Posted by guest , Oct 17, 2008 3:34PM

"The U.S. dollar may not seem the best choice given our macro
views, but we consider it the tallest midget amongst the rest of the world."
Like the shout out to midgeys

Posted by guest , Oct 17, 2008 3:42PM

"kabob stick to the urethra" - Do you have experience with that? Giving or taking?

Posted by guest , Oct 17, 2008 3:50PM

Somehow I don't get this sort of perspective when reading my daily business newspaper.

Why is that?

Posted by guest , Oct 17, 2008 4:03PM

If he's this bearish - why is he down this year

Posted by guest , Oct 17, 2008 4:08PM

is that an indictment on the pop rocks bj?

its not bad, but its really nothing special either...

Posted by guest , Oct 17, 2008 4:08PM

There were plenty of hedge funds that were on to the sub-prime / housing bubble situation, but were early, and got their asses kicked. Shorting is as much about timing as it is being correct. Christ, there were plenty of articles in 2005 talking about half the California mortgages being option-ARMs. Only one reason that happens. The bubble was obvious - the timing of the pop was less so. No different than the internet/tech bubble.

Posted by guest , Oct 17, 2008 4:10PM

fun read!

Posted by guest , Oct 17, 2008 4:11PM

@8 obviously not. it's a reference to the last graph in which he says why his fund's going to be better than dead. pop rocks bj's are the best.

Posted by guest , Oct 17, 2008 4:25PM

Whoa there #2 - You admit the guy nailed the subprime crisis before it happened and posted phenomenal returns - but then you denigrate him as a "pure salesman"... Why can't he be a great investor AND a great salesman? We've got the proof of his investing skills from his returns...

So why exactly do we take it with a grain of salt? what part do you disagree with? or are you just one of those uptight, entitled, overleveraged, Ivy League elitist turkeys that resorts to unnecessary personal (and untrue) comments about his marital status because you don't have the two original thoughts that are required to rub together to create a rational respone to the investment thesis laid out in that letter?

You "believe his subsequent launches have flopped" - really? what exactly do you know about them? From what I understand one is a Muni Bonds fund that is outperforming 90% of its peers.

Come back with some principled criticism or bugger off you jackass.

Posted by guest , Oct 17, 2008 4:30PM

@12 Apparently J. Kyle Bass reads the comments section

Posted by guest , Oct 17, 2008 4:44PM

I dunno. I have a hard time fully trusting someone who uses so MANY CAPS.

Posted by guest , Oct 17, 2008 5:11PM

too many grammatical errors, read it anyway

Posted by guest , Oct 17, 2008 5:18PM

@14

Are you trying to say that the $3 million that I sent to my Nigerian confide last week was trust misplaced?

Posted by guest , Oct 17, 2008 5:42PM

Kyle Bass is my hero

Posted by guest , Oct 17, 2008 6:10PM

You had me at "pop rocks blow job."

Sure, it was at the end; but that's where you had me.

Posted by guest , Oct 17, 2008 7:43PM

Commentary with a bunch of capital letters and mispellings is a lot of the time more informative, truthful and interesting than the bullshit, say-nothing research pretty much the whole street puts out and calls research.

Posted by guest , Oct 17, 2008 8:24PM

Any updates on Michael Dudley's scam real estate deals in Zermatt?

Posted by guest , Oct 17, 2008 9:34PM

This guy is an idiot. Debt levels mean nothing. One person's debt is another man's asset. The reason why debt has been able to increase so much over the last 30 years is because the money supply has increased because we have been off the gold standard since the 70's. This guy got lucky calling the top on housing. If he had tried to pull that shit in 2004 he would have been bankrupt. Deflation is not something to worry about - unlike in the early 30's the FED CAN PRINT MONEY! TO COUNTER DEFLATION!!! because there is no gold standard.

Posted by guest , Oct 18, 2008 12:58AM

Debt is an asset to the holder only to the extent that it is not worthless debt. When debt goes worthless, it makes a nice little hole in a balance sheet. When a lot of debt goes worthless, well, we've seen that movie.

If people were actually good for the tremendous amount of debt that is being carried at all levels, we wouldn't have a problem. But they are not, and a lot of the debt products are absurd i.e. credit card securities, HELOC's based on 125% of the original equity of the house and other nonsense.

Most Americans have no significant assets other than their homes. If their home is underwater, they are effectively bankrupt by definition if anyone forces an accounting, such as a divorce, anxious bank with a breached covenant or unpaid mortgage, government pissed about tax, etc.

There simply is no money and no worthwhile collateral there for a lot of the debt at the base of the financial pyramid. Interestingly enough, much of the balance sheets at the top of the pyramid (Lehman's commercial real estate holdings, for example) is equally devoid of value.

Posted by guest , Oct 18, 2008 2:23AM

I posted at 9:34 - Ok, so if the debt is worthless, the liability to the debtor is less than the nominal amount. Hayman's graph should then show a lower debt level instead of the nominal amount. Either way, it is a wash, less lawyer expenses. The Fed is an independent corporation and it can print money and Bernanke is a student of the Great Depression and he is a monetarist. He will print money in order to avoid the deflation. Also, trillions in asset value disappeared in the 2000-2002 tech bust (i know this is slightly different, but bear with me) and there was only SLIGHT deflation for one quarter because the Fed accomodated. So, assuming that there will be a massive decrease in economic activity because of a wealth effect is not exactly justified. Home prices doubled in the 2000-2008 period, GDP did not and GDP growth was infact inline with historical average. Home prices have another 15% to fall before they are in line with historical average. Fed has been and will continue to print money like there is no tomorrow. Paulson had to ask for $700B. Bernanke does not. B is only constrained by the capacity of the mint to print cash.

