Hugh Hendry: God is dead, China will follow

Late to this but Hugh Hendry is his usual high value self in this Economist interview. Always step outside the prevailing view…Enjoy.


  1. 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

      • 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.

  2. 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?

  3. 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.

  4. 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.

      • 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.

      • 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 πŸ™‚