Ray Dalio – the zen master himself – is of course on hand at the World Economic Forum in Davos and Wednesday finds the Bridgewater boss discussing the fall of globalization and the rise of populism in a panel discussion with Christine Lagarde and Larry Summers.
Now admittedly, there’s something quite amusing about the spectacle that Davos has become (Heisenberg aside: I still contend that the most amusing part about the entire summit is that CNBC inexplicably forces all of their reporters to work outside in the freezing cold as if the only way to prove they’re actually on site is to put them outdoors so you can see their breath against the frigid, snow-covered backdrop) but I’m sick to death of hearing the blogosphere whine about how the event is emblematic of everything that’s wrong with the world. Yeah, the world’s richest people got together, ate expensive food and talked about how to perpetuate a global system that disproportionately benefits them. So the hell what? It’s as if we don’t know that they do that every single day of the year – Davos is just a bigger version of a Manhattan luncheon that happens to be held at a ski resort in the Swiss Alps instead of Cipriani.
Anyway, here are Dalio’s comments on populism and globalization – two topics that we (that’s me and readers) debate frequently in these pages (see here for the latest):
BRIDGEWATER’S DALIO: POPULISM MOST IMPORTANT ISSUE GLOBALLY
BRIDGEWATER’S DALIO: CENTRAL BANKS DON’T MATTER AS MUCH
DALIO: POPULISM IS BY DEFINITION NATIONALIST
DALIO: POPULISM IS POLAR OPPOSITE OF DAVOS
DALIO: POPULISM IS AN EXPRESSION OF `FED-UP-ISM’
DALIO: WE’LL SEE MORE PROTECTIONISM, REVERSAL OF GLOBALISM
DALIO: WE MAY BE AT END OF GLOBALIZATION
DALIO: `NATIONALIZATION, PROVINCIALIZATION MAY TAKE HOLD’
DALIO: GLOBALIZATION HELPED REDUCE WEALTH GAPS INTERNATIONALLY
DALIO: DEREGULATION HAS CONS BUT ALSO PROS; GETS THINGS GOING
DALIO: CAN MIDDLE BE COHESIVE ENOUGH TO CURB EXTREMISM?
DALIO: TECHNOLOGY, GLOBALIZATION CAUSING INCOME DIFFERENCES
DALIO: POPULISM SCARES ME
DALIO: POPULISM WILL MORE LIKELY THAN NOT BECOME EXTREMISM
Of course he’s right, but that won’t matter because thanks to how divided our society has become, his comments will be written off as yet another example of a billionaire defending his own interests and trying desperately to talk the angry villagers from storming the castle (which in Dalio’s case is actually some kind of weird ass forest compound in Westport) with pitchforks and torches.
Anyway, it’s not populism that should “scare” Dalio, it’s the possibility that stock/bond return correlations flip positive and stay there during some kind of nightmarish VaR shock that sees 10s at 3.5%+.
In short, this is what should “scare” Dalio: