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Ray Dalio ‘Wishes’ You Understood China Like He Does, But Barring That, He’s Willing To Patiently Educate You

"They don’t understand."

Aspiring philosopher, bestselling author, keeper of “principles”, and man who definitely isn’t the leader of a secretive forest cult, Ray Dalio, was out last month raising his subjective probabilities for “all types of wars”.

Obviously, that sounds horrible but like any good investor, he hedged it. Here’s the “summary” of his rambling war missive:

Nowadays, we can’t avoid considering geopolitical developments because they are playing a greater than normal role in affecting economies and markets.  Recent geopolitical developments have led me to raise my probabilities of trade and other types of wars, such as capital wars, cyber wars (and possibly even shooting wars). To be clear, I’m not saying they’re probable, and I’m not sure that my assessment is right.  I’m just saying that it seems to me that the odds have increased relative to where they were, and I am just sharing the thinking that leads me to that conclusion.

That is all kinds of funny for all kinds of reasons, not the least of which is that he felt the need to clarify his statement about “odds” by noting that when he says the “odds have increased”, he means “relative to where they were,” which is “odd”, because what else would they increase “relative” to? Maybe relative to where they weren’t?

Anyway, Ray apparently went to Beijing this week and he came away “inspired”. And as Ray is wont to do, he took to LinkedIn to blog about it and it would appear that he’s rolling back his probabilities for wars in light of said inspiration.

Read below as Ray laments your ignorance about China’s leaders and do note how he manages to tacitly plug his book by stealthily name dropping it and how, in the third paragraph, he accidentally pulls a Trump (“nuclear holocaust would be like no other“) in the course of trying to communicate the extent to which China understands that little bitty wars can lead to other wars and before you know it, you’ve got a “horrendous war” that would be like nothing anyone has ever seen. Enjoy…

Via LinkedIn

Yesterday I was in Beijing and once again I was inspired. I have been a part of the evolution there for over 30 years and have continuously been inspired by the system that has evolved so well to produce remarkable people who produce remarkable results.

People who have repeatedly and wrongly expected the collapse of the Chinese economy while it has progressively become more revitalized have accused me of not being objective in assessing China’s prospects and leaders. They don’t understand. I wish you could know the policy makers and issues the way I know them to form your own views because there are so many misunderstandings due to lack of contact.

Of course these leaders have challenges and have to make difficult choices. However, to the extent you trust my honesty and my judgement, please believe that these policy makers are highly principled, wise, and have great historical perspectives and competence — and, for these reasons, they are committed to having no war of any sort because they understand that one bit of war can easily lead to another and these bits of conflict can easily grow beyond anyone’s control and lead to a horrendous war that is beyond one’s imagination.

Of course there is competition and there are differences in values and approaches, and of course there will be tensions and the Chinese cannot be pushed past a breaking point. But, most fundamentally, there is broad awareness of the perils of Thucydides’s Trap (described here) and a commitment to evolving well without war.


3 comments on “Ray Dalio ‘Wishes’ You Understood China Like He Does, But Barring That, He’s Willing To Patiently Educate You

  1. Mr Dalio may know a thing or two, but understanding China is most assuredly not one of them.

    Apart from being clueless about the culture, he was also 100% wrong when he proclaimed two years ago that China was headed for a three year long recession. In fact, the following two years proved to be China’s best this decade. Tough to go on record publicly, but that’s the business he chose. Best he refrain from making anymore laughable remarks about Asia, especially about him understanding China, lol.

    • @Bunny, China avoided recession because they enacted a crazy amount of easing. Without that, Dalio probably would have been correct. And while it’s easy to point out where people are wrong, lets be honest, predicting when central banks and governments go on massive easing binges is not the easiest thing in the world.

      • So you’re saying Dalio was wrong with an explanation? Who cares about explanations, as a paid money manager, if you’re wrong, you’re wrong, and clients suffer. Besides, anyone with a clue knew Chinese policymakers would do everything possible to engineer an economic pickup in time for the upcoming party congress and Xi’s leadership review a year later. So almost zero chance of a recession heading toward that. The slowdown in China was actually in 2014-15, already history in 2016. The PBOC slashed its interest rate from 6% to 4.35% during 2014-15 and never again cut rates since 2015.

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