produce in renminbi) to earn those free dollars, then they use those dollars to buy oil and resources so that they don't have to use nor export any of their own resources. That's genius!

  13. To be honest with the audience here, any individual chinese with some curiosity and access to both sides of the world, inside and outside of the great firewall of China, will tell you exactly what Kass is telling in this video, I mean 20 years ago. I am talking about millions of chinese people who live overseas. Has any one of them telling you what would happen if you let CCP to have massive economic growth, you bet somebody did, probably a lot of them trying to influence the US government not to bring China to WTO. It’s just the level of greed in the government and Wall Street can’t help themselves. They have to let it blow up in their faces with the cost of ordinary people. That’s exactly happens today. People inside and outside of China are suffering because how CCP has been able to grow the economy and have tighter control of the people. Sad!!!!

  14. too many topics and too many anecdotes. plz focus one topic each time.
    believe or not Kyle Bass is a Master of Survival, even he took less eduction in school. his boss must trust him very well.

  15. THE GROWING TENSIONS BETWEEN CHINA AND THE US ARE NOT ACCIDENTAL. China’s meteoric rise to power has been orchestrated over many decades by many of the same banking giants that have financed America’s development for the past century and it was fueled by the same fortune 500 companies that have kept America’s economy moving in recent history. THE RIVALRY HAS BEEN STAGED. The conflict that ensues will have been orchestrated to pit the two global super-powers against everyone else in the middle then force us all to submit to whatever monstrosity of supranational banking and/or governance comes crawling out of the wreckage.

    Do you remember in Star Wars how Chancellor Palpatine (aka Darth Sidius) commissioned the creation of the Clone Army to help the Jedi Knights fight against the Separatist Uprising (which Palpatine also controlled)? And by pitting both sides against each other he was able to wipe out the entire Jedi Order and usurp control of the Galactic Senate. What once had been a forum where different sovereign planetary systems could negotiate their differences was henceforth transformed into the stage for a totalitarian dictatorship and in the end there was only the Emperor and his apprentice Lord Vader ruling over an oppressive galactic empire.

    Same basic difference, just a lot more Sith.

    It’s the same basic scam called a “Two Man Grift”

    Another example would be when the CIA funded ISIS to invade Syria so that Washington could send US Troops to also invade the country under the pretense that they were fighting against terrorists. Then they both proceeded to bomb that beautiful country into the stone age.

    And I pray you haven’t forgotten when they did basically the same thing in Libya a few years earlier in order to to execute the late great Saint Mommar Qaddafi.

  16. All central banks hold UST to inflate their local currency . Central banks won't sell UST because the the price of UST will plummet and destroy the value of there holdings

  17. Tell you a little secret. Most of chinese money, most asian money actually that is moving overseas do not go through the SWIFT banking system. That is a very expensive and slow way of moving money around the world. Extreme intrusive too. There are faster, cheaper and now equally trusted alternatives. This is why SWIFT get such low numbers. It is like asking how many Chinese visiting America come by sail ships. Very few does not mean few chinese visitors.

  18. Are you tired of getting these videos weeks, months, or years after they were recorded? Sign up for a free trial with RV Premium here: https://rvtv.io/RealVisionYT

  19. Kyle, cut it out, what about the war crimes we committed invading Iraq illegally? We killed millions of innocent lives and it was all based on a lie! and you want me to worry about re-education camps in China? That's pretty soft compared to the things we do.

  20. I like Kyle Bass, but one thing bugs me, its all about exploiting situations…which is a far cry from taking risks that have more than such an effect, like growing social stability by improving economic conditions etc. I thus wonder how he would do in a more normal (more boring) economic reality. Would he invest in new ideas, would he back the duopolists, that sort of thing.

  21. I don't see how China is "stealing" 300 billion a year. A trade deficit does not mean one side is better off. China has trade deficits with lots of countries, are those stealing from the Chinese? Or is it about currency manipulation? Leaving aside the fact that the US also manipulates its currency, why would it be stealing if they held their currency low to sell the US goods more cheaply?
    This is hogwash.

  22. Wait how are the Chinese stealing from the US when we fund and allow this to happen. I think rather than blaming Chinese for stealing, we should blame our government and wall street for letting this happen for their own benefit. These elite are so rich because of this and yet we ordinary people are paying for it. I dont like Trump for unfiltered things he says, but he is the only president that is sticking up for America which is more than I can say for the last 10. I think all of America needs to wake up and we need to come together and help makes changes to china!

  23. i have watched a few of these now and its pains me that there is almost next to no discussion about the pure EVIL that is the chinese givernment….how are you not acknowledging this how are you not addressing the fact that this regime takes part is malicious activity both towards humanity and the environment….is there no concerns of radically destructive actions?

  24. when are you business people going to acknowledge the difference between politicians and business people…oh wait…you all have political opinions…same as the POTUS does….and you know he's right as a businessman and you hate it!!!! well i love the guy because you don't represent me any more than any other political hack has ever represented me!!!!

  25. We heard "China collapse" rhetoric for last 30 years. Anything new? How about Guantanamo Bay – Indefinite detention without trial and torture. Should the world stop using USD?

