Managing Chaos: The World of Distressed Sovereign Debt

Featuring Hans Humes

Hans Humes, the chairman & CEO of Greylock Capital Management, has been involved in as many sovereign debt negotiations as any other individual in the history of finance. In this interview with attorney and former hedge fund manager Jay Newman, the two veteran investors span the globe by discussing the one common thread that brought Venezuela, Greece, Argentina and Puerto Rico into crisis. Filmed on May 10, 2018 in New York.

Published on
18 May, 2018
Topic
Monetary policy, Geopolitics, Debt
Duration
62 minutes
Asset class
Bonds/Rates/Credit
Rating
46

Comments

  • AF

    Andrew F.

    29 5 2018 14:20

    0       0

    This is like the play book of how countries/governments dodge there responsibilities and debts to its own people and try to hide there ill gotten gains. Absolute power corrupts and then Hans and Jay come to figure this our for the people on the ground. Just hope Venezuela gets turned around sooner than later. Thanks Hans/Jay/RV

  • BL

    Bryn L.

    23 5 2018 23:54

    1       0

    Excellent interview.
    Poor sound volume on Hans mic.

  • KS

    Kathleen S.

    22 5 2018 22:51

    2       3

    You know the only reason Real Vision exists is because we are lied to by the CNBC's of the world --- Thus, what makes anyone think that someone whose career is debt restructuring for banks and hedge funds would not leave out critical bits of information that expose their fraud? At one point odious debt comes up in the interview -- What is odious debt exactly????? According to wikipedia --- international law says odious debt, also known as illegitimate debt, is a legal theory that says that the national debt incurred by a despotic regime should not be enforceable ---- This is was the reason why, when the US illegally invaded Iraq -- Iraq debt was dismissed. Problem is who decides what and what is not a despotic regime -- In today's world it seems it is the US military or the CIA or an NGO and not the actual people of the country that decides who is their legitimate leader. Like I said, REal Vision exists because we are lied to by the financial media; thus we all need to open our eyes and see through the lies of DEBT and see exactly how it is used by (in some cases military force) to enslave people and steal a country's natural resources. And make no mistake this will happen in US too --- was just talking to my husband about how much it will cost to go throught the Holland Tunnel after this bit of infrastructure is sold off for pennies on the dollar to private equity when NJ or NY go bankrupt. And FYI - this was the plan all along.

  • ST

    SAHIL T.

    22 5 2018 20:04

    1       0

    Great discussion. Would be great to see Lee Buchheit in the room as well!

  • F

    Floyd .

    21 5 2018 23:39

    2       0

    Outstanding interview! Intimate knowledge of the practical aspects of dealing with a financial crisis which outlined the issues,problems and solutions. Far superior than the Nomi Prinns interview which Has might say is the view of an academic which ignores the practical realities. Having Jay Newman part of the mix was perfect!

  • JG

    Jory G.

    21 5 2018 20:43

    0       0

    The U. S. congress with the aid of the Federal Reserve have created many trillions in debt and has been buying that debt with capital created from thin air. That seems corrupt to me and a bit hypocritical. Congress and the Fed need to be sanctioned.

  • DP

    David P.

    21 5 2018 11:36

    0       0

    That corruption thing is very interesting. Because it ultimately depends on the moral code that underpins what is or isn't deemed acceptable. Even between Europe and the US, there is a different definition of what is corruption and what isn't.

  • EL

    Emanuel L.

    21 5 2018 10:43

    0       0

    Thanks RVTV for this great interview and equally to the contributors in this thread. It has really helped me discerning the mechanisms of sovreign defaults.

    My understanding now starts from the premise that lender and borrower are equally responsible for the outcome. Wheras one has to question, why a country takes on so much debt although it won't be able to service it, one should also ask, why the borrower agrees to lend to such a country. The answer is: because there is mutual interest. The borrower actually is not the country, but a privileged group within that country that is allowed get the money and steal some. By giving his consent, the lender accepts the misappropriation of his money, because he, the lender, will be able to project his power over the lending country without the need to fire a single shot while seizing assets and taking advantage of cheap valuations and cheap labour in the debt crisis and thereafter. This is all to the advantage of the borrower, the lending elites and to the detriment of the population. This mechanism takes advantage of the natural inclination of humans of putting themselves before others, so there is no need for large scale conspiracy or collusion. You just need to leave the system how it is.

