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Hugh Hendry On Europe "You Can't Make Up How Bad It Is"

Tyler Durden's picture


At The Milken Institute conference yesterday, Hugh Hendry delivered his usual eloquent and critical insights on the state of Europe. Beginning with the statement that "All of Europe has defaulted", the canny-wee-fella (translation: shrewd and cautious young chap) explained that "The political economy in Europe is such that the politicians chose to default on their spending obligations to their citizens in order to honor the pact with their financial creditors and so as time goes on, the politicians are being rejected." Between France's election of Mr. Hollande and Luxembourg's 'when times get tough you have to lie' Juncker, Hendry says the only inspiration for Europe is fiction as "you just can't make up how bad it is" as he goes on to discuss the precedent for a way forward, the grotesque distortions of fixed exchange rate regimes, why Weimar happened, why the transfer union will never happen, Ayn Rand's reality, and fear politicians are feeling.

The entire discussion is well worth watching for a sense of the underlying reality in Europe.

The underlying reality that what the European monetary union is about is not about preventing a third so-called European civil war, it is essentially about making someone (France, Germany or both) a Great Power, a European Hegemon, and a global player.

Starting at around 12:00, Hugh begins his must-watch discussion...

And begins again at around 30:00, Hendry discusses the British perspective on the impeccable logic of the German mind and why the transfer union will never happen in Europe...and why Wiemar happened...

At around 46:00, Hendry addresses Germany's emerging housing bubble (and why it won't occur) and the two forms of leverage in the world.

From 52:40, Hendry takes on the view of (disagreeing with) a weak USD and the US being supplanted as a global leader

Hendry confesses to not being able to finish reading Ayn Rand's Atlas Shrugged at around 1:02:00 and explains why (apart from its length and lack of pictures)...noting that is too depressingly real in its description of the world we live in today...

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.

Concluding at 1:10:10 - "we are single-digit years away from the most profound market clearing moment"

(h/t Stock Bitch)

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Wed, 05/02/2012 - 11:32 | 2391289 barliman
barliman's picture


Redundant for ZH'ers

ZeroHedge has provided the hard numbers across a braod spectrum of the problems in Europe.

When I think of Europe anymore, I visualize a continent sinking under a sea of debt while the politicians argue about the best arrangement choices for deck chairs, tableware and seating arrangements for the next EU Finance Ministers conference.


Wed, 05/02/2012 - 11:36 | 2391307 evolutionx
evolutionx's picture

This speaks volumes:

ECB Fear Indicator near record level

Banks deposited 790 billion with the ECB


Wed, 05/02/2012 - 12:03 | 2391388 Manthong
Manthong's picture

I can’t help but feel that the for all the talk of support, the Anglo-American Financial/Political syndicate has to have the plan in place plan to shoot their Franco-Teutonic EU good buddy in the leg when the debt grizzly bear gets too close to their heels.

Wed, 05/02/2012 - 12:12 | 2391412 Spastica Rex
Spastica Rex's picture

+1 use of creative imagery

I used to had been a English teacher.

Wed, 05/02/2012 - 12:25 | 2391446 Mysteerious Roo...
Mysteerious Rooshian Vooman's picture

Clever! Made me laugh.


Mysteerious Rooshian Vooman


Wed, 05/02/2012 - 12:50 | 2391529 Manthong
Manthong's picture

There is meanining buried in the "good buddy" term, too.

I guess I have to fire the proof reader. 

Wed, 05/02/2012 - 13:43 | 2391654 Oh regional Indian
Oh regional Indian's picture

hugh Hendry looks like he's been put through some kind of dishwasher in his time outside the spotlight.

He's talking his old book but it's like 2 diferent people.

And has anyone seen the new hearted cheney? Frightening. All pink and plastic surgried and WEIRD.

Euro shmooro.

While everyone is looking at the banks, don't forget what always causes the problem nowadays... insurance. If some large insurers in Europe are in trouble, we've got problems. Insurance (rates and companies) are the canaries. Always. Leading indicators par excellence. Now that BDI has taken off on it's own dreamboat journey of dis-coupling.



Wed, 05/02/2012 - 14:19 | 2391751 collon88
collon88's picture

Since June of 2010, the BDI is down about 75%.  Its recent rally off extreme oversold lows is hardly "taking off".

