Skip navigation

Current DateTime: 09:59:19 08 Feb 2012
LinksList Documentid: 23452764
Expiration DateTime: 2/8/2012 10:00:24 AM

Current DateTime: 09:59:21 08 Feb 2012
LinksList Documentid: 23452000
Expiration DateTime: 2/8/2012 10:00:40 AM

Current DateTime: 09:59:21 08 Feb 2012
LinksList Documentid: 24355697

MOST SHARED


Current DateTime: 09:59:21 08 Feb 2012
LinksList Documentid: 31330905
Expiration DateTime: 2/8/2012 10:00:45 AM

MOST POPULAR


Current DateTime: 09:59:21 08 Feb 2012
LinksList Documentid: 35819650
    • Super Bowl, Super Bucks

        Whether it's the Patriots or Giants who actually win the game, the business of the Super Bowl is a touchdown either way.

HOT ON FACEBOOK

By: CNBC.com | 02 Oct 2008 | 04:28 PM ET
Text Size

Ireland's decision to guarantee all bank deposits will contribute to the demise of the single European currency, because it will erode the euro's credibility if it's allowed to go ahead, Hugh Hendry, chief investment officer and Partner at Eclectica Fund, told CNBC on Thursday.

The plan pledges to guarantee the liabilities of six Irish-owned banks totaling some 400 billion euros ($565 billion), more than twice the country's annual gross domestic product.

"The decision, if left to stand … my prophecy is it will bring down the currency. The euro is not a tenable currency if you have politicians making such decisions. The reality is there is no such thing as a free lunch," Hendry told "Squawk Box Europe."

"If I was German, I would say give me back my Deutschmarks," he added.

(Watch Hugh Hendry and Charles McKinnon, CIO of Thurleigh Investment Management, on CNBC above).

On Thursday, Irish lawmakers backed the plan and the government said it may be extended to foreign banks with retail units in Ireland, but it has raised questions in Brussels and London about competition and state-aid rules.

Promises of lavish spending such as this and others being discussed in Europe will erode investors' confidence, Hendry warned.

"McDonalds has got less chance of going bust than the British government," he said. "When our government comes to issue this sea of money they're going to pay through the nose … if we can't constrain that behavior, we're going to pay for it."

"We're on the verge of a sovereign debt default in Europe."

The current crisis stems from central banks easing monetary policy and flooding markets with liquidity to kick-start the economy after the dot-com bust in 2000, Hendry said.

"The reality is we should have had a stinking recession at the turn of the century. We burnt and destroyed lots of capital, we should have suffered from it," he said, adding that former Federal Reserve chairman Alan Greenspan thought he could "abolish the economic cycle" by inflating house prices.

Currently, Hendry owns "bonds, government bonds," and he might be "contemplating selling my gold equity shares," he said.

© 2012 CNBC.com
Tools:
Add This share icon

CNBC HIGHLIGHTS

  • Road Warrior - Taxi Magic App
  • These will help you file expenses, sign documents, process orders, book a cab and more.
  • GOP Candidate Rick Santorum
  • Former US senator Rick Santorum rejuvenated his campaign with a sweep of three nominating contests.
  • Toronto, Ontario, Canada
  • We've put together a list of the world's 15 best cities to live in. So which cities made the list?
  • house
  • For those thinking of retiring, one step is to rightsize your house now, says our guest blogger.
  • It's now more expensive to lease office space in Beijing than in New York.
  • It is hard to believe that so many people are clicking on Facebook. That’s because well, they aren’t, exactly.


Current DateTime: 06:33:39 08 Feb 2012
LinksList Documentid: 29778428

Current DateTime: 08:44:16 08 Feb 2012
LinksList Documentid: 29779196

Current DateTime: 09:39:59 08 Feb 2012
LinksList Documentid: 29779197

Current DateTime: 11:45:13 07 Feb 2012
LinksList Documentid: 29779199
CNBCCNBC
About CNBC  |  Site Map  |  Video Reprints   |  Advertise  |  Help  |  Contact
Privacy Policy  |     |  Terms of Service  |  Independent Programming Report
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2012 CNBC LLC.  All Rights Reserved.
A Division of NBCUniversal
Thomson ReutersThomson Reuters