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Business Standard
5 hours ago
- Business
- Business Standard
Best of BS Opinion: Fragile power and rising risk in geopolitics and policy
A loaded gun in a trembling hand, that's what anxiety looks like, sometimes. Like a loud bang waiting to go off in a quiet room. The instability and ready to harm triggers capture the volatility of our current moment. Power, when unanchored by accountability or foresight, ceases to be a stabilising force and becomes a threat in itself. Across geopolitics, technology, tax reform, and economic theory, decisions are increasingly driven by impulse rather than strategy, amplifying the risks of miscalculation and unintended consequences. Let's dive in. Nowhere was this more evident than in the United States' sudden bombing of Iranian nuclear sites over the weekend. Using stealth bombers and bunker-busting weapons, the Trump administration bypassed international consensus and strategic restraint. As our first editorial warns, such unilateral action may not delay Iran's nuclear ambitions but accelerate them, pushing more nations to believe that only weapons guarantee security. In the tech world, a different kind of arms race is underway. The scramble for AI talent has become frenzied, with top companies offering astronomical salaries to a scarce pool of researchers. Despite soaring innovation, the entire sector rests on a fragile foundation of overstrained human capital, as our second editorial outlines. The very systems designed to bring control and predictability are themselves dependent on an unstable and overstretched workforce. That fragility extends to India's development ambitions as well. Nitin Desai shows how the country's long-term economic goals risk being derailed by chronic underinvestment in R&D. Without structural change and targeted support, India's journey to becoming a high-income nation could stall, its potential energy left dangerously untapped. V S Krishnan argues that GST, though stabilised after eight years, still lacks the coherence needed for inclusive growth. His proposed reforms aim to simplify the tax system and align it with employment and equity goals, but like all fiscal overhauls, the challenge lies in execution, steady hands in a charged environment. Finally, Sanjeev Ahluwalia's review of Ray Dalio's How Countries Go Broke reminds us that macroeconomic collapse rarely arrives all at once. It builds gradually, through political missteps, ignored debt cycles, and overconfidence, a trembling hand gripping levers of power for too long. Stay tuned!
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Business Standard
11 hours ago
- Business
- Business Standard
Dalio's debt playbook: What Japan got wrong, and India may be getting right
In 'How Countries Go Broke', the billionaire investor offers a sweeping view of macro cycles and fiscal choices - arguing for 'beautiful deleveraging' as the best path through rising global risk Listen to This Article How countries go broke Published by Simon & Schuster 400 pages ₹1,499 Ray Dalio is a successful hedge fund founder with a net worth of about $14 billion as his calling card. A YouTuber, his opinions on investments, politics and why things happen are freely available. In a recent episode, an NBC anchor asks whether Donald Trump's tariff war can mitigate MAGA dissatisfaction about jobs and stagnating incomes. His answer is ambivalent — agreeing with the diagnosis of the problem that the demise of manufacturing has enhanced strategic risk and lowered family income, but not with the solution proposed. Rather
Mint
03-06-2025
- Business
- Mint
Wall Street is sounding the alarm on US debt. This time, it's worth listening.