Wed, 05/02/2012 - 22:11 | 2392797 Ahmeexnal
Ahmeexnal's picture

Hendry states the USD has only one way to go: higher.

I'm sure he would put other peoples money on that bet. But will he place all his chips on the USD too?

Wed, 05/02/2012 - 15:24 | 2391952 ConfederateH
ConfederateH's picture

Based on Hendry's appearance and demeanor I wouldn't give him a dime to invest even if I had a billion.  The guy looks wasted.

Wed, 05/02/2012 - 21:59 | 2392773 Eireann go Brach
Eireann go Brach's picture

That's your problem you fucking idiot, because if he wore a sharp suit like some prick on Wall St then he must be bright and smart like a Banker, but people like you will ignore what he says because he does not look the part.

Wed, 05/02/2012 - 22:43 | 2392844 AldousHuxley
AldousHuxley's picture

whenever a bankster says wall st. hires best of the best who some how need to dress UP to impress,

remind them the true genius like Grigori Perelman, a brilliant mathematician from St. Petersbrug, who became famous worldwide after he had solved the Poincare conjecture, a century old problem, and has refused to accept the million-dollar prize, unemployed, living with his mother in Saint Petersburg in communist housing.

This guy has real steel balls to say FU to institutions and money.

how many banksters have the brain power to understand the problem?


Saint Petersburg Mathematical Society Prize (1991), accepted
EMS Prize (1996), declined
Fields Medal (2006), declined
Millennium Prize (2010), declined



Thu, 05/03/2012 - 00:39 | 2393014 TwoShortPlanks
TwoShortPlanks's picture

Agreed. I didn't see any well dressed Programmers during the DotCom era...they could do and wear whatever they liked

Thu, 05/03/2012 - 00:42 | 2393016 TwoShortPlanks
TwoShortPlanks's picture

....IF, they were gifted!

Thu, 05/03/2012 - 01:00 | 2393042 Ahmeexnal
Ahmeexnal's picture

yeah, if they aren't, they have to wear mini skirts, fishnet stockings and red high heels.

Thu, 05/03/2012 - 20:45 | 2395562 Quisat_Sadarak
Quisat_Sadarak's picture

Dammit! I knew I should have spent more time learning C++!

Fri, 05/04/2012 - 01:40 | 2394509 e2thex
e2thex's picture


Wed, 05/02/2012 - 22:00 | 2392780 DCFusor
DCFusor's picture

You can be wasted and make tons of dough.  I have.  Doesn't always work of course, but just having a different viewpoint helps sometimes.

I didn't notice he was making trading decisions on stage, at any rate - wasted or otherwise.  What one might do in that circumstance has little to do with what you do with your (clients) money - or the state of mind you do that in.  Kind of a different job, no?

Thu, 05/03/2012 - 01:01 | 2393041 Oh regional Indian
Oh regional Indian's picture

DC, point I was making was that he looks like he has been "put through it". His older vids, the guy is like a flux-you capacitor. Sharp, ruthless...

He looks/speaks like he's drugged/unhealthy/unwell here.


Thu, 05/03/2012 - 01:05 | 2393045 Ahmeexnal
Ahmeexnal's picture

Seems like he popped some dilaudids before going on stage.

Wed, 05/02/2012 - 22:58 | 2392862 GMadScientist
GMadScientist's picture

And that's why he manages billions while you talk about it.

Thu, 05/03/2012 - 01:24 | 2393060 q99x2
q99x2's picture

Get integrated dude. It is your own dark side you see in Hendry.

Banksters, Lawyers, and Politicians are what crimminals look like today.

Maybe you should give your dimes to them.

Wed, 05/02/2012 - 19:47 | 2392532 DaveyJones
DaveyJones's picture

Hendry's look, like his tone, his passion and his prose, are one of the better and truer analogies for what is going on. This is not just finance, it is crime and war and abuse and a tragic dramatic, cummulating moment in history. A true scotsman

Wed, 05/02/2012 - 21:56 | 2392772 The Big Ching-aso
The Big Ching-aso's picture



I talked to a guy today, a real long-time pro in the stock market.   He's getting his ass kicked because nothing's allowed to fail and get right, regardless if it's absolutely fraudulent in nature.  IOW, when he expected that regulators would finally step in and fix the egregious over the top mess - let's say with a Bank XYZ, they didn't, and he lost.

