An in Depth Look at Deleveragings – Ray Dalio – Bridgewater

No Growth, Easy Money - The New Normal?: Ray Dalio

No Growth, Easy Money – The New Normal?: Ray Dalio (Photo credit: World Economic Forum)

This is an excellent article looking at good, bad and ugly deleveraging experiences over the last century. It is written by Ray Dalio, billionaire,  head of the World’s largest hedge fund operator, Bridewater Associates. I STRONGLY RECOMMEND this article for a deeper understanding of the deleveraging debate underpinning the argument of the austerian politicians in the  US, the UK and Germany.

Open this link to read the article which is in PDF format.

The article is quite long but easy to read with lots of interesting colored charts.

Based on historic precedent, I think that there is hard evidence that austerity has been too severe in many countries since the financial collapse in 2008, especially in the UK and Southern Europe.

Good national economic house-keeping as advocated by Germany makes excellent sense but as this article explains there are different rates of pain associated with different deleveraging strategies; also and most critically because of the Euro and the European Commission, Southern European countries do not have a full range of economic policy tools, both in terms of fiscal and monetary policy.

Any thoughts?

 

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Euro stumbles but stocks stable in thin trading – FT.com

Hedge funds and tax haven from 2000 to 2007

Hedge funds and tax haven from 2000 to 2007 (Photo credit: Wikipedia)

This is an interesting global financial market update from the FT. Check it out!

Euro stumbles but stocks stable in thin trading – FT.com.

The “bulls” seem to still be in the sunshine, with further upside potential if policy-makers and central banks provide stimulus. On the other hand, there are still many downside risks, and bad news is always on the horizon. No doubt the hedge funds are still active too, betting on potential major news events.

Where do you see the markets closing for 2012?