Hugh Hendry Debates w/ Columbia's Jeffrey Sachs on European Debt Crises (May 26, 2010 on BBC Newsnight Video)

Happy Memorial Day to my US subscribers. Watch Hugh Hendry of Eclectica Asset Management (based out of London) debate with Columbia Professor Jeffrey Sachs on how to solve the Greek/European debt crisis. Hendry, who is probably short Greek sovereign debt (via CDS), vulnerable European banks or the Euro in some form (which has been the right trade) recommends you panic.  Sachs says bail them out, Greece will be able to *service* its debt under normal market conditions in the near future.
Jeffrey Sachs: "Clearly there's a lot of worry and there's a lot of uncertainty. But markets also have a way of jumping to conclusions and suddenly saying well they're not going to pay, it's all going to be restructured, looking at worse case scenarios and I don't think that we're anywhere close to the worse cases of sovereign defaults at this point".

"I think the market is panicky by nature and there is uncertainty, so the downsides could happen but I don't think they are inevitable".
Newsnight Moderator: Alright panicker, panic.
Hugh Hendry: "I would recommend you panic. The European banking system is in crisis. Banks today are refusing to lend to each other, that's a reality. Bank share prices are collapsing and we have no ability to gauge the credit worthiness of the banking sector".

"Don't reward failing. The banking sector is responsible for gross failing. When you bring on a Professor and when you bring on a politician, they are unaccountable. If Jeffery's wrong you know what, he will survive in tenure, if I'm wrong I'll go bankrupt. Who'd you want to bet with?".

"I say lets purge the system of its rottenness".
Hugh then disses Sachs about the real world!  Damn!!  But then they agree on much needed banking reform.  Watch Hugh Hendry debate with Professor Joseph Stiglitz about the Greece bailout in February (link).  For recent posts featuring Hugh Hendry click here.

Video courtesy BBC via

Update: Europe’s Banks at Risk From Slower Growth, E.C.B. Says - New York Times
ECB: Banks Will Suffer Considerable Loan Losses In 2010, 2011 - WSJ