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Hedge Fund Manager Rips Professor Joseph Stiglitz and Spanish Ambassador to the UK Carles Casajuana on Greek Debt

February 11th, 2010

So called expert Professor Joseph Stiglitz and Spanish Ambassador to the UK Carles Casajuana argue with hedge fund manager Hugh Hendry of Electica Asset Management about what needs to be done about the Euro and the Greek debt crisis.

Talk about a one-sided argument. Hedge fund manager Hugh Hendry makes Joseph Stiglitz and Charles Casajuana appear to be idiots not at all familiar with the real world as they discuss the Greek debt crisis and the role that the Euro zone countries will have to play in alleviating the crisis.

In my opinion, Mr. Hendry makes the entirely valid argument that an accelerating crisis caused by excessive debt can not be solved by the issuance of additional debt. While their discussion centers on Greece the same principle applies to the remainder of the euro zone countries as well as to Japan and the United States. Many countries in the developed world have created a mountain of debt that can no longer be supported by the economic growth that can be generated by their economies or by the level of economic growth that can be reasonally expected in the future.

Prof. Joseph Stiglitz appears especially flustered and foolish as he talks about how the Greek debt problem is easily managed by Euro zone members making additional loans available to Greece. The difference in viewpoints between the hedge fund manager and the Prof. and Amb. is the difference between the real world and the make-believe world of politicians and academics.

When Hugh Hendry states that it is just a matter of time before Greece and other sovereign countries default on their debt obligations, Prof. Stiglitz and Amb. Casajuana go berserk. The video is well worth watching just to see their reactions.

Unfortunately, the video reminds me of the disconnect between Obama and his team and the reality of what is taking place in the US economy. Clearly, the level of debt that is being created by the federal government is unsustainable and at some point in the future cannot be properly serviced. The United States will be forced to monetize vast amounts of debt, thereby guaranteeing hyperinflation, or default on its obligations. When Sec. of the Treasury Timothy Giether recently stated in a Bloomberg interview that United States would never default I took that as a confirmation that the financial future of the United States is terribly grim.

The unraveling of Greece and the euro zone is very likely a preview of our own future. When sovereign debts becomes so large that they cannot be serviced bad things are bound to occur. We are most likely at the beginning of a worldwide financial crisis that will dwarf anything that any human being has ever taken part in. Ever.

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