The second largest economy in the world is in serious trouble, according to hedge fund investor and CEO of Dallas-based Hayman Capital Management, Kyle Bass. Bass likes to play on the misfortunes that companies and countries experience. Bass became a nationally known financial expert when he predicted the subprime mortgage bond debacle back in 2008. In fact, Bass started blowing his horn about a possible financial collapse back in 2006, but the investment market was too caught up in greed to listen. Bass made a fortune when the subprime bonds were deemed worthless. Bass became a superstar in the hedge fund world, and Hayman Capital became an overnight sensation.
Bass has been the center of attention in the hedge fund world for the last eight years. Kyle is not afraid to give his opinion when it comes to investment strategies, but his advice hasn’t always been that great. Bass has had more than his fair share of losing bets, and lately, his words and actions have been suspect. Bass is putting more than 85 percent of Hayman Capital’s asset on the table. Bass claims China’s will have to spend a huge chunk of the $3.3 trillion capital reserves to keep their banks, currency, and stock market solvent over the next three years. Bass believes the Chinese yuan is going to depreciate against the dollar and China can’t stop it.
Other investors say the decline in China’s gross domestic product is by design. China is in the process of switching from an export and manufacturing based economy to a consumer driven one. China isn’t going to let Bass win according to the country’s finance minister. But in true Bass fashion, the maverick investor is telling the world to short-sell the Chinese yuan.
Kyle has been in the news for several reasons over the last couple of years. When he backed General Motors instead of the victims that lost their lives due to faulty ignition and power steering mechanisms, the world discovered that Hayman Capital was the largest shareholder of GM stock, and Bass was trying to protect his investment. When Mr. Bass backed former president Christina de Kirchner of Argentina instead of the four hedge funds that lost billions when she defaulted on $95 billion in government bonds, his peers shook their heads in disbelief.