[update 29Oct] I see many are coming here after Hugh Hendry's turn on Question Time last night. The piece below was written after a previous appearance. In my opinion, last night he was less arrogant and more beardified. Maybe his confidence is deflating a bit. Anyway, he gave a competent analysis of the situation, and was distinctly fuzzy about the chances of economic recovery. Oh, and he also endorsed torture. Now read on.]
Newsnight last night: the fragrant yet steely Emily Maitlis discusses the Euro crisis with Joseph Stiglitz, (Nobel prize winning economist), the Spanish Ambassador, and one Hugh Hendry, a hedge fund manager.
At issue is the Euro-PIGS problem - the credit crisis affecting Portugal, Italy, Greece, and Spain. All regular options to deal with the crisis - devalue, lower interest rates, or buy up debt - are blocked by EU rules. Stiglitz, speaking on behalf of Greece, wants the EU to stand by Greece, and
"teach the speculators a lesson".
The main thing that came across was Hugh Hendry's arrogant attitude. He led by suggesting the Nobel Laureate sitting in front of him was an idiot. "Hello? Can I tell you about the real world?"
His solution is to let Greece and the Euro crash. Leave it all to the market. He admitted that some hedge funds would make profits from this process. He identified the problem as the unsustainable debt burden. This from a supporter of the system that creates all money out of debt, and insists on maintaining its monopoly on that process.
'I antagonise people,' says Hugh Hendry. 'It's part of my skill set.'
Hendry's body language, his sneering laughter, and his interruptions betrayed a sense of total dominance over representatives of two sovereign nations sitting with him.
Power in our world has passed beyond elected governments to the mega-rich private corporations.
We need to rein them in.
The key question is - "What is the real world?" Is it Stiglitz' economic studies, or Hendry's frenetic activity on the trading floor? Answer - neither, and both. Stiglitz tries to study the whole field of human economic activity. Insofar as he is an orthodox economist, he is way off, because the conventional economy is a dys-economy, since it is divorced from ecology. Insofar as he is critical of globalisation, free market fundamentalism, the World Bank and the IMF, and dared to put the cost of the Iraq war at three trillion dollars, his view is worth study and respect.
Hugh Hendry is a hedge fund manager. He deals in the future, betting on what he believes will go up and what will go down. By his own admission, there is no knowledge of the future, so he deals in what he imagines the future will be. Profit confirms his imaginings; losses refute his imaginings. His supporters will say that his wealth and success testifies to a net correctness to his views. However, the field in which he operates is rightly called the "casino economy" - a world of betting on guesses - as opposed to the real economy, where people satisfy their needs for water, food, shelter, energy and waste disposal. It is real, because food will get you through times of no money better than money will get you through times of no food.
This is why Hendry's insulting "Hello? Let me tell you about the real world?" line is not just rude: it is also plain wrong.