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The Collapse Of The Euro: Insights By Joseph Stiglitz And Hugh Hendry - Two Part BBC Miniseries
Must watch two part BBC series recapping recent events from the perspective of the other side of the pond, including some much needed "on location" reporting (as opposed to persistent theorizing of "what may happen"). The first part provides the background on the currency crisis and how hedge funds are profiting from shorting the euro. As a commentator points out, the dilemma is moral hazard or austerity measures. And while countries certainly prefer the former, sovereign bond and currency vigilantes are making the second the only viable outcome.
"The sovereign debt crisis has exposed a flaw in the design of the Eurozone. To make a currency strong you don't just need bank notes and a central bank, you need central authority and political will. Some in the markets, are beginning to see the euro not as a permanent currency for all time, but as temporary and fragile, as, well, Lehman Brothers."
The second part is a great exchange between Nobelist Stiglitz and the ever outspoken, and conversation dominating, Hugh Hendry.
"Hello, can I tell you about the real world. Greece is paying 7% on 2 year money. Greece has debt which is 107% of its GDP. It never used the good time to save money. Therefore it finds itself compromised in the difficult economic environment of today cause it spent all the money in the prosperity."
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Hugh is more vicious and condescending when he sports a tie. He should wear one more often.
because there's not enough of them walking around already?
Not with that kind of haircut, no.
Wait, just a few weeks ago the dollar was crashing with hyperinflation imminent. Now the Euro is crashing? And the dollar will skyrocket with relative strength?
Bah, humbug. The system is crashing with teeter-totter effect. Paper is a trap. Putting all one's savings in PMs removes it from the chicanery of global greedy central bankers. Unless, of course, you like your hard-earned being used by TPTB to bailout their zombie necrotizing friend of the day.
Today this currency STRONG! Tomorrow this currency WEAK!
Complete hogwash.
is it a two week cycle? the dollar strengthens the week that there are UST auctions?
its was a clip on.. the studio must of made him wear it
Hugh let them off on a few points way to easily. For instance when beardie went on about cds on the USA..... he missed the point entirely
Hugh Hendry is the best...
How long until the market realizes this?!?!?!
Great stuff, bravo ZH!
More proof that the Nobel Prize is a farce.
I think I have a man crush.
I think I have a man crush
Stiglitz is a hottie for sure...
Yaah !even I have a crush for mumbling girlies!..not! LOL
Take a bow you people who force Nobel prizes!
No problem at all eh! "Start a Ponzi scheme and pay off now its only part of your income!"
Ick cheaters!Bad teaching! take away his licence now!
Hey, kids, skip the old fogies. Wanna see something beautiful, and something scary? Not necessarily in that order - you decide. Full screen for best effect:
http://vimeo.com/8032810
http://vimeo.com/8569187
+1
looks like how my bowels feel after eating Indian food
Game, set, match. Why oh why can't I ever get to see this on BBC World?
not only that but we never see such things on cn bullshit either. gee i wonder why? it is a big mistake to allow general electric to massage the information we get in the business media.
Stiglitz advising Greece! I think the short euro risk premium just disappeared.
The Good, The Bad and The Ugly
The speculator comes out looking pretty good next to the academic and the bureaucrat.
Leave it to BBC though to omit in its charts or narrative any discussion of Ireland or the United Kingdom and their debt ratios.
Good luck, Europe.
the us government can print its own money? that's news to me. if that were true, we would not be having this problem. that right if you want to call it that, has been taken from us by the FED. ron paul says get rid of the FED. there stiglitz is talking like all of the rest of them. he comes off as a total idiot in this clip. nobel prize? what did he offer mankind? more of the same bullshit?
"It never used the good time to save money. Therefore it finds itself compromised in the difficult economic environment of today cause it spent all the money in the prosperity." Isn't that..... exactly... what the US has done??? There has been no savings, just loading up on debt over the bubble years and now... exactly... the same as Greece. But, the world is made to believe in Hopium and the emperor has clothes of the finest gold cloth...
but the gold cloth.... isn't
Yes, you're right, and no, you're not dreaming.
You might be in trouble if:
Your country hires a Nobel Laureate to argue that reality is absurd.
Oink
Yes but the system has been broken for years/decades. Liquidity hid that.
It made everyone think times were good, after all people lived like it.
But it was really down here.
