Kyle Bass On Europe: Prepare For The Default

Kyle Bass, founder of Hayman Capital Management, shared his opinions on Europe and Japan during an interview on BNN. “I think that’s coming much sooner than others would think and that is something you must prepare for in 2012.”

“You see the deposits leaving the periphery at an annualized rate of more than 20 percent. This is the final precursor for a sovereign default and it’s happening while we speak.”

“As the dominoes fall, it’s clear that the peripheral countries that are in the news so much – the PIIGS (Portugal, Ireland, Italy, Greece and Spain) as we like to call them – will have to restructure their obligations.” Bass said

Bass believes that European banks will be continue to be under the excessive leverage. He said: “Europe’s banks have three times as much leverage from equity to assets that U.S. banks have.” He also believes when the Europe have to recap the banks, it won’t have a manageable scenario.

Bass says Germany is no better than the rest European countries. He said Germany currently has 82 percent on balance sovereign-to-debt GDP, but the country will be in a very difficult scenario in a post-recap world, when “Germany will be north of 100 percent.” (Click to see the full video)