  26. Kyle is indeed the man! With my massive Apple exposure I listen intently, but I have data inside China that CCP Chaos is increasing & small/mid sized biz that bolsters/supplies CCP big favored Corps & SOEs are being destroyed by internal policies w/consequences on inside China supply chains which traditionally threatens quality for products destined for domestic consumption inside China-population is increasingly intolerant of these tactics-Chinese Nationalism/Isolationism could backfire in this case threatening CCP’s grip.

  27. Many in Government including presidents have little understanding of economics and trade. Many just have law degrees and have no clue about economics. Trump as a businessman does.

  28. USD is back by the productivity and military of the US. RMB is back by the productivity and military of China. The key questions are 1)who is more productive and 2)who has the stronger military.

  29. Most Americans are so naive, because. they are born in a peaceful, lawful country, they don’t know how Chinese living, and most Chinese Also don’t know how ccp work, they are also naive,they are pig , make use of by ccp,China issues is most biggest problem in 21 century

  30. Hong Kong massacres show the world how ccp manipulate America ‘s politics, how deeply they can control Americans,ccp take advantage of the conflict between two parties and politicians’s greedy , swallows the freedom, Law,democracy crazily

  31. This is a proven CCP's plot to circumvent the petrol dollar by further internationalizing rmb through 18 continuous trading hours in a day. After being rejected by major stock holders of LSE on the combination offer, CCP has decided to embark on hostile acquisition. US Treasury must be warned that a different currency war is about to erupt.

  32. It makes me really angry that you guys admit to selling US out for profit yet you take the moral high ground against The president we elected to redeem our nation and our jobs. Get off your high horses before you're dragged off.

  33. 1) Kyle is bright. When Fx reserves plunge, a trade was signed between China & Iran :
    x8 Iranian oil tankers for : 4,000 cars, 11,000 TV sets, 100K men underwear and x5 NK nukes.
    2) Oil @ 40% Brent. Chinese real goods in Yuan.

    Not a dime was traded. "real Goods" for "Real Goods".
    US is dollar trade king.
    China is "Real Goods" king.
    If China oil consumption < 500 M tonnes, 1 out of 8 tankers oil will be sold at Brent in Rotterdam,
    to help Chinese "dollar" short.

  34. The global trade beyond peak, but its nature is changing.
    Barter trade takeover. Barter will always survive.
    The Yuan invisible hand "do" trades beyond wall street click.
    US is the dollar debt king.
    China is the barter king.
    Trump is a student of :
    Friedrich List, a German American economist, dead for 200 years :
    "The National System Of Political Economy"
    Amazon for $10 better than $75,000/Y x 4Y for the elite kids.

  35. Aug 24 1814 was a bad day : the British Empire entered DC and burnt the white house.
    Aug 24 2015 was a bad day : SPX suddenly collapsed.
    In 2014 foreign investors were invited China. The left was great.
    When SSEC bubble was peaked, on the right hand side of a bubble, investors got out.
    Dollar short, PBOC and the big x4 banks cannot kick the ball down to the other side and defend their own goal line…

  36. BINGO BINGO AND BINGO (except for the minor Trump bashing). No ones perfect but we can all thank President Trump for doing his job.

  37. not only can china not have its cake and eat it too. You cannot expect communism and capitalism to co exist in the same system forever. I think it was held together unconsciously by allegiances to communism.

  38. Kyle Bass – like Jordan Peterson, only better 🤗 – guy deserves his own meme. Like … when u get ripped by a truthbomb, u been ‘bassed’. Shieeeet

  39. I think not as much as some would think. They for decades have been storing gold and colonizing. They can write off our debt as the price they are willing to pay to move us out of the way.

  40. China has been eating the cake for 40 years.. and cake getting bigger year by year.. Are the western stupid to give China money as compare to u?? Must be frustrated to see the biggest airport in the world opening when the expectation is China going bankrupt and go back to 1900.. and all Chinese are poor and bullied as u wish.
    Wait for long long😂😂

  41. I know Kyle is dumbing things down, but daggum, he hasn't reached down far enough for me! What constitutes a "Current Account"?

  42. So Trump is actually the first US president to be savvy enough to understand what the Chinese are doing, and push back on them: and the media scream hysterically that he's irresponsible for doing so.

    Makes you realize just how shallow public political discourse has become.

  43. Now as it turns out , the US once is the victim of theft whilst they looted the German scientific, patents and anything else archives and stole everything worth in the trillions after the war. Seems to be a pattern in collective human behavior.

  44. See the Chinese Government showing their missiles in their national day parade ?
    Which country is those ICBMs to used against? Vietnam? Guess Again!

  45. You should love Trump because he is tearing down political correctness. He is the first Rupublican that actually fights back. How can anybody like a Democrat? That's what I wonder? Aren't you tired of your Liberal friends? I only wish the Republicans would boycott the Democrat`s businesses. That is how the Democrats roll. I think they need a taste of their own medicine. I for one is fed up!

  46. I pay great respect to Kyle, and yet with his logic, if I invested in Boeing's equity/bonds, am I also funding the war fought in middle east?

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