Euro currency crumbling? part2 (09Feb10)

Part 2 of 2: So called expert Professor Joseph Stiglitz and Spanish Ambassador to the UK Carles Casajuana argue with a Hugh Hendry (for Electica Asset Management) who is betting on the Euro currency falling and failing. The Hugh Hendry talks a lot of sense, where the expert talks none.

Recorded from Newsnight, 09 February 2010.

Category:

News & Politics

Tags:

• euro
• currency
• under
• attack
• political
• project
• bail
• out
• eurozone
• zone
• communist
• communism
• professor
• Joseph
• Stiglitz
• Spanish
• Ambassador
• to
• the
• UK
• Carles
• Casajuana
• Hugh
• Hendry
• Electica
• Asset
• Management
• eu
• eussr
• europe

[DavidAKZ]

@diurdi I would suggest the main game has nothing to do with whether the Greek economy can deliver 'efficiencies' to pay for additional loans, but the magnitude of Credit Default Swaps outstanding on said loans. This is what is being protected from being 'triggered' as MF Global found out to their pearl and promptly stole money from their customers accounts to try and backstop their losses when the CDS contracts they had bought on leverage didn't pay out.

[DavidAKZ]

@habraify and MF Global crashed because they bet the CDS trigger would be pulled - and wasn't. Interest rates on Greek bonds at record highs and on US bonds at records lows. I'm sure that isn't an accident or a result of 'market forces'.

[diptdipt]

The devil is losing and at the end will be judged for all the crimes. Live at the full in the freedom of GOD (praying in a right form, following the INSTRUCTIONS in the Bible - keeping the 10 commandments - including keeping the Saturday as the 7th day etc.) instead of in the incapacity and deception of devil. Jesus Christ is the savior, love and hope.

[rohmeh90]

so this is where the smart youtube comments are

[diurdi]

@habraify The biggest problem is that even if the rest of the EU got behind Greece, why would it suddenly become fiscally responsible? And even if it did, it would come at a significant cost to the rest of the world. The most likely scenario would be for Greece just to keep promising it will follow Austerity measures to gain more capital - spend it without changing anything - and keep coming back for more.

[habraify]

But of course here we are 18 months later and Hendry is 100% correct and Stiglitz is 100% incorrect. The haircuts have already happened and the crisis still persists!

[habraify]

Its interesting because they're both right. Stiglitz is right in that if there is market confidence, the interest would go back down to below 2% and Greece would likely be able to service that and Hendry is right in that the 2% rate is what investors are willing to accept for a stable solvent economy not what they're willing to to accept for a country in financial situation of Greece. Definitely chicken and egg problem....

[DavidAKZ]

Quote Stiglitz 'The issue isn't a bailout' Where Does The Greek Bailout Money Go? tinyurl . com / d7l94dt

[DavidAKZ]

@ADONISindeed why are people rioting then ? Because it's their day off ?

[DavidAKZ]

@DinaStrange because it is not about the Greek economy. It is about loans to the Greek government made by French and German banks. Ironically this it not the main problem. The loans are underwritten by Credit Default Swaps (CDS). The CDS will only pay out if the interest rate on payments on the loans (Greek bonds) rise. No one knows the extent of so called counter party risk. Also, Goldman Sachs actively short Greek Bonds driving interests up so that the state defaults and the CDS pay out.