Hayek vs Keynes

kevsta said:
yes because the daft old insider trading crony capitalist is really an expert on China isn't he. :rolleyes:
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I have no idea who you are referring to, so I am unable to offer a comment on that person's China expertise.

kevsta said:
and what a great deal he got on that fantastic company BOA there too btw, what did he pay, 6.75? (from memory, cant be arsed to read up about him)

http://www.zerohedge.com/news/bank-america-fiver-again

so, approximately $1.2 billion down in 8 weeks or something? nice, where do I sign up for lessons from this genius ?
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I have no idea what you are talking about.

kevsta said:
the difference between Hendry and Buffet is that Hendry lives in the real world, and wouldn't get bailed out by his Congress mates if he failed like the muppet you worship.
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No, the difference between Hendry and Buffet is that Buffett has $50 billion and Hendry doesn't.

Surely a man of Hendry's intellect should have twice that by now.

Game.

Set.

Match.
 
I know you don't, that much is clear. go back to Fox news.
 
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kevsta said:
Google is your friend - Google search "china + bubble + burst"

I would also suggest you check out "Hugh Hendry" and his China research.

Hugh would "recommend that you panic" (and has bet in the hundreds of millions on his research)
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I read a transcript of a Hugh Hendry presentation. He doesn't like regulation and likes volatility. The review I read was from April 2009 because I wanted to see what his forecasting looked like.

He is not specific except when discussing currency. He said at that time the USD would achieve parity with the EUR and recommended buying USD heavily. On 01-APR-2009, the exchange rate was 1.3222. On 31-OCT-2011 the exchange rate was 1.3947.

EDIT: My point is not necessarily that Hendry is incompetent or wrong but he is clearly not an economist.
 
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stilicho said:
I read a transcript of a Hugh Hendry presentation. He doesn't like regulation and likes volatility. The review I read was from April 2009 because I wanted to see what his forecasting looked like.

He is not specific except when discussing currency. He said at that time the USD would achieve parity with the EUR and recommended buying USD heavily. On 01-APR-2009, the exchange rate was 1.3222. On 31-OCT-2011 the exchange rate was 1.3947.
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he got blindsided by the bailoutfest and was a bit bitter about that for a while. when you correctly bet on a company going under months and years ahead, and it gets TBTF'd it must be a bit jarring.

things are back on track now.

Hendry's Eclectica up 40% YTD amid the HF carnage

It has been a while since we heard anything about everyone's favorite contrarian and most outspoken hedge fund manager, Hugh Hendry, and probably for a good reason.

As everyone else was complaining about their performance (and P&L) collapsing, blaming it on everything from the weather, to Bernanke's diet, to fundmanetals and technicals, Hugh Hendry was raking it in and is now up 38.65% YTD, with a stunning +22.5% in August alone (or pretty much mirroring the collapse at Paulson & Co) and another 11% in September!

As the FT reports, Hugh Hendry's Eclectica fund has "has soared in value over the past two months as global markets have plummeted and industry peers have suffered damaging losses." Hendry's opinion on China is no secret, with an indicative snippet being that he anticipates a 1920's Japan-like crash in China.

And as was reported previously, based on his recent trade of buying up lost of Japan CDS of companies exposed to China, his outperformance is no suprise. Expect to hear much more about Hendry as the media gets tired of paraphrasing sob stories and actually focuses on the (very few) winners from the most recent market blow out, confirming that contrarian, non-lemming approaches to investing still do pay off.

From the FT:

Mr Hendry - a former Odey Asset Management trader - is one of only a handful of hedge fund managers positioned against Chinese growth and therefore pitted against heavyweight investors such as Anthony Bolton.

The fund, which raised a modest $150m from a handful of London investors when it launched late last year is up 38.65 per cent so far this year, having returned 22.5 per cent in August - the hedge fund industry’s worst month since the collapse of Lehman Brothers three years ago.


The news comes as concerns of a Chinese slowdown gather speed. Wu Xiaoling, the former deputy central bank governor and vice director of the finance and economy committee of the National People’s Congress said the economy would cool next year and efforts to spur growth will be constrained by inflation, in an article published by the Chinese central bank’s official newspaper.

Mr Hendry’s fund is up a further 11 per cent for September, according to an investor. Mr Hendry declined to comment.

