Hedge fund manager Hugh Hendry, CIO and founder, Eclectica Asset Management, ends his exile and drops by BBC.
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Hugh Hendry shares his insight on the Euro crisis with BBC Bottom Line - September 22, 2011
Overall the interview provides an excellent cross section on the discussion of the economic crisis that is looming in Europe, led by a discussion with Hugh Hendry, and two other executives, Guy Berruyer, chief executive of global business software supplier Sage Group, and Brent Hoberman the founder of online interior decoration business MyDeco.com.
Hugh Hendry Snippets:
"I don't like the language that embodies the emergency.
The debate with regard to the economy is being overwhelmed by emotive terms such as fairness - I'm sure we'll come to that.
We're not in a recession in the UK - we're in a depression; a depression is a period where it takes the economy many years to get back to the level of economics that we saw back in 2006-2007. We're not at those levels, and its 5 years that've passed, and 5 years might pass again until we see those levels again. Its an enormously serious situation, that requires cold calculation.
On the Eurozone:
We've reached a very rare moment in economic history, where the problem is greater than the ability of the politicians to respond, and they're lashing out, they're angry at people like myself, because of my being, if you will, a speculator (hedge fund manager).
There is no policy prescription they can offer that will redeem the situation. The redemption will come through the population of Greece, and elsewhere, throwing the politicians out, and rejecting the "Euro ideal."
So all the Greek private sector goes bust?
The Bankruptcy is a solution - there is too much debt, and the creditors who extended that debt, that was a folly, that was a misjudgegment, and all this firefighting is trying to protect the creditors who made those loans as opposed to the oppressed person who is being fired, and who is seeing the education system close down and the health care system close down.
Greece needs a real exchange rate; if you go on holiday, and you have a beer, it costs Ā£5 - no one's rushing to go there from the UK. If you go and its in drachma - its 50 pence - there's a sitmulus that's not open to them today, and I think eventually, they'll pull the rip cord.
It will be painful, enormously painful. There isn't a solution that isn't painful. At least that is a remedy."
Source: BBC Bottom Line, 09-22-2011
http://www.bbc.co.uk/programmes/b014qnwx#synopsis
