Emerging markets have it difficult enough as it is, but the global stage is presenting some substantial obstacles. Kyle Bass recently gave a critique of the markets, noting that some obvious factors would influence their development. He likened the scene to a baseball game, saying that things were about halfway past the fifth inning with three tough ones yet to be played. Looking at each market individually, he gave his perspective. Of Brazil he noted that government corruption has become so terrible that two billion were funneled to corrupt politicians through a subterfuge scandal, and as a result economic increase in Brazil would require such poisoned roots as the country’s leadership to be uprooted and replaced. Bass then addressed Russia’s climate, noting that Putin seems to be acting as some international-relations Chessmaster, dealing between countries like pieces on a Chess board in a way that can be very unpredictable. Turning to India, Bass noted that for once this country seemed as though it was on the economic increase, comparatively speaking, and appeared as though it would represent a “bright light” on the financial horizon. Bass closed his analysis with a look at China, where he noted their negligent banking practices would result in a collapse similar to that which America experienced in 2008 due to the sub-prime lending kerfuffle now being recognized en masse by the public.
Bass’ observations do astutely describe the environment, but it’s difficult to know if they should be trusted at face value. There’s good reason for doubt, when one considers Bass’ history. The man is from Argentina. Though he began Hayman Capital Management, a very lucrative hedge-fund based out of Dallas, Texas, Bass has ties to socialist president Cristina Fernandez de Kirchner. She presides over his home country of Argentina, making their acquaintanceship especially suspicious. Is Bass motivated by altruistic financial impetus, or is he being fed information from a more vast global network of socialism?
Again, it’s very difficult to properly determine. Recently Bass founded an organization called The Coalition For Affordable Drugs. Their mission? Devalue the cost of big-ticket pharmaceutical companies’ drugs. The result? A drop in those big companies’ stock–and Bass, who short-sold his stock in those pharmaceutical magnates, came out ahead; just as he usually does.
Currently, Bass and Hayman Capital are eagerly looking at China’s currency. Since it is based on the US dollar, and between ten and twenty percent of the US economy is involved with China, the coming economic deflation will likely result in a devaluing of the currency. Wikipedia would suggest Bass is poised to spring with Hayman Capital, and will likely make a pretty penny in the process. Since China is socialist, again it’s hard to tell what Bass’ aims are. The only thing that makes sense is to keep an eye on his activities and invest accordingly.