Posted by guest , Oct 18, 2008 12:21PM

...and Bernanke just printing cash is good in what way?

Posted by guest , Oct 18, 2008 12:25PM

Props to K-Bass, not only for being right and timely, but for investing in his fund. While bloated hedge funds play "defend the management fee", he plays for the performance fee and invests the management fee in his business for the partnership's benefit. Not that long ago, say 7 years, these funds would play for the performance fee. But as assets skyrocketed, the principals viewed the management fee as the holy grail, which they keep for themselves instead of investing it for the benefit partnership. You have funds clipping $80-150mm in management fees and spending $10-20mm on investment staff and research. And guess what, they suck. Maybe if they invested more in investment staff instead of back office and admin check boxes to create the illusion of an institution, they'd do better. K-Bass's track record isn't that long, but he has already emerged as a thought leader because he has invested in his business, while the big funds flounder around egomaniacs who long ago lost their interest in the "partnership's" interests.

If hedge funds are to rebound, new leaders will have to emerge from the ashes of bloated excess. My guess is Kyle Bass leads the way.

Posted by guest , Oct 18, 2008 2:55PM

@24

Kyle, is that you? That's a whole load of hyperbole

Posted by guest , Oct 18, 2008 9:09PM

@23 = it is good because it will counteract any deflationary pressure. But, none of this matters anyways. Get out of the market (or shift your money overseas) Obama and the most liberal and corrupt government in history are coming...

Posted by guest , Oct 18, 2008 11:50PM

Don't playa hate...give Bass his props.

Posted by guest , Oct 19, 2008 6:43AM

@26

And why is deflationary bad if it reverses back to the historic mean?

So you would prefer for prices to diverge away from the historic mean yeah?

Posted by guest , Oct 19, 2008 10:19AM

@28 - there is no "historic mean" of prices. Over history, prices are not stable. Over history, there is price inflation of about 3% per annum. All rational market participants assume this, and base there long-term decisions on this, so having deflation would be harmful in the same way that 6%+ inflation is harmful, but instead of cash and debt holders being harmed (in the case of inflation) asset and debtors are harmed in a deflationary cycle. To the extent that this country or our government has alot of debt, the government must produce inflation to reduce that debt as well. The US government needs inflation - it is 10T in debt.

Posted by guest , Oct 19, 2008 1:22PM

one of the most down to earth investors letters ever.

http://weeklyta.blogspot.com

Posted by guest , Oct 19, 2008 3:30PM

@29

When I say historic mean, I was referring to the historic mean of the real-income adjusted housing prices. Do you think it's good for the prices to keep on going up just because we have to protect the debtors? Sorry bro, that's unsustainable.

Asia were massive debtors and suffered massive asset deflation between 97 and 2000 and they came out stronger than ever from the experience.

For US (or the world) to come back stronger and reach equilibrium, deflation is a must. Otherwise, you are just preparing yourself for a bigger crash in the near future.

Posted by guest , Oct 19, 2008 4:28PM

@31 - prices will and should keep going up in the long-run, roughly at the rate of inflation. Owner-occupied housing is a durable good, not an asset.

Posted by guest , Oct 19, 2008 6:26PM

@33

You said it yourself. Prices should keep going up *roughly at the rate of inflation*.

Fact is prices have gone way up away from the rate of inflation and it needs to deflate to reach equilibrium.

Posted by guest , Oct 19, 2008 6:28PM

This Hayman dude claims that the credit market is tight because there are no spare cash and not because of the trust factor.

BS! how do you explain this?

"So even though the Fed has flooded the credit markets with cash, spreads haven't budged because banks don't know who is still solvent and who is not. This uncertainty, says Ms. Schwartz, is "the basic problem in the credit market. Lending freezes up when lenders are uncertain that would-be borrowers have the resources to repay them. So to assume that the whole problem is inadequate liquidity bypasses the real issue.""

Posted by guest , Oct 19, 2008 8:32PM

@34 - asset prices have gone up at more than the rate of inflation, and, generally they can, except housing. The housing market will deflate. The general price level in the economy (the CPI) has gone up by the rate of inflation by definition. I am saying that CPI increases will be positive, not negative. You response shows that you misunderstood the meaning of "deflation." Deflation, in the letter and in our argument, is increases in the price level, NOT the price of homes, which is not in the CPI.

Posted by guest , Oct 19, 2008 10:17PM

#34 = dumb fucktard

Posted by guest , Oct 20, 2008 5:37AM

@36

Ok. We're not in the same wavelength then. I was always referring to the housing market deflation, not economic deflation, hence the reference to its historic mean.

I agree with you that falls in the housing prices will not bring about widespread deflationary pressures as long as they keep the printing press to the max.

Posted by guest , Nov 10, 2008 12:46PM

Kyle Bass is a da pimp. The sub prime housing mess is his hiz-zoe bitch.

Mc donalds fries come in 4 sizes now small, medium, large and Kyle Bass.
S Grove forever