As the Beard was off singing the praises of the Asian economic recovery story, David Einhorn threw on some long-dated option positions to put Greenlight investors in a spot to cash in from a looming currency crisis and interest rate explosion emanating from the heart of the region, Japan. In addition to building a fortress of gold to protect against US leaders "too trapped in the short term and special interests to make (serious choices)", Einhorn took a bit of a different stance on the trajectory of certain Asian economies.
"Japan may already be past the point of no return," he said during a presentation at the Value Investing Congress in New York.
Japan's debt is equal to 190% of the country's gross domestic product, and its government deficit will be 10% of GDP this year, Einhorn said.
"When the market refuses to refinance at cheap rates, problems emerge," he said, adding that this could trigger a "currency death spiral."
This certainly sounds reasonable. Greenlight investors should rest a bit easier knowing the guy at the top has done some critical analysis, positioned accordingly, and hopes to see the fruits of his labor in the future.
"There remains a possibility that I'm wrong, and I hope I am," Einhorn said.