I think the key here is that 'fraud' by now is really kicking people's asses to the point that if it doesn't stop and soon, there's no other way this can end but in tears for everybody.   If the big shots go down we're all going down.    That's the last canary.

Wed, 05/02/2012 - 12:33 | 2391474 Bicycle Repairman
Bicycle Repairman's picture

Looking back at the 1970s playbook is handy, because a lot of history does repeat itself.  One of the problems the USA had then was Europe and Japan had now recovered from WWII.  Their standard of living had largely caught up and they were very competitive economically.  The benefits of winning WWII were now gone.  So Nixon arranges for the "Nixon Shocks" or "Nixon Shokku" in Japanese.  The main shock was the jacking up of oil prices.  Europe and Japan were and are utterly dependent for oil.  The gist of it is this.  We pick out junior members of the empire and have them, willing or not, take one for the team.  The past year has been a replay of that.  So Europe and Japan, BOHICA.  It was not enough in the 1970s to solve the major problems and it won't be now.

The nationalization of South American energy companies is interesting.  Spain and Europe have no military to respond to such actions.  And to a large extent China doesn't either.  BOHICA.

Wed, 05/02/2012 - 18:29 | 2392408 Nussi34
Nussi34's picture

I can´t believe Bernard Connolly!!!

From wikipedia:

Bernard Connolly is an Oxford educated British economist from a working class background[1] noted for his pessimistic analysis of the Euro. After writing The Rotten Heart of Europe: The Dirty War for Europe's Money, a negative treatment of the European Exchange Rate Mechanism, he was terminated in 1995 from his employment at the European Commission. An appeal of his dismissal to the European Court of Justice was unsuccessful.[2] As of 2011, Connolly, 61, was working as a financial consultant in New York City.[1]

You should all read that book to understand how fucked up the EU is!!!

Wed, 05/02/2012 - 23:31 | 2392923 GoinFawr
GoinFawr's picture

"...The nationalization of South American energy companies is interesting..."


"Yah, we better turn the bass up on this one..."

Wed, 05/02/2012 - 23:39 | 2392938 Yen Cross
Yen Cross's picture

 R,u Playing the Excemption Card?

Thu, 05/03/2012 - 14:48 | 2393918 GoinFawr
GoinFawr's picture

It trumps the Rewle Card as it proves it...

"Who am I to blow against the wind?"

Wed, 05/02/2012 - 13:19 | 2391597 Doubleguns
Doubleguns's picture

TD is our Hugh Hendry.

Wed, 05/02/2012 - 13:29 | 2391619 tim73
tim73's picture

What makes you think Europeans are NOT planning to do the same :)

Wed, 05/02/2012 - 12:24 | 2391442 Peter Pan
Peter Pan's picture

I can just see the final score.......Leaning Tower of Pisa 1 ......Europe 0

Wed, 05/02/2012 - 11:37 | 2391308 Rainman
Rainman's picture

Euro politicians deserve many things, but rejection is their least serious threat when the debt slaves revolt and come for them.

Wed, 05/02/2012 - 12:08 | 2391392 Bad Lieutenant
Bad Lieutenant's picture


It'd be fabulous to see the Ferguson-Hendry debate that Hendry refers to at 31:10 last week...

As always, thanks Tyler(s).  Where would we be without you giving back, not to mention in such great quantity and quality.  Also, that  Keith Weiner is quite a mind -- that 451 piece is really something and wouldn't have discovered him if zh didn't initially post it.  For folks that haven't read Weiner, the 451 and PM backwardation pieces are must-reads. 




Wed, 05/02/2012 - 18:37 | 2392416 chipshot
chipshot's picture

ditto kudos TD......f***ing brilliant...

a bumper sticker should read...

                             ZERO HEDGE.COM


{you may copyright it}

Thu, 05/03/2012 - 04:26 | 2393152 heinrich6666
Wed, 05/02/2012 - 12:18 | 2391399 Zero Govt
Zero Govt's picture

so the bankers didn't work anything out at Davos 2011 then ...i'm stunned this meeting of collective minds (village idiots) came up with a blank

...and the two ECB Stress Tests (designed to "restore confidence" remember) didn't make liquidity flow and nor did printing €2 Trillion in counterfeit Euros thrown at bankrupt bankers either ...bloody hell, more blanks

these ECB 'solutions' seem to be making bankers even bigger suckers on the State nipple ...has the ECB any friggin idea when these nappy-wearing bankers can be weaned off????

