Ray Dalio Worries About Europe Once Again | Exploring Markets

Ray Dalio Worries About Europe Once Again

There is a report circulating that Dalio and his Bridgewater Associates are again concerned about the economics and finances of Europe. In fact, he calls it a perfect storm. He starts off his memo:
We are paid to worry. By keeping our eyes out for possible “perfect storms” brewing on the horizon and identifying cheap ways of protecting ourselves when others are not paying attention to them we have been able to reduce portfolio risks and raise returns. Of course, like all perfect storms far on the horizon, it is difficult to know for sure that a confluence of events will occur. However, by finding them early and by watching them closely we can usually better assess their probability of materializing than the market does, which allows us to bet on protection when it is relatively cheap.


The entire report is provided by ValueWalk here

What is interesting here, however, is what Ray Dalio has said about Europe in the past. Let's look at a select few of his comments and how they've evolved over the last 12 or so months.
January 24, 2013: "Dalio says there will be a long period of adjustment, and the key question is whether Europe will raise productivity. The fundamental thing Europe needs to do most is make sure the nominal interest rate is below the nominal growth rate, or else the debt will compound faster than the economy grows." - Business Insider
June 26, 2012: "For this reason, we think the popular assumption that the Germans and the ECB (which requires agreement of the key factions within it) will come through with the money to make all these debts good should not be taken for granted. Said differently, we think there are good reasons to doubt that European bank and sovereign deleveragings will be prevented from progressing to the next stage in a disorderly way, without a Plan B in place. This "fat tail" event must be considered a significant possibility." - ZeroHedge 
September 21, 2012: "Bridgewater's founder says there's going to be a "managed depression" in southern Europe in the next few years, and thinks we'll see both a combination of monetary policy (money printing) and a deleveraging and restructuring of debt over there. He says the euro is "likely" to stay together and it is controlled by southern Europeans, though there's more risk for the currency in later years." - Market Folly