Klarman Frets About Chinese Leverage; Warns of A Potential “Bloodbath”

There are multiple concerns among hedge fund managers that “bubbles inside bubbles” might eventually burst. A bubble can be a wondrous thing because it can seem so surprising when you are inside. But when it pops the aftermath can be harsh. It is in this regard that Chinese leverage and wealth management products that seem to have adopted a page from the 2008 opaque derivatives playbook and have become a growing concern. The Baupost’s Group Seth Klarman recognized the issues and addressed them in his 2017 year-end review. Since that point, the Chinese have made significant moves, most recently through…