Tue, Feb 9, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Bridgewater’s Ray Dalio bestows global economics master-class

Tuesday, September 18, 2012

Benedicte Gravrand, Opalesque Geneva: When Ray Dalio, founder and co-CIO at Bridgewater Associates, the largest hedge fund firm in the U.S., spoke at the Council on Foreign Relations recently, he reminded the audience he was not born yesterday. The 2008 crisis is just one of many, he says, even if it does not feel that way to those who encounter such an event for the first time in their life. Then he went on to describe "how the economic machine works."

The basis is in the transaction, he explains, a purchase done either with money or with credit, the latter being a liability. He believes demand is better measured in terms of spending rather than the traditional quantity of goods. Credit will count in GDP. Credit is created and this leads to cycles – not through the velocity, but "out of thin air." Buying with earnings and with credit has a positive effect (money spent is money earned) and the cycle becomes self-reinforcing. Debt rises faster than income, but cannot do so forever. Lower interest rates make credit cheaper, so purchasing is easier, and added to cash flow, it produces more wealth.

When you cannot lower interest rates any more, "that part of the cycle ends." This is when deleveraging starts; and when one can no longer rise debt relative to one’s income. This is when the cycle reverses. If debt growth moves from 10% down to 5%, this has a ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Avenue Capital's Marc Lasry: We like European bank loans, Comment: A bunch of hedge fund managers are chasing the 'dream of crushing a major structural problem'[more]

    Avenue Capital's Marc Lasry: We like European bank loans From CNBC.com: European banks are under immense pressure, but at least one prominent hedge fund has found what it thinks is a good opportunity in the wreckage. Marc Lasry, co-founder and chief executive of hedge fund Avenue Capital

  2. Credit Suisse cherry picks hedge fund ideas[more]

    From FT.com: Credit Suisse Asset Management plans to cherry pick profitable concepts from hedge funds with the launch in Europe of a “best ideas” strategy. The investment arm of the Swiss bank said the strategy will separate it from other funds blighted by “overcrowding problems”. It comes at a time

  3. Investing - Hedge funds bet on risks in U.S. blue-chip debt, Hedge funds bets against bank credit risk paying off, Tiger Global still likes Internet names, gets pointers from Jeter[more]

    Hedge funds bet on risks in U.S. blue-chip debt From WSJ.com: Hedge funds are betting the next bond sector to crack will be the $4.5 trillion market for the safest U.S. corporate debt. New York’s Perry Capital has placed a $1 billion wager against investment-grade bonds issued by 10 comp

  4. Short Selling - Hedge fund manager Kyle Bass is shorting real estate—again, Top US hedge fund has €80m short position in Paddy Power Betfair[more]

    Hedge fund manager Kyle Bass is shorting real estate—again From Fortune.com: He also predicted the mortgage crisis in 2008. Hedge fund manager Kyle Bass, who runs Dallas-based Hayman Capital, tanked the stock of a little-known real estate financier Friday by revealing that he is shorting

  5. HFRU Hedge Fund Composite Index down -2.58% in January[more]

    Global financial markets posted sharp losses in January led by declines in Oil and global equities, though steep intra-month losses in both were narrowed by strong gains in final trading days of the month. Global equities posted steep declines for the month led by Biotechnology, Energy, Financial, E