Wednesday, June 27, 2012

Ray Dalio: "Be Careful When Betting Against Human Nature"

"[W]e 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."
Isn't the European crisis just a demographic problem - the endgame when social safety nets meet an aging population caused by low birthrates? Is it a coincidence that the lowest IQ, lowest birthrate European countries are the first to go down the tubes?

3 comments:

C. Fischer said...

Isn't the European crisis just a demographic problem - the endgame when social safety nets meet an aging population caused by low birthrates?

That is 100% what this is.

Is it a coincidence that the lowest IQ, lowest birthrate European countries are the first to go down the tubes?

Absolutely not a coincidence.

CP said...

Isn't it weird that no one talks about this? But I guess if you talked about the cause of this problem you would realize it isn't going away.

C. Fischer said...

It's a tough problem that no politician wants to touch. The fact that it is hitting Europe first should surprise no one that's paying attention - those countries are the most difficult to work with and have the largest social safety nets.

We outsource some our lower level software development work to an Indian company. If we find a bug, the literally wake people up in the middle of the night to fix it. We also work with a software development company in Germany. We can barely get someone on the phone in July or August, and they never adjust staffing levels to add more help because they say "they'll have to keep the employee for life". Is it an wonder no one wants to do business with them anymore?

So with the EU, a big part of the problem is that there is no fix. I don't see how this can possibly end well over there.