  • WM

    Will M.

    20 5 2018 19:23

    1       0

    Good conversation, terribly depressing and clearly the tentacles reach deep into our governments to a greater or lessor extent.

  • WM

    Will M.

    20 5 2018 18:49

    0       0

    What astounds me is that the western banks continue to lend money to semi permanent bankrupt socialist states like Argentina. How many times have they defaulted? Why don't Argentinians learn to live within some form of means? The IMF have been approached again by Argentina, why not just say no for a historical change......

  • AC

    Adrian C.

    20 5 2018 11:16

    3       0

    I love how can the biggest movers of sovereign debt have the most budget shoes and socks? These are real people and not the glitzy crap that's out there.

  • SP

    Steve P.

    20 5 2018 04:28

    3       0

    Absolutely brilliant coup to have conversation of this caliber on RV - and extremely thought provoking when discussion turns to how global co operation could potentially be used to deter off shore bunkering of illegal gains. Likely very difficult to achieve but if there is a high risk regime in place that enables the threat of confiscation by creditors of pilfered sovereign funds/assets, it may act as a deterrent. As to how to stop those in power from slowly garnering the majority of sovereign wealth and sequestering it among the 'top 10%' (family, friends etc that is such a common denominator in many countries throughout time) is another thing all together. As pointed out, some aspects of human nature tend to be ever present. Sad but true !

  • JH

    Joel H.

    20 5 2018 01:20

    10       0

    Content is great, thank you. Audio mix on most of these videos really needs to be fixed.

  • ML

    M L.

    19 5 2018 21:01

    3       0

    Great interview.

    On the point about corruption, ill-gotten gains and clampdowns (e.g. the UK's unexplained wealth order): the UK, with its offshore territories and former colonies combined, has the single highest share of the global tax haven market - about 25%. Add the US to the equation, and the figure jumps to 40%. This is the single, largest issue that needs to be tackled when dealing with ill-gotten gains from EM nations. As long as places exist for wealth to be hidden 'legally', then capital will continue to be siphoned off from corrupt EM nations and denying the opportunity for their people to transition into more advanced economies because they are burdened by mounting debt. So, on that basis, I take any 'high-horse' professions of anti-corruption clampdowns and lectures of the same as complete hypocrisy and add a healthy dose of salt. The US assault on Swiss banking secrecy just shifted capital towards the UK offshore trust system and also to US tax havens.

  • KS

    Kathleen S.

    19 5 2018 18:08

    7       3

    Perfect example of how debt is used as a weapon to steal resources and implement neo-liberal global elite agenda. Remember when a debt crisis happens infrastructure is sold off for pennies on the dollar and the people pay the price-- do you all really think that will not happen here in the US??? Sovereign debt buyers are nothing but vultures -- if you really were interested in fixing a system when countries default on debt, bond holders (the creditors) pay the price, not the debtors. The whole reason bond holders are paid higher interest rates on some of the debt is because there is a higher chance of default (this was the case in Argentina)-- right? Well, if countries are not allowed to default on debt (they are all forced into restructuring) then these are really all guaranteed loans, thus they should not be paying high interest rates. This was Cristina Fernández de Kirchner point to the bond holders on Argentina. And I could really care less what the World Bank or IMF or any of these other global organizations have to say about debt, they all collude together to advance their agendas. You want to stop debt crises --- STOP BAILING OUT CREDITORS, make them pay the price for making these predatory loans, there will be pain - but system will be flushed out and lessons will be learned.

  • KC

    Kenneth C.

    19 5 2018 16:11

    3       0

    Watching this at my office on my computer this fine Saturday morning. The sound comments below most likely come from attempting to watch this on a cell phone (mine a Samsung S8 Plus). It is almost impossible to hear Mr. Humes speak. Here in the office on the computer it is not nearly as bad.

  • KJ

    Kulbir J.

    19 5 2018 08:26

    1       0

    I wonder which country will be next to default.

  • IM

    Istvan M.

    19 5 2018 07:48

    0       0

    brilliant

  • TH

    Timo H.

