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Old 09-25-2018, 08:22 AM   #1
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Ray Dalio sees dollar crisis about two years away


The interview starts with issues faced by emerging markets and covers a range of issues including the cycles that are leading up to another economic crisis here in the USA.
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Old 09-26-2018, 05:11 AM   #2
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Weve been assured that this would already have happened by so many 'experts' .......

Including many who actually did predict the '08 collapse.

And their observations and arguments have generally seemed reasonable.

Its a bit like knowing P.M's will eventually show us the true value of fiat currencies
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Old 09-26-2018, 07:48 AM   #3
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For the record, if you don't know who Dalio is:

Quote :
Raymond Dalio (born August 8, 1949) is an American billionaire investor, hedge fund manager, and philanthropist.[3] Dalio is the founder of investment firm Bridgewater Associates, one of the world's largest hedge funds.[4] As of January 2018, he is one of the world's 100 wealthiest people, according to Bloomberg.[5]
...
https://en.wikipedia.org/wiki/Ray_Dalio
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Old 10-17-2018, 08:26 AM   #4
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Is another “Great Depression” on the horizon? It would be easier to dismiss these words from Nouriel Roubini, Marc Faber or other doom-and-gloom prognosticators. Coming from Christine Lagarde’s team, though, they take on a new dimension of scary.

The International Monetary Fund head isn’t known for breathlessness on the world stage. And yet the IMF sounded downright alarmist in its latest Global Financial Stability report, stating that “large challenges loom for the global economy to prevent a second Great Depression.”

Even some market bears were taken aback. “Why,” asks Michael Snyder of The Economic Collapse Blog would the IMF use this phrase “in a report that they know the entire world will read?”

Perhaps because, unfortunately, the findings of other referees of global risks – including the Bank for International Settlements – hint at similar dislocations.

Ten years after the Lehman Brothers crisis, these worrisome warnings that will be explored in depth at this week’s annual IMF meeting in Bali. The tranquil setting, though, will offer few respites from cracks appearing in markets everywhere – from Italy to China to Southeast Asia, where currencies are cratering like it’s 1998 again.

Potential flashpoints and a long line of dominos

Italy is the current flashpoint – and the latest target of “domino effect” chatter in frothy world markets. China’s shadow-banking bubble, and the extreme opacity and regulations that enable it, also came in for criticism. And, of course, the 800-pound beast in any room where global investors gather these days: Donald Trump’s assault on world trade.

But the real worry is the health of foundations underpinning these and other risks.

As the BIS warned on Sept. 23, the global economy faces a potential “relapse” of the “Lehman shock” of 2008. “Things look rather fragile,” says BIS chief economist Claudio Borio. Equally worrying, he adds: “There’s little left in the medicine chest to nurse the patient back to health or care for him in case of a relapse.”

A similar connection of dangerous dots runs through the IMF’s latest report. The big problem, says Malhar Nabar, deputy chief of IMF research, is the one that investors tend to ignore or explain away: how much of the Lehman fallout is still with us.

“There are many countries, even today, that are operating below pre-crisis trends,” Nabar says. “And what’s interesting is not just countries that suffered banking crises in 2007-2008 but also other countries outside of that epicenter that were affected through trade links or through financial links.”

Increased inequality is one troubling side-effect. Yet Nabar highlights, “possible long-lasting effects of the crisis on potential growth” that might seem tangential to Wall Street’s crash – lower birth rates, lower fertility and even “some evidence of slower technology adoption.” All this, he says, “can affect productivity growth and potential growth going forward.”

There is no doubt that many of the official policy actions taken since 2008 “seemed to have helped limit the harm.” But the costs of those efforts are only beginning to get calculated.

2008 crisis measures cast long, dark shadow

Excessively loose monetary policies have exacerbated the widening inequality trends unfolding pre-Lehman crackup. At the same time, there’s been, in the words of the IMF, a “large accumulation of public debt and the erosion of fiscal buffers in many economies following the crisis point to the urgency of rebuilding defenses to prepare for the next downturn.”

Yet all the diplomatic speak in the world can’t sugarcoat the roughly $250 trillion crisis unfolding in slow motion. That’s the level to which the world’s debt burden ballooned since the Lehman crash. That’s 18 times China’s annual gross domestic product.

And with official rates from Washington to Tokyo still at ultra-low levels historically, there’s little ammunition to battle the next reckoning.

Italy’s debt woes are an obvious weak link. One reason: just as with US officials after 2008, Europe did more to treat the symptoms of its woes than address underlying causes.

So is China’s unbalanced economy, one being trolled by US President Donald Trump’s tariffs arms race. This year’s 6.4% drop in the yuan is raising eyebrows for good reason. For one thing, it coincides with a marked slowdown in exports, industrial production, fixed-asset investment and an 18% plunge in Shanghai stocks this year. For another, it raised the specter of sizable defaults on dollar debt, which would reverberate through the global economy.

And therein lies Asia’s problem.

Asia’s exposure

In general, the region has journeyed a long way since the darkest days of 1997 and 1998. Financial systems are stronger and governments are more transparent. Currencies are more flexible. Foreign-exchange reserves have been rebuilt. That leaves advanced economies from South Korea to Singapore reasonably well equipped to withstand fresh turmoil.

But there are cracks in the region’s developing markets, as the ferocity of currency plunges in India, Indonesia and the Philippines show. Investors may argue they’ve learned from past misstates, but still fall prey to herd mentalities.

It’s an urgent wakeup call for India’s Narendra Modi, Indonesia’s Joko Widodo and Rodrigo Duterte of the Philippines to narrow current-account and budget deficits. Leaders also need to devise macroprudential firewalls against global contagion.

