At the Milken Institute conference in May, he told the audience that France was just a year away from nationalising its banks and that politicians had still not faced up to the scale of the global debt bubble that was now imploding.
“We have reached a profound point in economic history where the truth is unpalatable to the political class – and that truth is that the scale and magnitude of the problem is larger than their ability to respond – and it terrifies them.”Read it at The Financial Times
Hendry – ‘Bad things are going to happen’
by Rober Cookson
In line with Randy Wray.
15 comments:
Hendry's just another egomaniacal hedge fund manager who's been calling for a collapse for the past three years now. He says things like, "the U.S. debt is bigger than it's GDP." It's the same misinformed soundbites that you hear from Schiff and Rogers et al, except with a British accent.
Hedry was bullish USTs pre qe2.
Then he got stopped out in the Fed assisted spec selloff into qe2 that Mike explained here.
Not clear whether he re entered in time for the huge "who will buy them now" rally that immediately followed the END of qe2.
If not, to Mikes point his ego may prevented him from learning anything new, (he already knows everything ) in this case that for the Fed it is always about price and NOT quantity.
Rsp
I don't know what Hendry's analysis is, but Randy and Michael Hudson have been calling a fairly near term collapse of the financial system based on Minsky.
And as Michael Pettis points out in the post I just put up which is based on Minsky, too, even if the euro crisis were solved tomorrow through a fiscal union, it still leaves the private debt overhang and insolvent banks to deal with. Pettis sees China vulnerable too.
This next crisis could be "the big one" that's too big to bail.
Hendry also talks about debt deflation and he has called for debt relief. He adamantly holds the position that the banks should be screwed over because they foolishly lent money.
So he's probably not as bad as schiff, who would love a society of debt slaves standing in breadlines, but Hendry is definitely a bit egomaniacal...
"I don't know what Hendry's analysis is, but Randy and Michael Hudson have been calling a fairly near term collapse of the financial system based on Minsky."
Then it's Randy and Michael vs. Warren Mosler, who's currently pretty bullish.
Hendry's just another egomaniacal hedge fund manager who's been calling for a collapse for the past three years now. He says things like, "the U.S. debt is bigger than it's GDP." It's the same misinformed soundbites that you hear from Schiff and Rogers et al, except with a British accent.
Except that is technically a true comment. US debt is larger than its GDP. What, did you mistakenly infer he tacitly said something that he didn't actually say, because you just don't like him?
And it's funny how you're still butt hurt over Schiff making you look like a fool on national television.
Then it's Randy and Michael vs. Warren Mosler, who's currently pretty bullish.
Warren is cet. par. He is figuring on the present trajectory being sustainable and admits that he is not taking a shock into account in this.
Randy and Michael are not looking as much at the present trajectory as at the likelihood of a shock given the private debt level and the fact that virtually all the conditions that led to 2008 are in place and some of them have gotten worse.
They think that the Ponzi finance cycle is yet to be resolved. Crisis are recurring more frequently, and the next crisis is anticipated five to seven years after the last. 2008 + 5 = 2013, and +7=2015. We'll get through this election cycle and then?
Two other items that could be important - It is now official: The Eurozone’s monetary transmission system is broken
Quote:
Here is the answer, as provided by Christian Noyer, a governor of the Central Bank of France (in an interview with Handelsblatt): “We are currently observing a failure of the transmission mechanism of monetary policy. From the markets’ perspective, the interest rate facing individual private banks depends on the funding costs of the state where they are domiciled and not on the ECB overnight interest rate… Hence the monetary policy transmission mechanism does not work.”
and
Geithner Lets the Cat Out of the Bag
Quote:
In essence, Geithner is letting the cat out of the bag. He is implying that Europe is hanging on the edge of the abyss. Only Germany can prevent it from falling in, and at the same time it appears that Berlin has now moved into a position where they cannot or will not prevent that disasterous scenario, either for economic or legal reasons. The decision by Germany’s constitutional court to delay its approval of the German Parliament’s ratification of the ESM and fiscal compact may be a warning. The court could have moved to approve quickly. Instead, it will not rule on emergency appeals for an interim injunction against the parliamentary approvals until the end of this month. If the court rules in favor of an interim injunction, the final decision on the ESM and fiscal compact may not be made for several months.
This decision to delay by the constitutional court suggests that it cannot be counted on to approve bailout measures for other European nations even if a failure of Germany to participate in such bailouts may lead to a quick and perhaps decisive European financial crisis.
Anonymous, the debt bigger than gdp is only true in the most superficial sense. We call it debt but is it really? The government can create dollars at will, why would you borrow something back you can create at will? If you have an unlimited supply of supply, are you ever at risk of not giving it back? See it makes no logical sense to look at the "National Debt" as a true debt. The difference between cash and tsy's is the interest rate and maturity.
This brings up the question, is the ratio of "national debt" to gdp have any real relevancy? I suppose if national savings got too high, this could induce people to not work thus leading to a loss of production, thus leading to more dollars chasing fewer goods, but with the wealth so highly concentrated and the average person just scraping by, I can't see any significance in debt-to-gdp. Thoughts?
Per Warren, failed banks needn't be terminal for stocks or economies ... given sane fiscal policy.
Warren's, Randy's, Michael's positions needn't be conflicting.
Europe is a mixed bag of nuts. Germany has completely bypassed the credit fueled housing bubble thing, whereas Spain and others have gone full force Ponzi. France somewhere in the middle.
One question: Is Germany too big a domino to topple?
Joe I don't think that ratio has any predictive information in it.
It is ex post accounting. Rsp
@Tom
When "the truth is unpalatable to the political class" ...
then politics & policy as we know it won't scale .. yet that doesn't scare everyone (ho hum say biologists & most other system scientists; Darwin says "wake me when it's over")
Brad Lewis: "May explain why [politicians] alternately reach for recycled issues or an apocalyptic vision of complete change."
And why the future always turns out to be neither? :)
Maybe we could have Art Linkletter's kids do a show called "Luddites say the Darnedest Things!"
Roger: "'Per Warren, failed banks needn't be terminal for stocks or economies ... given sane fiscal policy. Warren's, Randy's, Michael's positions needn't be conflicting."
No, they needn't be conflicting, but odds are quite high that they will be conflicting, and I would not be betting money against it.
But, yes, in the midst of panic, they could discover MMT and avoid falling into the abyss of debt-deflation. Much more likely is a rush for the exits.
Actually, Hugh Hendry is, relatively speaking, a Pollyanna optimist, who, himself, likely doesn't even begin to grasp the full situation.
Europe, Asia, and now most of the rest of the world are (the former eapecially) well advanced demographically into total societal collapse. He sees things imploding demographically. But I haven't heard his voice enunciating complete civilizational collapse.
My father-in-law, now age 96, told me 2 momths ago how they harvested far leas grain than they planted on his parents' farm in 1932, 1933, 1934 & 1936, during the dust bowl days of the depression.
Demographically, Europe is in an equivalent of 1934 or 1936, as far as human reproduction. In 1937, my father-in-laws' parents abandoned the farm. Europe is close to dying existentially. It is near ceasing to exist as a culture. The final throes of civil
Post a Comment