    19 5 2018 04:47

    1       0

    Maybe it is just me, but I see similar development happening in the western countries, that has taken e.g. Venezuela into a chaos. Too much money sloshing around is ending up in wrong hands. Scary.

  • OC

    OTTO C.

    19 5 2018 03:28

    15       0

    I'm surprised by their comments about "holding people accountable" as if it's an issue that doesn't happen in the US. Did we hold anyone accountable for the credit crisis in the US? It's clear that the banks caused the crisis and yet they got rewarded, not held accountable.

  • GF

    Gordon F.

    19 5 2018 03:27

    18       0

    As someone who currently lives in Ecuador, and has for nearly 8 years, I was pleasantly surprised to hear that his opinion of Correa (the previous president) was very similar to mine. That is, he started out well, and did a lot of good, but then allowed himself to be surrounded by the foxes, and ultimately joined them.
    His successor, Lenin Moreno, has also started out very well, in part by holding a referendum that reversed seven prominent acts of Correa that favored Correa's buddies, and negated a provision that would have allowed Correa to run again for president, now with unlimited terms. He also encouraged a bribery case against his vice president, Jorge Glas, such that Glas is now in prison, which absolutely infuriated Correa.
    I realize that my comments may not be of great interest to most RV patrons, but it is one of those rare situations where I have a personal vantage point into a small part of what was discussed, and for that part, Humes and Newman were right on the money, as far as I can tell. This adds even more credibility and authority to the rest of their discussion, IMHO.

  • OC

    OTTO C.

    19 5 2018 03:12

    0       0

    Great insight into sovereign debt !!!

  • MS

    Mark S.

    19 5 2018 02:32

    6       4

    Unfortunately many of the descriptions of corruption, self dealing and money laundering are now echoing through the current administration in the US.

  • KL

    Kathlyn L.

    19 5 2018 00:23

    13       9

    Damn it! Stop having the cinematographers record the sound! Spend the damn money and hire a location sound mixer. The sound is unacceptable

  • DS

    David S.

    18 5 2018 22:31

    3       0

    Mr. Newman said that governments realize they have borrowed too much to repay. It is just as true that the lenders have loaned too much to be repaid - and probably at a much lower interest rate and debt position than they should have. Lenders are the driving factor! The interest rate required, and the covenants demanded can put a check on the sovereign from excess borrowing. When this does not happen, it is easy for non-lenders to start with the idea of a haircut right out of the box. DLS

  • DS

    David S.

    18 5 2018 21:51

    5       0

    Excellent dialog. I do not have any higher risk sovereign debt. After watching this interview, there will be none in my future. I give Mr. Humes great credit for working so hard to figure out how to get a settlement from such diverse interest. I do not trust the rating agencies after the 2008 mortgage fiasco. I do not trust many sovereigns, including state and local governments in many parts of the USA. The citizens are the ones that have to pay for the sins of their current and past governments. This is going to be much worse when the next recession hits. DLS

  • JM

    Johann M.

    18 5 2018 21:42

    2       0

    Deeply insightful think piece, RVTV at its best!!

  • RP

    Raoul P.

    18 5 2018 19:41

    15       2

    This is a privilege to listen into this conversation...it lifts the curtain on the opaque world of sovereign debt restructuring. Wonderful stuff and eye opening.

  • TJ

    Terry J.

    18 5 2018 18:10

    5       0

    This is another example of RVTV at its best. Where else could I eavesdrop on such an extraordinary exchange of views, and a discussion on dsitressed sovereign debt from two seasoned professionals. So insighful!

  • WP

    William P.

    18 5 2018 16:37

    4       0

    Would appreciate a deeper dive into sovereign debt. Many interesting issues. Any chance John Perkins would be willing to participate in an RVTV segment?

  • WH

    W H.

    18 5 2018 15:55

    4       0

    Fantastic segment.

  • RM

    Richard M.

    18 5 2018 15:24

    4       0

    Truly fascinating discussion - really great stuff. This is quality TV!

  • Nv

    Nick v.

    18 5 2018 12:58

    14       0

    Excellent. Nothing better than listening to people with deep expertise

  • KS

    Karen S.

    18 5 2018 10:41

    4       0

    Great interview.