The problem for Asia: contagion could come as much from the West and its own backyard.

Trump’s fiscal incompetence – including a $1.5 trillion tax cut America didn’t need – could roil global rates and the dollar. A recent spike in 10-year yields to 3.2%, the highest in seven years, could be a bad omen. Trump, too, is publicly dueling with his hand-picked Federal Reserve chairman. And given Trump’s legal woes, the odds of new tariffs or even military action to distract voters can’t be ruled out.

Any new assault on China could devastate Japan’s reflation effort. True, epic Bank of Japan easing and a weaker yen boosted exports. It pushed Nikkei 225 index stocks to 27-year highs. Yet Asia’s No. 2 economy is in harm’s way if the US-China brawl trumps the region’s key growth engine.

Even before most policy makers and financiers arrive in Bali this week, the IMF is signaling that global growth has plateaued. It downgraded output to 3.7% from 3.9%.

That not the end of the world, per se. But with trade battles intensifying and dormant old devils re-emerging, all bets could soon be off.

That is a lot more than depressing: it’s terrifying.
https://news.goldcore.com/us/gold-bl...ression-ahead/
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Old 11-09-2018, 07:56 AM   #5
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This was published back in September - about a week before Ray Dalio's interview on Bloomberg:
Quote :
...
"We have no ability to turn the economy around," said Martin Feldstein, President of the US National Bureau of Economic Research.

"When the next recession comes, it is going to be deeper and last longer than in the past. We don't have any strategy to deal with it," he told The Daily Telegraph.

Professor Feldstein, a former chairman of the White House Council of Economic Advisors, described a bleak scenario more akin to the depressions of the 1870s or the 1930s than anything experienced in the post-War era.

He warned that a decade of super-low interest rates and monetary stimulus by the US Federal Reserve has pushed Wall Street equities to nose-bleed levels that no longer bear any relation to historic fundamentals. Stock prices will inevitably come plummeting back down to earth.

Prof Feldstein said the next bear market - most likely triggered by a spike in 10-year Treasury yields - risks setting off a US$10 trillion (NZ$15 trillion) crash in US household assets. The cascading 'wealth effects' will drain the retail economy of US$300bn to US$400bn a year, causing recessionary forces to mestasasize.

"Fiscal deficits are heading for US$1 trillion dollars and the debt ratio is already twice as high as a decade ago, so there is little room for fiscal expansion," he said, speaking earlier on the sidelines of the Ambrosetti forum on world affairs at Lake Como.

The eurozone faces an even worse fate when the global cycle turns since the European Central Bank has yet to build up safety buffers against a deflationary shock. The half-constructed edifice of monetary union almost guarantees than any response will be too little, too late.

"The Europeans don't have a fiscal back-up. They don't have anything. At least you have your own central bank and treasury in Britain, so you will be happier," he said.

"Mario Draghi is going to be very happy when he has left the ECB because it is not clear how they are going to get out of this when they still have zero rates. They can't play the trick of the cheap euro again," he said.
...
More: https://www.nzherald.co.nz/index.cfm?objectid=12126427&

Feldstein is a Harvard professor and head of the National Bureau of Economic Research.
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Old 11-09-2018, 02:50 PM   #6
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Rickards adds to the chorus:
Quote :
...
With growth now fading after the Trump tax cut boost (there will be no tax cuts in 2019), the debt-to-GDP ratio is now up to 106%, since debt is growing faster than GDP.

As Grant points out, the national debt has registered compound annual growth of 8.8%, but only 6.3% for GDP. That’s not a sustainable situation. And it’s not at all clear that GDP will close the gap.

Basically, the United States is going broke.
...
https://dailyreckoning.com/the-unite...s-going-broke/

He posits that the Fed could set a new floor in the gold price to create inflation (to devalue the dollar). I don't know how likely that would be. I would expect the world would have to be on fire before they would consider anything like that. Then again, we saw some drastic stuff happen after Lehman.
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Old 11-09-2018, 02:55 PM   #7
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Another voice in the choir:
Quote :
... the CEO of the world's largest asset-management firm said Tuesday during a panel discussion at the New Economic Forum in Singapore that the US dollar's status as the world's dominant currency wouldn't last forever.

And instead of citing external factors like China's expanding economic clout and influence, or an insurgent Russia, Fink pointed to the widening US budget deficit as the biggest risk to the dollar's status as the global hegemon. And while it might not happen tomorrow, or next year, over time, as US interest rates rise and the federal government strains under its tremendous debt burden, the creditors who were once eager to buy up Treasury bonds will gradually disappear.
...
The US will have a "supply problem" as the widening deficit requires more borrowing. The threat of "interest rates becoming too high to sustain the economy with its growth rates" is becoming a real concern for the US.
...
https://www.zerohedge.com/news/2018-...y-are-numbered
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Old 11-28-2018, 08:46 AM   #8
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Quote :
...
Here’s a note from Economic Cycle Research Institute’s Lakshman Achuthan:
Quote :
Notably, the combined debt of the US, Eurozone, Japan, and China has increased more than ten times as much as their combined GDP [growth] over the past year.
Yes, you read that right. In the last year, the world’s largest economies are generating debt 10X faster than economic growth. Adding debt at that pace, if it continues, will boost the debt-to-GDP ratio at an alarming rate.

Lakshman continues.
Quote :
Remarkably, then, the global economy—slowing in sync despite soaring debt—finds itself in a situation reminiscent of the Red Queen Effect we referenced 15 years ago, when tax cuts boosted the US budget deficit much more than GDP. As the Red Queen says to Alice in Lewis Carroll's Through the Looking Glass, “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”
...
https://www.forbes.com/sites/johnmau.../#34ac7ad653aa
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