Kyle Bass, founder and managing partner of Hayman Capital Managment, is making headlines once again with new predictions on the future of Chinese banks. If his predictions are correct it could speak trouble for Asian banks. Currently, Chinese assets are over 31 trillion dollars, that’s three times the GDP of China. When a country’s banks grow too large for the country’s GDP it could lead to it’s downfall, according to Bass. If he is correct, China will certainly lose it’s equity, but thanks to Chinese government involvement, the banks won’t fail. However, it will end double digit credit growth for China and could bring bring trouble to Asian banks who lend to China.
So the question is, how likely is Bass’s prediction to come true? Bass reached the pinnacle of fame in the finance industry when he correctly predicted the subprime mortgage crisis in 2008. With this success he was instantly the new whiz kid, the superstar of the day. But many are questioning his “genius” as he seems more concerned about his media appearances than the success of the hedge funds he is managing (it’s estimated he has lost 30% of the value at a time when the best performing hedge fund managers have increased their value by that much)!
Finance is not the only reason Kyle Bass has been in the headlines. He has been embroiled in a number of questionable, even unethical circumstances. Bass has aligned himself with Argentine President Cristina Fernandez de Kirchner who has defaulted on the country’s sovereign debt twice! Most economists view President de Kirchner as an economic illiterate leader while Bass continues to defend her while her policies are sending her constituents into poverty.
As an investor in General Motors, bass seems only concerned with his bottom line instead of the lives of consumers. GM was aware of faulty airbags in their vehicles. Bass’s defense? It’s not GM’s fault, the drivers must have been drunk or not wearing their seat belts. Yes, victim blaming to save his investment.
I wish it stopped there, but there’s more. Bass, along with Erich Spangenberg, attacked the pharmaceutical industry. Bass and Spangenberg would short sell stocks, challenge their patents with their organization, Coalition for Affordable Drugs. This caused stocks to go down and prescription costs to go up at the expense of the consumer to see his bottom line go up.
Is Kyle Bass a hero of the financial world or a villian?