Kyle Bass on Why Japan Is Still In Trouble

The Hayman Capital Management founder explains why he thinks Abenomics won't work in the long-term.

Institutional Investor's Alpha

October 16, 2013

By Robert Stowe England

Kyle Bass, founder of the $2 billion hedge fund firm Hayman Capital Management in Dallas, is not particularly impressed with so-called Abenomics. Bass, 44, has been predicting a default and economic implosion in Japan for more than three years, and he thinks that Japanese Prime Minister Shinzō Abe’s measures to spur economic growth in the country, introduced earlier this year, are a day late and several trillion yen short.

Bass’s fundamental case for Japan’s insolvency is simple: Its debt burden is a staggering one quadrillion yen and steadily rising, while its economy has hardly grown since 1989. Bass set up the Japan Macro Opportunities Fund in 2010 to bet against Japanese government bonds, but so far the big payoff has been slow to arrive. Bass has made correct doomsday calls before, however. He earned a return of more than 500 percent shorting the subprime mortgage market in 2007 (in a fund co-managed with Mark Hart’s Corriente Advisors) and also profited from a wager against Greek bonds.

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Robert Stowe England is an author and financial journalist who has specialized in writing about financial institutions, financial markets, retirement income issues, and the financial impact of population aging.

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