Oct

25

I call your attention to this article:

Risk on the rise as political leaders give in to mob rule

By Ray Dalio, President, Bridgewater Asssociates Inc.

http://www.ft.com/intl/cms/s/0/ed4439d4-fbeb-11e0-9283-00144feab49a.html

[link requires registration]

Highlights:

We are in the midst of a deleveraging, we are nearly out of [fiscal and monetary] ammunition and we are at each other’s throats. … being at each other’s throats is our biggest problem.

[In such situations ] frustrations increase, the established ways of doing things come under attack and frustrations over the ineffectiveness of government creates the perceived need for someone to gain control of the mess. Plato spoke of this dynamic. It was the reason Hitler was elected in 1933.

Matthew adds:

Mr. Dalio recently appeared on Charlie Rose . [37 minutes].

Tim Melvin writes:

This much publicity is inevitably followed by "bad things".

Philip J. McDonnell comments:

I agree with Tim. The tone of Mr. Dalio's screed is strongly doom and gloom.

I am guessing he is bullish though because he urges cooperative action.

 
 
 

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6 Comments so far

  1. Matthew on October 25, 2011 5:01 pm

    Mr. Dalio recently appeared on Charlie Rose,

    http://www.charlierose.com/view/interview/11957

  2. Andre Wallin on October 25, 2011 6:29 pm

    can someone explain why Alan Greenspan receives so much criticism?

    “The effect of the divergent cultures in the eurozone has been grossly underestimated,” he added. “The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work.”

    he is spot on

  3. jeff watson on October 25, 2011 7:33 pm

    @Andre, Switzerland might be a small country, but the Swiss people speak 4 languages, have a very diverse population, and happen to have an extremely stable currency. I would suspect that their robust currency is partly a result of a solid rule of law, a common distrust of a strong central government, and the citizens shared sense of orderliness and thrift….all of which trumps their cultural differences.

  4. michael bonderer on October 25, 2011 9:33 pm

    why is he doing charlie rose and this FT piece? earlier there was a dust-up about some people characterizing bridgewater as a cult. actually, i thought his answer to rose was very good and should dispel that crazy notion. no, as i was discussing with one of my investors this afternoon this very question, he rarely speaks out. why? it’s clear he’s the biggest and best hedge fund. non pareil. my guess is he’s short s&ps and will press the trade among other trades with impunity and he doesn’t want the flack when it’s revealed in the press that he’s made a shit-load of dough for himself and his investors. he can point to these warnings and suggest it was so obvious that the ‘machine’ was breaking down and that sensible people could have avoided this by rationally and logically talking through the problem jhust as he and his bridgewater partners had done. it was clear.

  5. Ed on October 26, 2011 7:46 am

    Cheap money and government funding/backed loans has over the past 40 years driven up the cost of most all middle class quality of life necessities. (home, education, medical)

    At the same time, worker wages have been stagnant largely do to wage arbitrage and skill jobs are being made obsolete by technology. This would all be FINE if the government was not juicing the pot for the medical field and education (in the name of “helping” people, ha ha)

    The price of education, medical care, Should be going DOWN just like it does with things like personal technology.

    Bottom line people have valid concerns. I suppose Dalio like most would prefer to simply jam more money into middle class hands (somehow?) so they can service their huge debt loads. and get consumption going again. Yet others look at this and believe the system is broken. An economy that requires a large portion of the population to consume via debt binge is fundamentally unsound. Real reform, while unlikely and painful in the short run, is what is required.

  6. Andre Wallin on October 26, 2011 8:21 am

    @Jeff, Switzerland is much different than Greece, Spain, Portugal, or Italy. I believe people move to Switzerland because they seek out people with the traits you described. They are all willing to part with certain aspects of the culture they leave behind. People in Greece, Spain, etc. hang on to bad habits of the ego and machismo. They will only change if they are forced to.

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