The sad thing is the problem was everyone was telling Greece and the World that everything was fine, no problem. So they spent like it. Of course prices have been going up because of the debt for a long time, which exacerbated the problem. But with a quadrillion in extra liquidity flowing around the world, the WORLD thought there was no problem.
But there was, and now EVERYBODY is in trouble.
So complaining about Greece not saving when times were good is asinine. The whole world was told times are good and getting better. You keep preaching it, people will believe it. The world did. The world is screwed because of it.
But it's not nations that are failing, it's the broken imperialist banking system making nations fail. 40 years long this road has been.
Of course you could never know when times would turn around, except you could, but if you believed it, you would have lost in the market for about 40 years. That's the truth about how irrational the markets have been. It's 40 years of fluff unwinding.
It's only now everything is coming home to roost. Which is why the manufacturing in China is a bit illusory. It's only here because of the broken system, but we better pray it continues afterwards, and that they can shift to domestic demand.
So many imbalances, so much inflation due to debt, levering up, and as mentioned by otherse, debt held in a strong currency....how could they eventually not fail? How can any country not fail? We're all going to be here, unless we switch systems.
Who were the dips who didn't see this all coming? Because it was quite obvious. Funny they're the ones that are pushing austerity now, when they were pushing 'goldilocks economy' and the like and considered someone nuts if they thought otherwise.
If it wasn't obvious, then you were just as oblivious as Greece, which pretty much evens the pedestals out.
So do we blame each other for social spending? Or do we place the blame where it's deserved.
Amen to that jmc
Not at all. Greece is inevitably going to serve as a reminder to the rest of the world of the dangers of getting too deep in debt. No way around it; may as well use the educational opportunity.
Do you blame the pusher, the addict, or the lax law enforcement and regulatory structure that allows the pusher to repeatedly take advantage of the addict?
If you blame only the pusher, you do not solve the problem, and arresting the current set of debt pushers will only create a business opportunity for new set of debt pushers to come in. You MUST address the addict (the public addiction to debt and failure to recognize its dangers) and the regulatory structure (the massive corruption and incompetence in the SEC, FINRA, and Congress, particularly Barney Frank).
Capitalism has not failed us. WE HAVE FAILED CAPITALISM.
How can you blame the individual when most do not even understand the concept of modern money/debt - they have to swim across a river of propaganda before they can see the lay of the land
Watching the ebb and flow of sentimental tides, I'd say 2 or 3 years tops before we're in worldwide Austerity measures.
The IMF becomes the de-facto central bank of the world.
The word Poverty will be used as the name of a famous singer of happy love ballads, thus substituting meaning in the collective mind.
Without the words to describe their condition, the serf's will fail to rebel.
-MobBarley
Stiglitz and guys like him (Volker) used to be radicals...now they are batting for the NWO. Running out of options, are we?
I think it's fine if Hugh Hendry makes his opinions clear and on the record. But he should be able to do that without insulting people. I think Joseph Stiglitz has earned the right to that much. Hugh can go down to Killary Fjord and make fart noises if he feels hanging around Nobel Laureates is beneath him.
Stiglitz deserves what he got. Thats what happens
in the real world when you open your mouth without
understand what the hell you are talking about.
That's a fair definition of the destruction of a democratic space. Hell, if your opponent is simply too inferior to respect....
Your attitude is one of the keys to the shithole we're in.
a most interesting exchange indeed and indicative of the rock and the hard place which the "sovereigns" find themselves today. Joseph Stiglitz representing the interests of the IMF, is flanked conveniently by one of the government satraps who implement the predatory lending policies of the IMF. National assets used as collateral are sequestered first in the form of high rates of interest and the expansion of national debt in the inevitable inflation of asset and housing bubbles. With the subsequent and inevitable collapse leading to the austerity of "structural adjustments" said assets are ultimately stripped in subsequent repurchase agreements at fractional costs. What is forgotten these days is the role Stiglitz, our nobel laureate, played in the same asset stripping and plundering of the former Soviet Union in his capacity of head of the World Bank with the able assistance of head of Russian finance under Al Gore, present OMB head Peter Orszag. The World Bank and IMF then turned their attention to Iceland with the predictable result that under the aegis of Stigltz and Orzsag, the Bank Of Iceland failed precipitating an economic crisis which is still unfolding to this day. Hendry for his part representative of another notable predator class, hedge fund manager, swoops in to pick the leavings clean with short raid speculation along with Soros, Goldman Sachs et al. all the while squawking"you should have saved for a rainy day". Meanwhile the "sovereigns" (don't you love that great new term) are left holding the bag and are left to fend off their dispossessed new underclass of plebes rioting, pillaging and robbing, madly scavenging for any scraps that fall from the master's table.
These folks are like arsonists who push for the bomb-making material and then, after planting the bombs and lighting the fuses, extort the firemen and get a tax on the water.
currently reading: http://stocknews.freeoda.com... yes crisis will intensify
Can someone ban his IP or something?
It's more fun when Marla changes their links.
I've seen funny and I've seen FUNNY but when she does that. It's FUN-NY!!!
For the record, this rumor Germans not accepting Euros with the wrong letter on them is bullshit...
yeah, i wondered what he was saying about that. No one in germany does that. Euro is Euro whatever place they were printed.
ummm..hello? When was the last time you were in Germany. In actuality, yes he's correct.
ummm hello? i live there and im there right now paying with all kinds of euros...
Shiitlitz is a giant douche of the highest order.
Uh-Oh
Feb. 10 (Bloomberg) -- European Union leaders meeting in Brussels tomorrow will probably press Greece to present more detailed budget cuts and stop short of announcing an aid package for the debt-stricken nation, a German government official said.
Really? Does it bother no one that a select very few stand to profit enormously while millions of workers through no fault of their own are forced to have pensions stripped and wages cut? That families may go hungry or without shelter or food? Are we to cheer the death of the euro, civil unrest, upheaval and the growing prospect of war in a world armed to the teeth with nuclear weapons? Debt is not worth one human life. Not one. There has to be some way out of all this without causing so many to suffer for so few.
Your fatal mistake was to buy into the ridiculous notion that we have moved far beyond the cave.
As The Tribe on Wall Street has proven, the richest among us are Alpha Gorillas, very much barbarians. Look at Haiti and sub-Sahara Africa, Ethiopia, Indonesia, Compton, Detroit, inner cities all over the states devastated by chronic overpopulation and unemployment, drugs, and shootings.
A select few have always profited handsomely, always will. The citizens are not rioting and killing the Tsar Nicholas and his family any longer.
I could care less if the people of Greece suffer or even starve. The should have lived withing their means. They should have saved more and spent less. To hell with them.
And Ludwig von Mises couldn't get a teaching job in this country.
Chrysler announced they are investing $550 million for a new highly automated Fiat assembly plant capable of producing 140,000 cars per year employing only 400 people. Oh my Goodness, we need 11 million jobs. This is not going to work with free trade, robots, and digitalization. Workers are not needed.
at this time we should just bomb everyone while we still can...
Kendry talking about the real world? No, Kendry, you Wall Street/speculator vampires don't know a damn thing about the real world, because your hundred-million-dollar selves don't live there.
The world doesn't have a Greek sovereign debt problem. The world has a US private debt problem: that wonderful deregulated market you worship ran wild and saddled the US with private debts of somewhere around 280% of GDP, according to the latest Federal Reserve data. Thank goodness that bad, evil government didn't spend that money on foolish luxuries like science, education or green jobs -- no, that wondrous perfectly rational market blew it all on bogus credit derivatives and McMansions and luxury yachts.
Kendry ???
His name is Hugh Hendry.
Learn more about him and then make comments!
A a circus freak with too much money ?
Part II - Oh man, that was great.
Stiglitz sounded like a paid schill ('advising greek government' - I'm sure he's doing that out of the goodness of his heart).
Hendry - "hello?" lol He rightly pulls back the curtain and bluntly states several times - THERE IS TOO MUCH DEBT.
Spanish guy looked pretty queasy - had a 'shit, we're next'-look on his face'.
Great piece.
"Hello, can I tell you about the real world" - Hugh, made my day :)))
Um... Capital markets haven't been free since the abolition of free banking and the market-based gold-standard. SlorgGamma, you clearly don't understand Austrian monetary or economic theory (or even Chicago school - the light beer to Austrian theory). The private debt crisis is intimately linked with the problem of "public" (more like "official mafia") debt. Science? Education? Green Jobs? Yeah, clearly you've been reading 18th century progressive political philosophy while ignoring the pile of skulls left by nation states in the last 100 years. Why don't we let the government just run the entire economy, right? No private debt. From each according to his ability, to each according to his needs. Wouldn't that be just peachy? Oh, wait... This meaningless shift from state capitalism to state socialism that you seem to advocate won't help anyone except those in power. Way to play into their system!
