Earlier today, CNBC invited Kyle Bass, the man who correctly predicted and profited from the subprime collapse, to discuss what he thought was the biggest threat to the global financial system.
http://player.cnbc.com/p/gZWlPC/cnbc_global
Here is the highlight of what he said:
What better analogy than this...
This was the worst first week of the year for US equities... ever!
Dow... (even worse than 2008)
S&P...
Submitted by Jeffrey Snider via Alhambra Investment Partners,
The focus on China as if their problems were only Chinese is highly misplaced, though you can understand the appeal of the excuse. This sentiment was expressed over and over today (just as it was in August):
“China Finds $3 Trillion Just Doesn't Pack the Punch It Used To,” a Bloomberg headline from Friday morning reads.
“China’s $3 trillion-plus in foreign currency reserves, the biggest such stockpile in the world, would seem to be a gold-plate insurance policy against the country’s current market chaos, a depreciating currency and torrent of capital leaving the country,” Bloomberg writes, before citing a number of sources who say that in reality, $3 trillion aint what it used to be.
On Friday, the PBoC said it would seek to keep the yuan’s exchange rate “basically stable” at reasonable and equilibrium levels and work to further promote RMB internationalization.
As we noted earlier today, the more China moves to “liberalize” exchange rates and financial markets, the worse things will be for global risk assets. After all, when something that has been perpetually manipulated is suddenly subjected to a semi-honest price discovery process, the “adjustment” is usually violent. China is a case in point.