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KYLE BASS: Japan's Adding A Ponzi Scheme To A Ponzi Scheme

Linette LopezMay 8, 2013, 22:14 IST

Kyle Bass is on his favorite topic here at the Sohn Investment Conference — Japan.

His bottom line is that the country's "shock and awe" monetary policy is going to work, and Japanese leaders are beginning to realize that.

"What they're doing represents 70% of what the Fed is doing here with an economy 1/3 the size of ours," said Bass.

Ultimately he says, with regards to Abenomics, is that country is a Ponzi on top of a Ponzi. He says the country is on "tilt" and he added "You have to be sh**ing me."

The question is when, and that moves to "qualitative aspects," he added. What does that mean?

There's a fatalism, he says, in everyone he talks to in Japan. Their thinking is changing, and the way they talk to him about debt is changing. They already spend 50% of tax revenue on debt service.

"If rates go up, it's game over."