Hugh Hendry - Why the Bank Bail Out Wont work -Dispatches Heckle

Anyone got Hugh Hendry on Channel 4 - Dispatches ?

Is that the Hugh Hendry of CNBC fame?

Ard-Taoiseach wrote:

Is that the Hugh Hendry of CNBC fame?

Yes indeed - Scottish Hedge Fund manager.

cactus flower wrote:

Ard-Taoiseach wrote:

Is that the Hugh Hendry of CNBC fame?

Yes indeed - Scottish Hedge Fund manager.

He's something else, isn't he?

He says a bottomless pit of taxpayers money has been put into the British banks - and government has been taking stakes in the banks.

It looks as if much more money will be needed because of the amount of asset destruction that has taken place - the tax payer is the "Sucker of Last Resort".

Libor - The London Inter Bank Offered Rate - is too high because banks don't trust each other. Lending has come to a stop in spite of the money put into the Bank.

He is interviewing businesses who had their loans cancelled.

He says there should be "sensible" banks that just do High Street banking and don't get involved with high risk stuff - horse has bolted though.

cactus flower wrote:

Anyone got Hugh Hendry on Channel 4 - Dispatches ?

watching it now - back later

I find his manner as annoying as David McWilliams. Think I'll stick with the West Wing on my laptop .

johnfás wrote:

I find his manner as annoying as David McWilliams. Think I'll stick with the West Wing on my laptop .

Oooh now that's low! West Wing is Nice. Which season are you watching?

johnfás wrote:

I find his manner as annoying as David McWilliams. Think I'll stick with the West Wing on my laptop .

I think he is suffering from the editing. The programme is designed for people who haven't been following this.

He is making the interesting point that Banks shareholders are pension funds and other banks, and are either sleeping partners or are up to the same stuff themselves, so they don't scrutinise what is going on in the way that shareholders sometimes do.

Otherwise, pretty feeble so far and I agree johnfas, self promotion like McWilliams. Perhaps he doesn't see much future in Hedge Funding.

so far the RBS guy and the Schroeder's guy have been PATHETIC!

Aragon wrote:

so far the RBS guy and the Schroeder's guy have been PATHETIC!

As were the others on CNBC Squawk Box when he was on there. Other financial figures can't seem to be able to handle him.

Aragon wrote:

so far the RBS guy and the Schroeder's guy have been PATHETIC!

US bank guys talking about mattress money - no wonder housebreaking is on the increase. Lehman Brothers was until recently regarded one of the worlds most successful firms - it went down with 600 billion bad debts from sub prime. Hendry says that letting Lehmanns fail was a "mistake" - was it hell, it was highway robbery by Paulson and Goldman Sachs who oicked up its assets.

Nouriel Roubiniis now wheeled out "Permabear". Irrational exuberance was a presage of collapse. Roubini says the failure to punish the banks - gains have been privatised and losses socialised.

"Hang a couple of bankers on a public square".

Housing market rescues are his next target.

1.4 trillion dollars of mortgage losses is coming through the system.

"Mortgage backed securities" were turned into into Credit Default Swaps into toxic, unpriceable waste.
It was done to make them look worth more than they were, now no-one can tell if they are worth anything. Credit agencies like Moodys and Poors were paid by the banks to give them triple A ratings.

This was driving everyone's growth in the banking sector so no one wanted it to stop - everyone knew it was coming to an end and tried to stretch it out one more quarter and then one more quarter....

The financial system is failing and better regulation is not enough, he says.

Stiglitz is on now.

So far no one seems to be wondering why this has happened, except that it involved under regulated lending.

Hendry thinks this is so bad it will be a 20 year depression. In Part 3 he is promises to tell us why...

The last guy he interviewed was wearing a 50,000 dollar watch, from the look of it.