Wed, 05/02/2012 - 12:54 | 2391539 walküre
walküre's picture

I think the Europeans are in utter shock and disbelief when it comes to banking.

For the most part, they consider banks as institutions holier than anything else. The wealthy Germans, French, Italians and so on are trusting these banks to "manage" their assets properly. In reality, the depositors have no friggin' clue what the banks are doing and how high their money is being levered.

I can't tell you when the bank run will start, but believe you me that once the confidence goes into the crapper there will be a massive bank run in Germany and France. At that point the ECB needs to come up with massive amounts of paper which will destroy the currency completely.

Certain and guaranteed to happen.

Thu, 05/03/2012 - 04:44 | 2393158 Zero Govt
Zero Govt's picture

the shocker is awakening from our belief system that institutions like Govt and banking can be trusted (at all)

there are good banks, though not many left in monopolised/over-legislated Europe, but regards the bank-runs they've already started in places like Greece and Spain. And why not, the banks offer zero interest (inflation rate protection) and have nothing to offer

the ECB's (and Feds) 'solutions' are now causing more problems than they solve 

someone needs to put the issue, "How can Parasites (Govt and Bankers) make Economies Productive" on the next gripping instalment of the Davos village idiot competition

Wed, 05/02/2012 - 11:40 | 2391321 SRSrocco
SRSrocco's picture


It is simply amazing to read this post and see GOLD and SILVER down again today.  With all the financial disasters taking place, gold and silver should be seeing new records.  If you have not seen my latest article on Silver you can read about it at the link below:



Wed, 05/02/2012 - 11:44 | 2391334 SheepDog-One
SheepDog-One's picture

Maybe everyone who wants to own gold and silver now does?

Wed, 05/02/2012 - 11:46 | 2391339 francis_sawyer
francis_sawyer's picture

Hendry... Big 'dollar' bull (55:28)

Wed, 05/02/2012 - 12:14 | 2391416 bobola
bobola's picture


My take on this is that the big banks will keep pushing gold and silver prices down while they keep pushing stock prices up until the pushing has no effect, and they realize they are losing too much money.

The Wizard of Oz (central planners) is safely hidden behind the curtain - Toto (reality) is nowhere in sight....

Wed, 05/02/2012 - 12:28 | 2391459 Biosci
Biosci's picture

He's in Africa with his girlfriend Rosanna

Wed, 05/02/2012 - 12:50 | 2391527 Al Huxley
Al Huxley's picture

Did you have to do that? It's been many years since I had those piece of shit songs in my head, and now they're back.

Wed, 05/02/2012 - 14:26 | 2391776 Arthor Bearing
Arthor Bearing's picture

I think a prudent planner would account for both inflation and deflation. Even extreme gold bugs (e.g. Matterhorn) ackowledge the possibility of deep deflation followed by hyperinflation.

Wed, 05/02/2012 - 19:12 | 2392477 DCFusor
DCFusor's picture

Piece of shit?  Guys who can actually play their instruments well enough to have been in-demand sidemen for the very "famous" (Frank Zappa for one, who at least was honest enough to admit it), who don't need autotune, or lip-sync tapes? 

Al, you're making your taste suspect.  Yeah, the radio overplayed a lotta stuff.  So, you did have the power to turn it off before getting burnt out on it, you know.  But you probably didn't.

Heck, I refute it thus:


Wed, 05/02/2012 - 22:43 | 2392842 sun tzu
sun tzu's picture

Get with the times. You don't need talent to be famous anymore. Look at Piss Daddy, Gay Z, Justine Beiber, Miley cCircus, Lady gagag and the rest of the clown on TV and radio these days.

Wed, 05/02/2012 - 22:48 | 2392851 buckethead
buckethead's picture

Technique does not, a great artist make.

Fri, 05/04/2012 - 03:31 | 2395996 Clashfan
Clashfan's picture

If any of you have time, this is the first chapter of an unforgettable book on the hippie movement, the rock industry, and Laurel Canyon. McGowan exposes the intel and Luciferian ties convincingly. Beware: Once you start, you can't stop. Find other chapters through the home page, and see plenty of info on Zappa and others.


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