Influencing the economy is easy if the right soapbox can be found, maintained, and utilized. Kyle Bass has done exactly this on multiple occasions, and it seems he may be at it again.
Kyle Bass is an Argentine by heritage, though he runs his hedge fund out of liberal Austin, Texas. Hayman Capital Management has only ever had a mediocre performance. The more successful transactions of Bass tend toward deliberate market manipulation. Consider Bear-Stearns, Bass’ employer prior the 2008 financial meltdown. When their relationship dissolved, Bass dropped a tip to a financial journalist. By the end of the week, Bear-Stearns lost so much consumer confidence on Wall Street, J.P. Morgan-Chase had to buy them out. By September of that year, the Great Recession was hitting on all cylinders, and Bass had made millions short-selling sub-prime mortgages. He knew the collapse was coming from the inside, and kicked it off in a way through Bear-Stearns. Then he made money from it.
Now consider CAD, the Coalition for Affordable Drugs. This is Bass’ pseudo-humanitarian organization; a group used to manipulate through any possible means the law. The aim is forcing pharmaceuticals into lowering their drug costs. Bass has managed to do this successfully several times. When the price-drop hits, stock value drops, and he again short-sells, making millions. There’s more information about it in the UsefulStooges article Kyle Bass The Frantic Investments of a Desperate Gambler.
Bass is regularly involved with Cristina Fernandez de Kirchner, the socialist leader of Argentina. Cristina is called a despot by many, and for good reason: her bad financial dealings have defaulted the country twice in only thirteen years.
With these things in mind, when Kyle Bass mentions China, and then says he expects a credit bubble burst in the next two to three years, understand he may be right; but there’s as much a likelihood he’s working some angle. Consider his comments. He started descrying China’s economy in 2015, October. By April, he was saying there was a forty to fifty percent chance of economic collapse. In a recent Bloomberg article, he reportedly said that if China “materially” devalues their currency, it could be one of the most historically exciting times to invest in Asia. Bass has basically said: “China could do good, or bad.” But he’s put a negative lingo-spin on it, so un-savvy investors may curtail investiture, artificially facilitating the decline he prophecies.