Fancy Hendry making money out of betting on the bust. That sort of meaningless speculating should be outlawed immediately. Still, Roubini is the guy they should be listening to but it is angering as hell to have to do as he suggests - he's so right that if they dont at least have some public hangings and floggings from among the banking community there is likely to be violent revolution. Bring back the stocks on Wall Street and the City of London - and every other stockbroking cesspit!

He says banks should never be allowed to lend more than they have on balance.

The British Banking Sector is going to be clamped down on - derivatisation and securities trading.

But Banking is 20% of the British Economy
How much is it of the Irish economy (IFSC)

May to August 164,000 people in Britain lost their jobs - it is expected to go to 3 million by 2010.

Interest rates are set at 4.5%- he says that is far too high. He says that is insane and would result in massive pressures on employment.
The Bank of England, like the European Central Bank, is focused almost entirely on the risk of inflation.

He would cut rates to 2% but doubts that that would happen.

He believes that the UK is on the way to a debt of 200 billion pounds. This will have to be paid back by future taxation - children and grandchildren will pay.

People will have to spend a lot less.
"The reality is we took on too much debt. We have to be prudent. Our strength of character will prevail"

.As youngdan says, a future of slavery and misery lies ahead.

Aragon wrote:

Fancy Hendry making money out of betting on the bust. That sort of meaningless speculating should be outlawed immediately. Still, Roubini is the guy they should be listening to but it is angering as hell to have to do as he suggests - he's so right that if they dont at least have some public hangings and floggings from among the banking community there is likely to be violent revolution. Bring back the stocks on Wall Street and the City of London - and every other stockbroking cesspit!

He only seemed to be able to find one banker who had lost his job.

Well done Cactus - got it all in there. Striking that there is no mention of the looming oil crisis though - which is going to hit before this is over and make it look like a storm in a tea cup by comparison.

What if interest rates really do go to 0% though?

Aragon wrote:

Well done Cactus - got it all in there. Striking that there is no mention of the looming oil crisis though - which is going to hit before this is over and make it look like a storm in a tea cup by comparison.

What if interest rates really do go to 0% though?

Low interest rates were one of the reasons why this crash has happened. There was no incentive to save, and Banks profits were eroded, so they expanded the volume of their lending. Still, as we are going into a horrendous deflationary crunch, it may be justified at the moment.

Aragon wrote:

Fancy Hendry making money out of betting on the bust. That sort of meaningless speculating should be outlawed immediately. Still, Roubini is the guy they should be listening to but it is angering as hell to have to do as he suggests - he's so right that if they dont at least have some public hangings and floggings from among the banking community there is likely to be violent revolution. Bring back the stocks on Wall Street and the City of London - and every other stockbroking cesspit!

That's what I used to think and I also used to think that currency speculation should be outlawed. Rockyracoon twisted my mind on the 'meaningless speculation' bit by saying very truly that there is always someone who is going to gamble and always someone who'll take your bet. Given that they are consenting adults then why stop them from betting on something as innocuous as the stock market crashing ? Their bets don't affect the stock market either way really unless they borrow, like Sean Quinn, money from banks to gamble with. In the latter case money is created in order to speculate while in the first case it's invested. The trouble is that those investors do not know what's happening to their money, by and large I'd say and if they did would they care if Hendry was betting on a falling market ? Maybe they invest with him because he's good at it...? Can negative bets like this can bring a tiny bit of sobriety to the market I wonder ? Sometimes not everything is good if it's going up and up like the ISEQ was ...

In the end the stock market could be very democratic if shareholders made informed buys and used their votes as in to discourage their bank from over-leveraging its deposits. Often they are not fully aware of what's going on though because real numbers are hidden from them. In that case someone should hang.

Currency speculation I'm still not sure about ..

