a prop di scenario iperinflattivo
Bass Says ‘Cluster’ of Sovereign Defaults Is Possible
By Pierre Paulden and Saijel Kishan
March 4 (Bloomberg) --
Kyle Bass, the hedge-fund manager who made $500 million in 2007 betting on declines on
subprime mortgages, said investors need to protect themselves against central banks printing money to cover up their mistakes.
Confidence in government and central bank leadership is plummeting globally, sending investors to buy “old fashioned stores of value” such as precious metals, Bass, managing partner of Dallas-based Hayman Advisors LP, said in a letter to clients. The growth in banking debt increases the possibility of a “cluster” of government defaults within three years, he wrote.
President
Barack Obama is seeking Congressional approval for a $3.55 trillion
budget for the fiscal year starting in October that would increase spending by 32 percent, resulting in a deficit of $1.17 trillion as he seeks to kick start the economy. Treasury Secretary
Timothy Geithner said costs to rescue U.S. banks may be more than the $700 billion already approved after losses and writedowns globally from the credit crisis exceeded $1.19 trillion.
The “rampant printing of currencies” won’t immediately lead to inflation as banks reduce borrowing and asset values decline, Bass, 39, wrote in the March 2 letter, a copy of which was obtained by Bloomberg News. “The greater concern is the potential inflationary time bomb that grows as governments continue to borrow, print” and stimulate economies.
The U.S. will need to issue $2.35 trillion of new Treasuries this year, and Europe will have to issue even more government debt, Bass said.
Treasury Yields Rise
Yields rose the most in a week as the cost of protecting against losses on U.S. Treasuries climbed. The yield on the 10- year note rose 13 basis points, or 0.13 percentage point, to 3.01 percent at 9:50 a.m. in New York, according to BGCantor Market Data. The price of the 2.75 percent security due in February 2019 dropped 1 2/32, or $10.63 per $1,000 face amount, to 97 24/32.
Governments globally have allowed banking systems to grow to many multiples of their gross domestic product. To support them, governments will save the banks at the risk of “bringing the sovereign into an untenable position,” he wrote.
“If you are following stocks or bonds (like in 1923 Germany or Argentina in 2001), you are likely to get rope-a-doped because you are not watching the government steal your hard-earned savings with their printing presses,” Bass wrote. “It is time to defend yourselves from this insidious crime against the financially prudent.”
Safe Haven
The U.S. dollar will be a safe haven compared with other currencies, including Japan’s yen, Bass said.
Christopher Kirkpatrick, a general counsel for Hayman, declined to comment.
Bass, a former salesman for Bear Stearns Cos. and Legg Mason Inc., started Hayman in 2006 to focus on corporate turnarounds, restructurings and mortgages. Hayman Capital Master Fund LP has gained 340 percent since inception, including 6.13 percent in 2008, the letter said. The fund is up 9.03 percent this year, compared with a 0.7 percent gain by the
HFRX Global Hedge Fund Index.
Hayman Advisors has $620 million in assets under management, according to a filing with the U.S. Securities and Exchange Commission.
Too Soon
After betting on declines in the value of residential mortgage-backed securities in 2007, Bass said it’s still too early to buy mortgage whole loans and securities. A rise in the unemployment rate to 10 percent to 12 percent and another wave of defaults will send prices lower, he said.
“While there will be significant opportunity in this space one day, the time has not quite arrived,” he wrote.
Hayman has started a municipal-bond fund to provide a tax- free return and a residential real estate private-equity fund focused on distressed assets and bankruptcy loans. To date, the fund has bid on more than $1 billion of distressed transactions, he wrote.
“Given the direction in which the global economy is headed and looming worldwide fiat currency debasement, we are confident that at some point, real estate will prove to be a very valuable asset class,” he said.
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