His flagship Eclectica fund has had a short position against Japanese corporate credit for some time, but the strategy was only broken out as a seperate specialist fund 12 months ago.
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kevsta said:
lol, what for being the best performing HF in 2011 thus far?

you really are very funny :D
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Isn't this supposed to be an economics thread? I'd like to know how Hendry fits in and whether there is much truth to anything he says.

How exactly did a bank bailout change the accuracy of his prediction of USD:EUR parity? How exactly could it?
 
stilicho said:
Isn't this supposed to be an economics thread? I'd like to know how Hendry fits in and whether there is much truth to anything he says.

How exactly did a bank bailout change the accuracy of his prediction of USD:EUR parity? How exactly could it?
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yes it is supposed to be, apologies once again, I cant help responding to your autistic troll.

I suggested Hendry's research on China about the bubble, that's all. I end up defending his credibility because rainman keeps on going on about Buffett.

whether there is any truth to anything he says? do you know much about HFs and traders? I would say probably not, because you would likely have heard of him if so.

Hendry is well regarded as one of the best in the business by his peers, but obviously that doesn't mean much when Buffett's been on Fox News today and lost 1.2 billion on his Bank of America purchase in the last 8 weeks to compare him to.

with regards to the dollar / euro call, everyone gets it wrong from time to time, winners just win more than they lose. I wasnt talking about your specific dollar / euro piece, I haven't seen that.

I do know Hendry was calling this China hard landing 2 & 1/2 years ago (mar 2009)

http://www.youtube.com/watch?v=ektMQGbW3wk

and here we are with it happening right now, and his HF way ahead of everybody else, because of precisely this.
 
kevsta said:
Hendry is well regarded as one of the best in the business by his peers, but obviously that doesn't mean much when Buffett's been on Fox News today and lost 1.2 billion on his Bank of America purchase in the last 8 weeks to compare him to.
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How do you know how much Buffett has lost?
 
I have a question: The US took an economic strategy that seems Keynesian to me starting in the 1930's. It worked its way out of a great depression using a lot of spending on infrastructure and social programs so that by about the end of the decade the country was back to about the point it started at just after the '29 crash occurred but a couple years before it became a full blown depression. About that time the US took on the axis powers in World War II. This was an all-in approach where it threw everything it could at the enemy so that the war was over in less than 5 years but at enormous economic cost, even to the point of shutting down the auto industry to aid in building war machines.

It invested so heavily that immediately afterwards it found itself in debt to the tune of about 120% of GDP. On top of that it had millions of veterans returning home to a country with a job market that had gone fallow as it shipped those workers off to war rather than building much on the initial recovery at the start of the 40's.

Then, using money I'm sure many here would say it didn't have, it invested even more sending millions of vets to school for college degrees (fully paid) and/or putting them into homes and even businesses with very low interest loans. It also started investing in the Marshall plan by the end of the decade rebuilding a decimated Europe and Japan. At the same time investing in the construction of an interstate highway system that was an infrastructure investment not equaled since the railways system built in the previous century. Oh, and it also paid for a skirmish in Korea that lasted a few years as well, somewhat similar to the invasions of Afghanistan or Iraq though again, not as lengthy as either of those.

Yet by the end of the 50's the US had become the worlds first modern superpower by way of its modern middle class which was unlike any other social structure that had ever existed. And the 120% debt had been paid down to pre-war levels about the end of the decade. To be sure, much of that was funded in part by insanely high taxes at the high end of the economic ladder which did not stall the economy but evidently boosted it. Good jobs were pretty plentiful about 10 years after WWII had ended.

By the start of the sixties the US had become the economic powerhouse of the world leading in trade and technology. The prospect of the American dream was seen as the ultimate model of success around at least the free world then and in retrospect now by the rest of the world compared to other nations during that period of history.

So, how did Hayek's economic school of thought figure into that turnaround?
 
TubbaBlubba said:
Yes, I absolutely agree, but whenever you support a dictator, even if he seems like a great guy, you ALWAYS risk getting the baggage of genocide, torture, and other human rights violations, becase of the very nature of dictatorships. You DON'T get too choose, or change dictators without external intervention. Whenever you have a dictator like Pinochet or Mussolini (who was supported by many before the war, including Churchill and Gandhi), you ALWAYS, as history has shown, run a very real and large risk of ending up with HRVs in the baggage. That's why Hayek's point about liberal dictatorship is ludicrous unless it's a purely academic statement. You can't separate the two and say, "Well, dictatorship is good in some aspects, so we should have a dictatorship with just those aspects" because you DON'T choose dictators that way, they choose themselves.
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Just to clarify, I did not say that dictatorships are good, or can be preferable. While I think there is indeed a spectrum between relatively benign authoritarians (like the Singaporean one) to the utterly despisable ones (like Kim Jong-il), even bad leaders who a democratically elected (like the latest Bush) tend to be preferable over the vast majority of authoritarians.
 
