Risk on the rise as political leaders give in to mob rule – By Ray Dalio
Found via Zero Hedge.
We are in the midst of a deleveraging, we are nearly out of ammunition and we are at each other’s throats. Being in a deleveraging and nearly out of ammunition is a very difficult position to be in. But, being at each other’s throats is our biggest problem.
Our character and our political and social systems are now being tested in ways that have typically been tested in past deleveragings. In deleveragings bad economic conditions typically lead to emotional reactions, social and political fragmentation, poor decision-making and increased conflict. When this occurs in democracies, the checks and balance system, which is intended to yield the best decisions for the whole, can stand in the way of thoughtful leadership and lead to ineffective “mob” rule. This dynamic can lead to a self-reinforcing downward spiral.
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.
In our opinion these types of risks are now emerging and should be taken into consideration when trying to figure out what may lie ahead. Rather than trying to resolve disagreements through thoughtful discourse, people are now trying to grab power to beat and suppress their opponents. Tensions between the rich and the poor, capitalists and socialists, those in and out of power and different factions in each group are now intensifying in a manner that is classic in deleveragings. Politicians who are fighting for power in a political year are fanning the flames and are increasingly willing to do risky things (like shutting down the government) in pursuit of their missions and popular support.
This growing populism will have important implications for monetary, fiscal and trade policies and will significantly increase risks of a markets downturn and a global depression.
………………..
Related previous posts:
Ray Dalio on Charlie Rose
A Template for Understanding What’s Going On - by Ray Dalio
Bridgewater’s Dalio on Europe, Economy, Strategy (video)
Mastering the Machine - By John Cassidy
Ray Dalio: Principles of Bridgewater Associates
- The Soul Of A Hedge Fund 'machine'
Link to: The Soul of a Hedge Fund 'Machine' The Bridgewater founder talks about how his firm measures employees and economies to steer its $160 billion in investments. How do you build the world's largest hedge fund? Bridgewater...
- Dealbook Conference Video: Ray Dalio, Steve Schwarzman And David Rubinstein
...
- Ray Dalio: Southern Europe Is About To Enter A ‘lost Decade’
Found via The Big Picture. The euro zone crisis will likely create a “lost decade” in southern Europe, hedge-fund honcho Ray Dalio said Wednesday. The founder of the hedge-fund giant Bridgewater Associates was speaking Wednesday morning at the Council...
- More Ray Dalio Quotes
More Ray Dalio quotes from Jack Schwager’s book Hedge Fund Market Wizards. I think the last couple of long paragraph quotes below are especially important in regards to the current situation in the U.S. “We don’t use stops. We trade approximately...
- Dalio Returns 25% This Year On Diversified Bets Even As Markets Convulse
Found via The Big Picture. Bridgewater Associates LP founder Ray Dalio can rattle off the investing fads he’s witnessed since he began trading as a 12-year-old golf caddie: the Nifty-50 stock craze of the 1970s, the 1980 gold bubble and even the 60-...