I think this is an older video dating back to 2011 pre-US downgrade. PIMCO'S El-Erian via Zerohedge. Structural unemployment, central bank creating systemic risk, the Eurozone market design issues and execution.Financial repression, deflation. you have heard it all here before. He is more optimisitc then i am aboout China's ability to manage its economy.
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I referenced it before, now hear it straight from Kyle's Mouth.
Business Insider
"Bass replied: I think what you really have to focus on – I think people are focused on the dollar/yen too myopically. You have to think about where Japan has lost its trade competitiveness. It's lost it to Korea. And, I think the next thing you are going to see Japan talk about is buying foreign bonds, and I think they need to set the architecture up at the MoF and the BoJ to allow themselves to do so. If and when they do that, you're going to see an implicit trade war started by their purchasing of foreign bonds. So, I think that is sort of the next step out of the BoJ. But don't be myopic about dollar/yen. You have to think about where their trade competitiveness really is lost." Business Insider reports that Kyle Bass told a University of Chicago audience that one of the world largest banks has asked him to close his Japan CDS trade. I said this would be the new financial debacle one year ago. Here is a Kyle's world "The AIG of the world is back. Here's what I mean by that. I have 27-year-old kids selling me one-year jump risk in Japan for less than one basis point. $5 billion worth at a time. You know why? Because it's outside of a 95 percent VaR. It's less than one year to maturity. So guess what the regulatory capital hit is for the bank? It rhymes with "hero." Right? And, if the bell tolls at the end of the year, the 27-year-old kid gets a bonus. And if he blows the bank to smithereens, ah. He got a paycheck all year. We're right back there. I mean, the brevity of financial memory is only about two years. I wouldn't sell nuclear holocaust risk in Dallas for less than a basis point. You should be fired for thinking about selling something for less than 50 basis points, you know? And yet, this is happening again. And it's happening in huge size. You know, huge. We bought $0.5 trillion worth of these options. Interestingly enough, recently, one of the biggest banks in the world called me and asked me if I would close my position. That was an interesting day for us. That happened to me in 2007, right before the mortgages cracked. They said, "You know, we ran some new risk tests." And I said, "Really?" And they said, "Yeah, you know, our new stress scenario is a little bit more punitive than the last one." And I said, "Well, what is it?" And he says, "We don't want to share our proprietary secrets of our bank with you." And I said, "OK, then I'm not closing it." And they said, "Whoa, whoa, whoa, whoa. Well, how about: in our old one, we had rates being stressed 50 basis points, and the new one has rates being stressed 400." And I said, "Ooh, yeah, 400. That would really hurt you on this trade, wouldn't it?" And they said, "Yeah, we'd like to close that one." And I said, "Well, I'd like to, but I'm not going to do that for you, so I'm sorry." But anyway, they are starting to realize. Why would they run a stress test like that? Who would have them run that stress test? This is happening." Things are getting worse, but it seems that many mainstream economists believe things will improve in second half of 2013. I don't.
CNBC via Zerohedge.
Japan is on fire. We will see if Abe and the BOJ can put it out.
He cranks his rehtoric up on the likelihood of war.
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