Kyle Bass the founder of Hayman Capital recently spoke at the AC2012 The Engtanglement KB. He was the keynote speaker at the event. Not surprisingly, he spoke about bloated balance sheets' of Central Banks. He talks about Europe and Japan, but does not discuss much about his recent investments in non agency debt.
He notes that the LTRO did not really accomplish anything, as there was still a bank run in many of the poorer European countries. Bass notes that despite exports outside the region, Europe appears to trade with itself, with flows going from Southern to Northern Europe. Without even looking at off balance sheet revenue, the situation appears to be grim in many countries. He notes that Ireland and Iceland had banking assets with 10x assets versus GDP. Bass thinks that France is next, and if the Euro splits up, France will not be allowed to stay.
Bass states that he had a conversation with famous author, Kennth Rogoff, several years ago to discuss some of the debt problems around the world. Bass realized that none of the regulators were paying attention to the problem, which made him more fearful. He now believes that inflating out of the situation 'as Academics want to do' will not work, as revenue will not grow as fast as revenue. Japan has 24x its tax revenue in debt, if it ever moves to inflationary levels the country 'will be finished.' He calls this a case of the Keynesian end point, and notes Russia as a recent example.
Bass then gets into discussing confirmation bias (which he apparently does not believe he is prone to).
The full one hour keynote video presentation can be found at the following link.
H/T Frank Voisin