Principles for Navigating Big Debt Crises

The Marias submission for this weekend is a 55 minute audio interview with Ray Dalio of Bridgewater Associates as interviewed by Barry Ritholtz discussing the entire U.S. history of debt crises and, more importantly, his new book published November 1st outlining his strategy for how to not just recognize the next debt crisis but to protect yourself from it.  The big bonus is that this book that is available for $30 on Amazon can be had here as a free download.  And if you don't have time to listen to this recording or read this book, you can go to the Amazon listing and for $7 purchase a published summary of this book.  Anyway you do it, the information sounds valuable.  Enjoy your weekend.



Sat 11-10-18 BigPic: MIB: Ray Dalio, Bridgewater Associates - The Big Picture

MIB: Ray Dalio, Bridgewater Associates

November 10, 2018 9:00am by Barry Ritholtz

This week, we speak with Ray Dalio, founder, Co-Chair and Co-CIO of Bridgwater Associates, author of Principles: Life and Work. His new book, Principles for Navigating Big Debt Crises was just published (free PDF here). Dalio’s prior MIB appearance is here.

Dalio describes how 48 of the greatest financial crises look so very similar from a structural perspective. He describes a 6 step process that every single one of theses financial disasters runs through:

1. Early cycle
2. Bubble / Top
3. Depression
4. Beautiful deleveraging
5. Pushing on a string
6. Normalization

from the build up to the bubble peak to the collapse to the subsequent government rescue. These steps are readily predictable: “the same basic structure repeats over and over again.”

He created a template for future crises, giving policy makers and investors a roadmap for the next time this happens. And as history has shown us, this sort of crisis will inevitably occur again. Dalio also shows the parallels between today and 1937 — from an economic, societal and political perspectives.

Dalio has observed that “Capitalism is not working for the majority of Americans” — the bottom 60% is worse off than they were a few decades ago, with no real wage gains, rising death rate, loss of middle class, and disenfranchisement across the board. Big progress on this division can be made, but it requires measuring the problem and tracking how well repairs are going. We currently do very little of that. What is needed, says Dalio, is a significant effort from both government and the private sector – a public/private partnership.

His favorite books are here; transcript of our conversation will be posted here.

You can stream/download the full conversation, including the podcast extras on iTunes, Bloomberg, Overcast, and Stitcher. Our earlier podcasts can all be found at iTunes, Stitcher, Overcast, and Bloomberg.

Next week, we speak with Scott Adams, creator of Dilbert, and author of How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life, and most recently of Win Bigly: Persuasion in a World Where Facts Don’t Matter.

Ray Dalio’s books

Big Debt Crises by Ray Dalio