Auto Bailout Is Nationalization of Dinosaurs: Hendry
The automakers' bailout will not boost Wall Street as investors are unlikely to see advantages in subsidies granted to "dinosaurs," Hugh Hendry, chief investment officer and partner at Eclectica told CNBC.
The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers, which may include naming former Federal Reserve Chairman Paul Volcker as a "car czar" overseeing the industry's restructuring.
"There's nothing bullish about the deal of preserving dinosaurs into your economy," Hendry said, forecasting that the stock market would fall after the decision is taken.
"This is nationalization. This is nationalization. Americans just can't see it. A car czar! What does Paul Volcker know about this? What did Stalin do for the economy of Russia? That's where we're heading now."
Following the bailout, living standards for the average American will fall further and car prices will rise, as it happens in Europe, Hendry predicted.
"The reality is, car prices are twice in Europe what they are in America because we have to 'parlez-vous Francais'…we have to subsidize the French making cars," Hendry said.