Even Bernanke’s money-dropping aircraft are powerless to stop the carnage.
Ray Dalio was just interviewed by John Cassidy of The New Yorker. The article goes to some length to describe Dalio’s business style and his rigorous nature, probably an effort by the magazine to establish his credibility with its readership. Ray Dalio is the founder of the world’s largest hedge fund, Bridgewater Associates. The money quote of the article is at the very end:
- Dalio believes that some heavily indebted countries, including the United States, will eventually opt for printing money as a way to deal with their debts, which will lead to a collapse in their currency and in their bond markets. “There hasn’t been a case in history where they haven’t eventually printed money and devalued their currency,” he said. Other developed countries, particularly those tied to the euro and thus to the European Central Bank, don’t have the option of printing money and are destined to undergo “classic depressions,” Dalio said. The recent deal to avoid an immediate debt default by Greece didn’t alter his pessimistic view. “People concentrate on the particular thing of the moment, and they forget the larger underlying forces,” he said. “That’s what got us into the debt crisis. It’s just today, today.”
Dalio’s assessment sounded alarmingly plausible. But when one plays the global financial markets a thorough economic analysis is only the first stage of the game. At least as important is getting the timing right. I asked Dalio when all this would start to come together. “I think late 2012 or early 2013 is going to be another very difficult period,” he said.
Irresistable force, meet immovable object. We get to find out what happens. Personally, I don’t think it’ll take that long. But I’m not a billionaire.