Humes fork said:
Just to clarify, I did not say that dictatorships are good, or can be preferable. While I think there is indeed a spectrum between relatively benign authoritarians (like the Singaporean one) to the utterly despisable ones (like Kim Jong-il), even bad leaders who a democratically elected (like the latest Bush) tend to be preferable over the vast majority of authoritarians.
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I see; I've seen the "benevolent despot" idea thrown around a lot, and given the way most despots or potential despots look, and the systematic problems, I don't feel overly eager about it. Glad to see you don't subscribe to it.
 
Chucky said:
I have a question: The US took an economic strategy that seems Keynesian to me starting in the 1930's. It worked its way out of a great depression using a lot of spending on infrastructure and social programs so that by about the end of the decade the country was back to about the point it started at just after the '29 crash occurred but a couple years before it became a full blown depression. About that time the US took on the axis powers in World War II. This was an all-in approach where it threw everything it could at the enemy so that the war was over in less than 5 years but at enormous economic cost, even to the point of shutting down the auto industry to aid in building war machines.

It invested so heavily that immediately afterwards it found itself in debt to the tune of about 120% of GDP. On top of that it had millions of veterans returning home to a country with a job market that had gone fallow as it shipped those workers off to war rather than building much on the initial recovery at the start of the 40's.

Then, using money I'm sure many here would say it didn't have, it invested even more sending millions of vets to school for college degrees (fully paid) and/or putting them into homes and even businesses with very low interest loans. It also started investing in the Marshall plan by the end of the decade rebuilding a decimated Europe and Japan. At the same time investing in the construction of an interstate highway system that was an infrastructure investment not equaled since the railways system built in the previous century. Oh, and it also paid for a skirmish in Korea that lasted a few years as well, somewhat similar to the invasions of Afghanistan or Iraq though again, not as lengthy as either of those.

Yet by the end of the 50's the US had become the worlds first modern superpower by way of its modern middle class which was unlike any other social structure that had ever existed. And the 120% debt had been paid down to pre-war levels about the end of the decade. To be sure, much of that was funded in part by insanely high taxes at the high end of the economic ladder which did not stall the economy but evidently boosted it. Good jobs were pretty plentiful about 10 years after WWII had ended.

By the start of the sixties the US had become the economic powerhouse of the world leading in trade and technology. The prospect of the American dream was seen as the ultimate model of success around at least the free world then and in retrospect now by the rest of the world compared to other nations during that period of history.

So, how did Hayek's economic school of thought figure into that turnaround?
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I dont really know enough about Hayek and/or the US' history to answer this sensibly to be honest. I would just like to point out that the whole way through the period you discuss, the USA was on the Gold standard though :)

clearly it is possible for it to work, and work very well.
 
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Chucky said:
I have a question: The US took an economic strategy that seems Keynesian to me starting in the 1930's.

....

By the start of the sixties the US had become the economic powerhouse of the world leading in trade and technology. The prospect of the American dream was seen as the ultimate model of success around at least the free world then and in retrospect now by the rest of the world compared to other nations during that period of history.

So, how did Hayek's economic school of thought figure into that turnaround?
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My own opinion is that it didn't. The only thing I might mention that took some of the economic wind out of the sails was the habit of America's trading partners (Canada included) to begin "reviews" of foreign investment. Canada benefitted from a few two-way compromises inked in the Sixties and since but nothing has been nearly as effective as NAFTA in opening up trade opportunities.

Possibly the biggest challenge faced by the US in the years after the brief post-War boom was the formation of the OPEC oil cartel--a producers' price-fixing and supply-fixing scheme of which I have found no evidence Hayek would have approved. Keynes, on the other hand, wrote to a considerable extent on various industries--including coal and cotton--although his focus appeared to be on those sectors where "atomistic competition" appeared to be increasing inefficiences. I haven't read enough about him to understand his full judgement on nascent or highly profitable industries such as oil or even automobiles.

