Hugh Hendry, my favourite sceptic

There is almost nothing that Hugh Hendry isn’t sceptical about, and that makes for an excellent sounding board, when you want to double check a bullish premise listen in, the same goes for a bear call. I watched him go toe to toe with Joe Stiglitz once and was impressed, he knows his brief. In this clip from Bloomberg he talks about his belief that the Euro is finished. (hat tip on the clip to creditwritedowns)

Hendry also talks about his belief that the noose is getting tighter in Asia, I would concur, there has to be a rebalancing and even a managed economy like China’s cannot stop that from happening, the Euro will go through a competitive devaluation and we can all go back to competing in the ‘new normal’.

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Efficient markets: fact and fiction

In this clip Michael D. Goldberg talks about the efficient market hypothesis, a talk given at the King’s Institute for the inaugural conference of the Institute for New Economic Thinking (INET), a group financed by legendary investor George Soros.

This video has a behavioural slant to it, and there is a strong focus on irrationality, herding, and other behavioural aspects of the markets.

Personally I’m not convinced that we can turn our back on the efficiency of the markets, nor that we can necessarily undo or limit the inherent weakness in any market, any blockade or regulatory restriction has a tendency to fall victim to circumvention of various sorts. However, there are growing bodies of work that point out the weaknesses of markets, and in this area the behaviourists are streets ahead of the curve in understanding the key points of market movements that are difficult to comprehend because they don’t act the way we think that they would or should.

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Is Britain the Next Greece?

Economist Richard Wolff compares economic forecasting to palm reading, before predicting himself that Britain will be the next victim of the global recession, citing that the average British family currently faces a debt amounting to 170% of its annual income.

The full video is more about capitalism in its current brand, the fascinating thing is that Wolff is neither an Austrian nor a Keynesian, he isn’t freshwater or saltwater, he thinks that both Hoover and FDR didn’t find the right solution, that WW2 was the answer (albeit a terrible one). This is a video that is absolutely worth watching.

The full version is available on Fora (a site well worth bookmarking!)

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The upside to Negative Equity?

Sometimes I write articles that are inflammatory, today’s is of that ilk, I want to point out some of the upsides to Negative Equity. They are going to be put in a list with the upsides to getting hit by the number 47 bus. Anyways… The theme of this article is that for every downside there is an upside so today I will seek to find the benefits of Negative Equity, my gut feeling is that I definitely have my work cut out for me on this post!

100% mortgage, if you took out a 100% mortgage during 2007 and put down no deposit and in turn you bought for €300,000 then what you didn’t have to do was save up 30k of a deposit – what actually have to earn to save a deposit? If you are on the higher band of tax then you paid tax at 41% and of course there is about 5% of PRSI so we’ll say that you paid almost 46% in total. A €30,000 deposit would mean you had to earn about €55,000. …

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