Share on Facebook Share on Twitter Share on Reddit + - Hugh Hendry: God is dead, China will follow By Houses and Holes in Featured Article, Marketsat 8:07 am on November 26, 2012 | 24 comments Late to this but Hugh Hendry is his usual high value self in this Economist interview. Always step outside the prevailing view…Enjoy. Share on Facebook Share on Twitter Share on Reddit + - YOU MAY ALSO BE INTERESTED IN Is APRA preparing to tighten mortgage LVRs?From APRA's new residential mortgage lending What will the CPI do to the Australian dollar?From ANZ: CORE INFLATION: 0.3% Q/Q OR CoreLogic: Brisbane most exposed to apartment glutCoreLogic's Cameron Kusher has published an China buys keystone in Oz credit archFrom the ASX: OK, so Chinese interests now Comments SMc November 26, 2012 at 8:31 am I saw this a few weeks back on ZH.. I listened again to it and its still jsut as entertaining there are only 2 people I listen to on a regular basis and Hugh is one of them. Kyle Bass being the other. some great insight, the whole bogeyman theory that China will dump treasuries sparking the downfall of the US can finally be put to bed TSpencer November 26, 2012 at 8:54 am agreed, Hendry v Stiglitz is always a favourite TNA November 26, 2012 at 8:57 am Check him out against a big-haired professor, Jeffery Sachs, on Newsnight (on youtube). “If you’re wrong, you keep your job. If I’m wrong, I go bankrupt. Who are you going to bet with?”. The Eclectica fund is brilliant too. thomickers November 26, 2012 at 3:33 pm Hendry vs former Danish PM Rasmussen. 🙂 Sean G November 26, 2012 at 8:56 am It’s not the international factors that concern me – it’s the domestic problems looming that really are a cause of concern. Imagine how bad it would be for Australia if the whole of China suddenly collapsed into civil war (not to mention the hundreds of refugees that will probably evacuate. One of the factors the Politburo mentioned with their recent change of guard is the capacity for the rural poor and working class to rise up and decapitate the ruling elites because they haven’t really benefited from the last 30 years of industrialisation – a lot of China has been lifted out of poverty but its overwhelmingly the urban population on the eastern seaboard while the rest of the country continues to have little or no social services, healthcare or pensions. China also has a history of violent revolutions on a regular basis (unlike Australia or the UK). The party showed just how far they were prepared to go in 1989 to hang on to power but the people are better educated and connected now so it’s hard to imagine how a scenario like 1989 would play out if it was repeated? Sean G November 26, 2012 at 9:34 am Oops, meant to say ‘hundreds of thousands’ of refugees. ALSO, I heard that most Chinese students in Australia at the time (in 1989) got automatic visas because Bob Hawke decided not to force them to go home – can anyone confirm that? Codger November 26, 2012 at 12:32 pm Yep, my mother was one of those students. That’s why I’m Labor 4 LIFE! GSM November 26, 2012 at 12:44 pm LOL, we all are at one point Codger. GSM November 26, 2012 at 12:46 pm PS: Great outcome re: your mum. Gunnamatta November 26, 2012 at 1:23 pm Great stuff! (on your Mum I mean, the ALP I can take or leave) TSpencer November 26, 2012 at 9:35 am also a good one from this conference http://www.youtube.com/watch?v=PcfgfjwwaPM SMc November 26, 2012 at 9:50 am nice on thanks for that… I always enjoy a good Feb bashing… SMc November 26, 2012 at 10:01 am jesus either my keyboard is broken or i need glasses littleguy November 26, 2012 at 11:37 am It’s not the keyboard. 🙂 Willy2 November 26, 2012 at 9:37 am Hendry overlooks one thing: China WILL sell it’s Treasuries when China considers it to be in its own interest to sell the Treasuries. Whether that would lwad to a rising Yuan/USD or not. More over, China is (close to) running a Current Account Deficit and that simply forces China to sell Treasuries. Willy2 November 26, 2012 at 9:46 am I wrote “lwad”. That should have been “lead”. littleguy November 26, 2012 at 11:38 am It’s not the keyboard. 🙂 energywonk November 26, 2012 at 9:38 am i love HH but nothing new here. Willy2 November 26, 2012 at 9:59 am Hugh Hendry second flawed notion: He thinks that Britain and the US in 1931 provides a roadmap for the US and China in the coming years. That’s bunk. the british financial/monetary/economic development from say 1900 up to 1929 is a different one from the american financial/monetary/economic development in the same timeframe. And therefore using this example for the US and China equals to comparing apples to oranges. Houses and Holes November 26, 2012 at 10:00 am Charles Kindelberger disagrees and so do I. The point is more one of political economy. Willy2 November 26, 2012 at 10:32 am Political economy ? That begs for an explanation. The reasons why I disagree: 1. Britain had to repay its wardebts to the US after WW I. And that was a large drag on the british economy. 2. In 1926 Britain pegged pound sterling to gold again. But it was done at a too high a rate, effectively revalueing pound sterling upwards. It forced britain to raise interest rates, in order to defend the exchange rate. This crashed the economy and led to deflation. (general strike of 1926). But in the US during the 1920s interest rates went down. 3. WWI. Britain suffered heavily under WWI whereas the US benefited massivley. They gave loans to european countries in order to pay for US made war supplies. As a result of that the credit creation in Britain was (much) smaller than in the US and therefore the british deflation in the early 1930s was much smaller as well. 3d1k November 26, 2012 at 10:09 am Willy2 – this might interest you – Rise of the Ferro Dollar. There was a good article in FT Aphaville (see weekend links) seeing merit in James White’s view. http://www.cfsgam.com.au/uploadedFiles/CFSGAM/PdfResearch/111202_The_rise_of_the_ferro-dollar.pdf Mav November 26, 2012 at 1:41 pm A trivia question inspired by this new bankster economics mantra: Q: What would James White’s parent company (Commonwealth Bank) be if its capital base was wiped out by bad debt? A: An Insolvent A “post-capital” company 🙂 Yorrick November 26, 2012 at 1:52 pm Ah Hugh Hendry, the contrarian’s contrarian.