There are few doubts that "Keynes-ish" nationalisation projects by America's trading partners--beginning with the oil producers--have been the biggest drag on global economic resilience.
 
kevsta said:
I dont really know enough about Hayek and/or the US' history to answer this sensibly to be honest. I would just like to point out that the whole way through the period you discuss, the USA was on the Gold standard though :)

clearly it is possible for it to work, and work very well.
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`
I see gold as only a commodity in the end. Nor would I look forward to paying $20 a pop for gold accessory connectors in a really good economy. It limits the consideration of where the overall value of other crucial resources ultimately sit in an economy. We're not in the industrial age anymore, ya know? Sure it has intrinsic value and will always be worth something. Once the price drops big time some day I hope I can get in on some of it if I'm diversified enough.

Anyway, with the current accelerating rate of change in technological standards and their effects, I wouldn't be a bit surprised if in 50 years, maybe as little of half that, a lot of what we see as economic thinking will be from a bygone era, beyond the basics. I suspect that all first world actors are becoming ever more distributed within economies and will be harder to track by the way of their having ever more options. We may have more and more ways to spend our money, perhaps sometime doing things we don't even envision yet.

Even if only by the virtue that your phone is now is often a computer. And one that is geographically tied to you where ever you happen to be when you make a call. This feature alone will be exploited in a whole lot of ways in the coming years. And geez, what happens when the age of robots gets here? How much manufacturing might go back to the garage in small, sometimes local, niche markets away from some large corporate manufacturing? Have the properties of digital information with it's more-or-less infinite copying capacity without loss of quality been properly defined? And it's always ever more storable in ever smaller volumes as a practical matter.

We'll need some big tweeks in economical systems which may ever further increase gold's purpose as a more widely distributed commodity in any functioning economy.
 
stilicho said:
My own opinion is that it didn't. The only thing I might mention that took some of the economic wind out of the sails was the habit of America's trading partners (Canada included) to begin "reviews" of foreign investment. Canada benefitted from a few two-way compromises inked in the Sixties and since but nothing has been nearly as effective as NAFTA in opening up trade opportunities.

Possibly the biggest challenge faced by the US in the years after the brief post-War boom was the formation of the OPEC oil cartel--a producers' price-fixing and supply-fixing scheme of which I have found no evidence Hayek would have approved. Keynes, on the other hand, wrote to a considerable extent on various industries--including coal and cotton--although his focus appeared to be on those sectors where "atomistic competition" appeared to be increasing inefficiences. I haven't read enough about him to understand his full judgement on nascent or highly profitable industries such as oil or even automobiles.

There are few doubts that "Keynes-ish" nationalisation projects by America's trading partners--beginning with the oil producers--have been the biggest drag on global economic resilience.
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What I find interesting is when you bring up OPEC. This was right around the time that supply-side thinking took hold and may have been in part providing a solution for the moment while also being seen by others as a vehicle for strategizing an alternate economic theory. One that I believe has been exploited to its ends very much as seen on the news these days with #OWS and all.

But Keynes in the end points out that economies run on demand, with certain timely exceptions such as OPEC-like supply side dilemmas. At least I'm convinced of demand as capitalism's primary driver. Though that OPEC era was the era when the Keynesian model seemed to be put to rest.
 
Chucky said:
`
I see gold as only a commodity in the end. Nor would I look forward to paying $20 a pop for gold accessory connectors in a really good economy. It limits the consideration of where the overall value of other crucial resources ultimately sit in an economy. We're not in the industrial age anymore, ya know? Sure it has intrinsic value and will always be worth something. Once the price drops big time some day I hope I can get in on some of it if I'm diversified enough.
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get in on it? as an investment you mean? or..?

IMo its going way higher first, and is only likely to drop significantly once we're out the other side of the troubles of this next decade, after which it's time as in investment is probably up. I could be wrong, but I dont see much point getting in on it after it's dropped significantly again.

or did you mean to make your own connectors? :)

Chucky said:
`
Anyway, with the current accelerating rate of change in technological standards and their effects, I wouldn't be a bit surprised if in 50 years, maybe as little of half that, a lot of what we see as economic thinking will be from a bygone era, beyond the basics.
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indeed, I have the definite feeling we are fast approaching the end of an era.
 
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