Hugh Hendry, head of hedge Fund Eclectica Asset Management, told CNBC today that the best alternative for major financial firms is nationalization:
It’s not preferable, but all major U.S. financial companies will eventually be under government control because the alternative is so much worse, Hugh Hendry, chief investment officer at hedge fund Eclectica Asset Management, said Friday.
“All financials will be owned by the U.S. government in a year,” Hendry said. “I bet you.”
Nationalizations take dramatic losses from the private sector and places them on the larger balance sheet of the public sector, he said.
“It’s not good,” but society is vulnerable and society is going to have to intervene, Hendry said.
Because the taxpayers are forced to foot the bill for bailout out the banks, shareholders shouldn’t be compensated, Hendry added.
“Actually the shareholders of Citigroup have looked the other way for more than a decade” while management took excessive risk, he said.
Shareholders should take nothing away if it is nationalized, because the taxpayer will be “paying this for a long, long time,” he added.