He’s dead right about our 2.75% being a total crock.
But I still can’t get my head around how anyone can argue that we don’t need (or deserve) “job losses and wage cuts”. It cannot be possible to acknowledge that there was a bubble and at the same time argue that the “gains” of said bubble should be maintained. That seems to be HH’s argument, at least on the narrow issue of national austerity.
Hendry’s point is that the Irish private sector has taken pay cuts of 10-25pc between 07 and 09, and 200k of them have joined the unemployment lines. Many of the unemmployed will run out of JA this year and leave. The Irish private traded sector is now quite competitive and overall pretty efficient.
While it may piss off the Irish private sector that the PS and certain unionised sectors have not shared the pain, this is OUR issue. Viewed from abroad, our efforts to restructure overall are impressive.
Unlike the Greeks, we did not have a huge public debt entering the crisis. The only reason we are in trouble is the bailout; without it we’d have private distress but a solvent State. We are about to get clobbered again because of this.
This is incorrect. Despite pay-cuts, public spending has not decreased because of the huge increase in transfer payment (social welfare etc). We have a humungous deficit apart from the bailout - bigger than anywhere else. There would have to be huge cuts to avoid this debt becoming unbearable even if there were no bail-outs. The bail-outs have of course made the position much worse, as has the fact that our banks cannot service the economy. However, even if we did not bail out the banks and they had somehow managed to remain in existence to the extent required to allow normal life to continue, then we would still have a massive problem.
We have reached a profound point in economic history where the truth is unpalatable to the political class - and that truth is that the scale and magnitude of the problem is larger than their ability to respond - and it terrifies them. - Hugh Hendry, Milken Institute Global Conference 2012
Hugh Hendry got something big right but he clung onto his idea too long. Like a lot of people he then saw everything through the prism of how he had conditioned himself to think. Eventually he saw the error of his ways but never fully recovered from his error. This should remind a lot of posters on this forum of themselves (excluding 2pack of course who called the bottom correctly).
I think it’s got as much to do with the hedge fund industry’s 2 and 20 model as it does have to do with execution. Who wants to pay exorbitant fees when you can buy an ETF that charges just a few basis points?