I really dont know enough about the mechanics of investing and stock markets to make an informed comment about the above but heres my take on it. The "meaningless speculation" implies to me some kind of manipulation of the market for the beneft of some interest and to the detriment of free and fair trading. If thats the case then good - ban it. But my feeling is that this is more to it then even betting for gain.
If you got the opinion of all the people of ireland as to what the price of Bank Of Ireland would be by the end of next week, and averaged it the chances are is that you would get a very accurate result. Thats the way it should be and thats better then having a certain indivdiual or expert decide whats best. And for me thats the beauty of the "free" free-market, which I believe we still havent got yet. The rotten companies will be exposed and should be condemned. The same with the currencies.
I think that in time if we come to a situation where there is absolute transparency and fair application of the law, and no bias (unlike the bank bailouts and guarantees which are unfair on a point of principal), the stock markets can help the population as whole prosper in an egalitarian manner which is something that up to now has not seemed possible.
Sure, we should nail the law-breakers and their corrupt accomplices but we would do well to remember that Stock markets in themselves are not bad. They are in fact are an expression of our freedom to allocate our resources and our freedom to choose.

Respvblica wrote:

If you got the opinion of all the people of ireland as to what the price of Bank Of Ireland would be by the end of next week, and averaged it the chances are is that you would get a very accurate result. Thats the way it should be and thats better then having a certain indivdiual or expert decide whats best. And for me thats the beauty of the "free" free-market, which I believe we still havent got yet. The rotten companies will be exposed and should be condemned. The same with the currencies.

Neither am I qualified but it must surely be as mechanical a thing as that above. I heard a labourer say a couple of years ago about the boom "this can't last" and he didn't seem qualified either but he was of course right - emperor no clothes thing. A lot of this is common sense i.e. there won't be an infinite demand for houses... more of it is common nonsense in that we accept the market prices of things like houses and new cars and then we follow the rest of the herd down to the slaughterhouse of debt. This kind of behaviour on a society-wide scale can only lock up future activity, killing the goose ...

This bailout will do what though ? The banks are supposed to only have as much money as flows around in the economy because of normal economic activity and some extra adjusted for growth but tons of money from into the future has been frozen up into debt so now they are dried out and need liquid for the normal economic activity. On top of that they have money numbers on their books which corresponds to nothing at all only thin air - they have as much as my drawerful of unchecked lotto tickets and that's all. Heads should roll I think Nuriel Roubini said there.

Still, a lot of houses got built though a lot of them are probably shite.

Auditor #9 wrote:

Respvblica wrote:

If you got the opinion of all the people of ireland as to what the price of Bank Of Ireland would be by the end of next week, and averaged it the chances are is that you would get a very accurate result. Thats the way it should be and thats better then having a certain indivdiual or expert decide whats best. And for me thats the beauty of the "free" free-market, which I believe we still havent got yet. The rotten companies will be exposed and should be condemned. The same with the currencies.

Neither am I qualified but it must surely be as mechanical a thing as that above. I heard a labourer say a couple of years ago about the boom "this can't last" and he didn't seem qualified either but he was of course right - emperor no clothes thing. A lot of this is common sense i.e. there won't be an infinite demand for houses... more of it is common nonsense in that we accept the market prices of things like houses and new cars and then we follow the rest of the herd down to the slaughterhouse of debt. This kind of behaviour on a society-wide scale can only lock up future activity, killing the goose ...

This bailout will do what though ? The banks are supposed to only have as much money as flows around in the economy because of normal economic activity and some extra adjusted for growth but tons of money from into the future has been frozen up into debt so now they are dried out and need liquid for the normal economic activity. On top of that they have money numbers on their books which corresponds to nothing at all only thin air - they have as much as my drawerful of unchecked lotto tickets and that's all. Heads should roll I think Nuriel Roubini said there.

Still, a lot of houses got built though a lot of them are probably shite.

So they've been doing this bail out with a colander then ?

That's a good image cactus but I just got the image of the credit crisis as an enormous economic tumour which needs to be cut out with a sharp scalpel... They are only pouring morphine into the subject which does nothing.

Interest rates cannot fall any lower in the states though - they might need another bubble soon ... if they go for a green energy one it'd be mighty.