Kyle Bass On: China’s Currency Conundrum | Interview | Real Vision™


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.

4 comments

  1. For the last 7 years I wait to see when Japan will collapse financially and which summer China's banking system will explode, Bass is a bad prophet.

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