Weakness in the dollar...no, the euro...no the ??? is used as evidence that all fiat currencies are doomed and hard currencies (i.e. precious metals) are the best alternative.
I am sympathetic to the this thought. However, governments cannot allow the prudent few to do well while the imprudent many suffer.
Buy gold and silver for your grandchildren. But when the dollar is really under threat, confiscating PM from "speculators" will the government's first act. If you want to keep your PM, you will have bury it deep and let your descendants dig it up in 40 years or so when it is legal again.
No one has ever be able to escape the tyranny of government, except by moving to the frontier where there is no government (tough place to live) or being lucky enough to be born (and die) during the brief periods of unusual prosperity when the government could take enough to satisfy its avarice without really being burdensome.
However, like almost all parasites, the more you feed the government, the more it grows until it eventually kills its host.
We are moving out of that sort of fortunate period into a period of oppression because governments never live withing their means. They live within your means and you get to live on the leftovers.
They will take your savings, you possessions and your liberty because ... they can.
Well lets look at Chile
Superavits and Deficits(from memory might mistake)
2006 +8,x %
2007 +7,x %
2008 +5,x %
2009 -4,x %
Public Debt: 6,x%
See how it is easy to not crash your own country!!!
It is my contention that the vast majority of countries don't follow any economic theory it is just lunatic socialists of right and left at helm. And USA is there...
The EUR collapse will leave the USD bears in disbelief. They will scratch their heads unwilling to realize there's a currency more flawed than theirs. The EUR is doomed as Germany and France needs a lower EUR to stave off deflation and Club Med is headed for the toilet.
No the euro collapse would finally free the deutsche mark from the chains of ill-conceived euro. The Deutsche mark would then finally be able to rise against the eastern european/southern european worthless currencies as well as the US dollar another worthless currency.
Keeping things in Perspective
http://static.seekingalpha.com/uploads/2010/2/10/saupload_highestdefaultprob.jpg
This has nothing to with Greece per se. Its all about the EU, and what it has to do to contain this. Piece meal bailouts are irrelevant, the real problem has to be dealt with. As Hugh says, it's all about too much debt. Buying time with more debt is economic suicide, but working it down is political suicide. Pick your poison. Draconian power grabs, federalizing the debt/finance of the EU might be solutions, but are they palatable to anyone? Why should the Germans give up sovereign power in order to save the PIIGS? That doesn't compute. They would rather be like England or Switzerland right now, part of the EU, but not the EMU.
The simple fact is that the poorer countries in the EU have suffered rather than thrived. Germany just wipes them out; they're all buying German blenders, shavers, cars, heaters, etc. As long as they could borrow money to buy all that stuff, it puttered along nicely. But without access to credit for the poorer countries, the EU simply doesn't work. So the question is do France and Germany want to be part one that might? Does anybody?
Without Germany and France the EU would be dead before it hit the floor.
I don't know, but my guess is that there's abasement FULL of "New Deutsch Marks" somewhere in Berlin, just in case.
reading: http://stocknews.freeoda.com crisis will get worse
give me a break, this aint 'the pirate bay'
Don't you guys already know the game...
usa 1.6T deficit, bailouts => usd weakening => ooo but Greece 2% of euro GDP is defaulting, Spain and Portugal have problems => euro getting weak / dollar up => usa do 3.5T budget next year => usd getting weak again.....
It is just excuses for politicians and bankers to print, ad infinitum, instead of leveling with the ppl and solve the problems (with the possibility of not being reelected in the next turn).
It is the same game over and over again... concurrent currency devaluations.. with the derivate-funny-money market monster deflating to create the illusion of missing inflation ... then 1-5y down the road all this will pop and whoever had physical stuff in possessions will be so, so OK in the new-paper-inflated-world.
The Greek people and their creditors just extended two hands to Europe, one open demanding payment and the other; the middle finger:
"What a nice cozy little mutual benefit society you got here . . . shame if anything happened to it, what would you say it is worth?"
Saw this live - fantastic telly; do you Yanks have this type of discussion on mainstream tv?
