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Hugh Hendry ‘I would recommend you panic’

Below is a video of the conversation on News Night last night in the UK about the European Credit Crisis. Participants were Hugh Hendry, Gillian Tett and Jeffrey Sachs.

Also see Gillian Tett’s piece out today following up on this conversation entitled Greek bondholders jittery over haircuts.

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

20 Comments

  1. praxis22 says:

    It was a classic, I don’t think Sachs is used to such open dissension, he blusters well

  2. Matt Stiles says:

    Hendry is right to say Sachs’ comments are preposterous. These European sovereign/financial system issues were raised all over the place in winter/spring of ’09.

    A number of others had recognized that monetary union was untenable without fiscal union and was prone to systemic collapse.

    Sachs tries to sound like “the voice of reason” but his unwavering confidence that austerity measures are sufficient to sort out Greece’s finances was unsubstantiated.

    • I am with Hendry too despite his obviously studied indifference and incredulity. He is entertaining in that sense if boorish. Where he does lose me is where he talks about the purge. We have to be careful HOW we purge as we witnessed with Lehman. While he may think it’s OK fine to have a little depression, history demonstrates that depression, social unrest and military confrontation go hand in hand. Letting things just collapse and hoping we return to equilibrium would lead to a catastrophic outcome.

  3. rwp says:

    Sach’s is either disingenuous, or an arrogant idiot. Sorry, Greece has been brewing for nearly six months now, not ten weeks. I called it in mid-December, and I am no genius like Jeffrey. Plus his insistence on fiscal rectitude is so off base in this situation, he clearly has no understanding of how sector financial balances are interrelated, which means he remains largely ignorant of any kind of coherent stock/flow approach to macroeconomics…which is par for the course amongst his colleagues as well. If the reverse the fiscal deficits on current plans, they will simply substitute private sector debt defaults for public sector debt defaults, which is the point Gillian was trying to make on the banking system, which should soon have a full blown run on it for the reasons she briefly outlines.

    Sach is really out of his tree on this one, but he is not alone unfortunately.

  4. DavidLazarusUK says:

    Hugh Hendry is right that we should let the banks have failed and also introduce laws that prohibit dividend when capital ratios are so weak. It should also extend to bonuses. If they had allowed the banks to collapse then the state nationalise the remains after wiping out all creditors. It could then re-capitalise the banks properly without any toxic issues going forward.

  5. Element says:

    Hugh Hendry is spot on, the banking industry is the oil in the marshes, poisoning jobs, society and nations, and if allowed to continue the banks will do terrible harm that will last many decades. (not to mention the political drift into extremism that will unfold the longer it takes to get this done)

    We need a recovery to begin now, and bad loans and bad banks have to go to get it.

  6. The level of discussion leaves much to be desired. Hugh Hendry, may be right but not because he understands things well enough to come to those conclusions (apparent in his other obnoxious videos). And and the (poor) ad hominem attacks only convince people who stopped maturing in early high school. Sachs, while very smart in some areas economics, needed to attend the fiscal sustainability teach in before he recommends austerity as the responsible thing in the US. And I have a crush on Tett so I won’t say anything bad about her, but she’s a sociologist not economist, and I think sociologists understand economics better than economists very very often.

  7. Hugh is offering up a purely Austrian perspective, which is problematic to implement in the world we actually live in, but worth shoving in the face of mainstreamers like Sachs, who is really, really off base on this one.

    His assertion that Greek crisis is only 10 weeks old, is, um, just plain wrong and Hugh is right to call him on his blatant ignorance, as this has been unraveling over the last six months.

    Gillian is ever the voice of reason, though she too could stand a fiscsustain teach in. Regardless, would vastly prefer to see this level of debate over issues of substance ever show up on US TV.

  8. I’ve disabled the embed because all you septics won’t do the decent thing and link to the original:

    http://www.the-daily-politics.com/home/38-editorial/1595-newsnight-26th-may-hugh-hendry-i-would-recommend-you-panic

    Where the video is available.

    • I was not aware that your site published the YouTube version of this, Clark. I grabbed it from Youtube where the link back to the original video is embedded in the Flash.

      You do realize, however, that your site is not the original source of the content? Here is the original source, also without embed.

      http://news.bbc.co.uk/2/hi/programmes/newsnight/8709853.stm

      Acting protectively about a Youtube video of 3rd party material doesn’t seem like a good way to promote your site.