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Kyle Bass: “China’s Credit System Is Reaching A Boiling Point”

Kyle Bass: “China’s Credit System Is Reaching A Boiling Point”

Fresh on the heels of the biggest-ever two-week drop in onshore dollar-yuan, noted China bear Kyle Bass gave an interview where he addressed one of the most exasperating aspects of the short-selling business, and an issue that he is no doubt grappling with at this very moment: What to do when confidence in your investing thesis is undermined by uncooperative markets.

It’s been about three years since Bass first announced a massive bet against the Chinese yuan, a position that he has been forced to justify to his increasingly nervous investors, as the Chinese currency’s more than 6% surge since May – and its nearly 8% climb against the dollar so far this year – has more than reversed the currency’s largest one-year decline since 1994.

To be sure, he’s still willing to explain how ballooning assets in shady Chinese wealth management products, which have swollen to more than $40 trillion in aggregate, are destined to collapse in a cascade of bad debt, taking the country’s banking system down in the process.

He discussed his views on China – while also answering a few questions about events in his life that helped shape his investing outlook during an interview on “Adventures in Finance.”

Something strange is going on in the financial system. And according to The Wall Street Journal, it’s causing some investors to move massive amounts of money out of the banking system.

After being asked about events in his life that inspired him, Bass shared a story about his upbringing in working class Texas, where he said he started working at the age of 13 and eventually paid his own way through school.

His family didn’t have money for little extras like eating out. This inspired Bass to be very diligent about saving.

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