This is one of the better things I've seen on ZH - the disheveled Hendry destroys the slick Keynesian and government spokes-hole. He sums up so much of what's wrong with the global economy when he says they want to "ban the truth." Mark-to-fantasy accounting, deficits don't matter, debt doesn't matter, off balance sheet assets, etc. Ban the truth to make problems go away.
more Hugh Hendry.....this time with Nassim Taleb.....in Russia
http://www.youtube.com/watch?v=YQ2otZqmNKE
Hugh Hendry is a tool with crappy numbers. Stiglitz is either a liar or an idiot, I'm not sure which. That Ambassador seems nice enough, but I'm not sure why he is part of the discussion.
The amazing thing is it took this long for the "euro experiment" to be proven a joke. You don't take a ratbag full of disparate economie4s and create a silk purse. The euro will fail, probably sooner ratehr than later. I guess you gotta be long the buck - after all, we're the creamof the crap!
Suddenly passing the lisbon treaty doesn't seem like such a good idea anymore
Used to make sense that Hendry,
but so full of himself.
Who really cares, but that load of utter crap
about Germans who wouldn't take any non Bundesbank
denominated Euro coinage.
Tell that to the barkeepers in Mallorca, Florence or Paris
and they give him the slapping around that this bundle of
embarrassing hubris deserves.
Greece shmeece, the whole friggin world needs a bailout.
Planet Earth is drifting through the Universe broke & bankrupt and Hollywood tells these stories of more or less bellicose encounters with extraterrestrials.
If we EVER REALLY met any, we need to hit 'em up for some serious spare change - whatever the currency.
Stick a fork in it.
We are done.
Stiglitz is a well-decorated idiot.
He seems to think that interest rates should be set by the customer, not the lender or the market. That is simply loony.
Who represents economic reality more: the Euroland governments and their promises of future solidarity and fiscal responsibility? Or the speculators and hedge fund shorts, who are reflective of the views of real, private capital?
Why do I get the feeling Stiglitz is preaching religion, rather than anything factual?
Surely merely printing money to cover debt is "defaulting", Mr Stiglitz
"Why do I get the feeling Stiglitz is preaching religion, rather than anything factual?"
It is breathtaking to see an economist of that stature forget the basics: people will lend money at a rate that is attractive to them; rates are not dictates by what countries would like.
Tell em Hugh
OK. I buy that the Euro is doomed. But I'm not perfect and neither is Hugh Hendry. Who is taking the other side of his trade?
fascinating discussion, but truly 15 minutes wasn't enough. I wish it was at least a full hour of Hendry and Stiglitz debating.
No this is better telly
http://www.youtube.com/watch?v=43Wcbd0dJpQ
It appears that the credibility of Nobel Laureates in economics is at the same level as the credibility of Nobel Peace Laureates (lately many of them were/are warmongering demagogues and terrorists).
Now, one starts to question the credibility of Nobel Laureates in real science (physics, chemistry, medicine, etc.,)
The Nobel Prize in Economics is not a Nobel Prize. It's a sham, like most everything in economics, started by the central bank of Sweden.
http://en.wikipedia.org/wiki/Nobel_prize_in_economics
All I heard was blah blah blah then Hugh Hendry ripping them apart and laughing in their faces, which is what any rational person would do. They are trying to solve the problem by some financial voodoo while Hugh is telling them that Greece should reap what they sowed. How refreshing.
Hendry is on an agenda. His argumentation is not primarly about economics, it´s tainted by national preferences. A typical british syndrom. Sure the Euro is under pressure, but since it does´nt run the risk of loosing it´s status as reserve currency, it´s probably still better off than even the US dollar. Europe is weak because there is no political Union, maybe yes, but maybe that is a good thing in the long run. America is now ruled by a nomenclatura and has a centralbank in private hands , is there anything else you need to describe failure?
very well said +1
Long run Euro is a better bet I think... short $, medium mixed bag
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So we do the debt dance. Played out in its many forms throughout the globe. When the music stops make sure your already in your seat.
The assumption made is that the debt can be serviced. We shall see.
Mark Beck
The gracefulness of Hugh Hendry.
"It's Recognizing the unsustainable debt burden"
Fascinating that even the most educated, and decorated cannot understand the simplist of truths.
We need more cover pullers such as the like of Hugh Hendry!
I like everything about this guy.
Great Post!
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