'Is the U.S. Going Broke?" Featuring an illustrated Uncle Sam with pockets turned inside out, that was the cover story of America's most influential news magazine…in March 1972. Sounding the alarm about a debt crisis has been great for companies shilling gold coins and fishy financial products but has made smart, sincere people look silly when nothing happened—financial markets' equivalent of Y2K. So why are several suddenly worried? Because the math is getting daunting with interest on the debt blowing past $1 trillion annually and Washington acting recklessly. Even people who have issued past warnings deserve a second (or third, or fourth) hearing. Hedge-fund manager Ray Dalio does have something to sell—his book, 'How Countries Go Broke," out Tuesday. But the world's 172nd-richest person is hardly staking his reputation on royalties, and his arguments are compelling. Dalio told Bloomberg he gives America 'three years, give or take a year" to avert an economic 'heart attack." Peter Orszag, chief executive of investment bank Lazard and a former budget director, wrote last week that 'those who bemoaned the unsustainability of deficit spending and debt levels" back during his time in government 'seemed to cry wolf—a lot." Now he's worried, too, because the wolf is 'lurking much closer to our door." The package of tax-and-spending measures sent to the Senate, now officially called the One Big Beautiful Bill Act, could act like budgetary wolf bait. It would add around $3 trillion to debt levels over the next decade compared with existing estimates and $5 trillion if certain temporary features were made permanent, according to the nonpartisan Committee for a Responsible Federal Budget. For perspective, federal interest this fiscal year already will be more than the defense budget and more than Medicaid, disability insurance and food stamps combined. Moreover, the Congressional Budget Office's estimates assume that the bond market will not only tolerate a surge in spending but become more relaxed about it with lower yields. Consider if the yield on the 10-year Treasury note stayed at today's level of around 4.4% for the coming decade. Then the CRFB estimates it would add another $1.8 trillion in interest costs over that period. And what if yields surge instead in a vicious cycle? JPMorgan chief Jamie Dimon warned on Friday of the consequences: 'You are going to see a crack in the bond market, OK?" Yet the bond market isn't exactly collapsing, even if 30-year yields recently hit a postcrisis high. So who are you going to believe, millions of fairly relaxed investors or some wealthy pundits? Another hedge-fund manager, Paul Tudor Jones, calls the paradox an economic 'kayfabe," a term from professional wrestling. Those who know that the numbers aren't sustainable are happy to suspend disbelief while the show continues. Treasury Secretary Scott Bessent reiterated this past weekend that the U.S. will never default on its debt. But it doesn't have to: Rapid inflation would accomplish the same thing if the Fed had to ride to the rescue through a measure called fiscal dominance. What is the tipping point for the bond market to go from mild anxiety to the sort of concern that feeds on itself? Former International Monetary Fund chief economist Kenneth Rogoff, an authority on debt crises, explained in April that they 'are never a matter of simple arithmetic." 'Almost every country default—either through outright default or high inflation—occurs long before debt calculus forces it to," he said. Despite Dalio's guesstimate, knowing when doomsayers will be proven right is impossible. Consider Stein's Law: 'If something cannot go on forever, it will stop." (Contrary to urban legend, that line wasn't uttered by Ben Stein, who played the boring economics teacher in 'Ferris Bueller's Day Off," but by his father, Herb, an actual economist.) Life comes at you fast. Write to Spencer Jakab at
Bloomberg
03-03-2025
- Business
- Bloomberg
Ray Dalio on the Coming Crisis in US Debt
Listen to Odd Lots on Apple Podcasts Listen to Odd Lots on Spotify Subscribe to the newsletter Almost whichever way you measure it, the US has a lot of debt. And, with the Trump administration recently proposing a budget that would see US debt levels swell even further, it doesn't look like this issue is going away any time soon. In this episode, we speak with Ray Dalio, the billionaire founder of the hedge fund Bridgewater Associates and the author of the new book, How Countries Go Broke. We talk about how he thinks about debt cycles, the catalyst for when high levels of debt become an immediate problem, what a debt crisis actually looks like, and what the US needs to do to avoid a "heart attack" debt crisis within the next three years. We also speak about what investors should do in these scenarios, including Ray's thoughts on things like Bitcoin and gold. And, of course, we also speak about his role in helping create the Chicken McNugget.
Emirates 24/7
13-02-2025
- Business
- Emirates 24/7
WGS: Ray Dalio calls for immediate action to tackle debt to avoid destabilising consequences
Ray Dalio, renowned macro investor and founder of Bridgewater Associates, the world's largest hedge fund, outlined the five fundamental forces shaping the world today and issued a stark warning about the mounting global debt crisis during a thought-provoking conversation with Tucker Carlson on the final day of the World Governments Summit 2025. Dalio described the debt crisis as a challenge that is both imminent and potentially destabilising, warning that the unprecedented scale of global debt poses a severe threat to economic stability. He framed the dynamics of global transformation through five key forces that operate in cycles, shaping economies and societies worldwide: monetary policy and debt markets, internal order and disorder, geopolitical power shifts, natural forces – including climate change, pandemics, and natural disasters – and technological advancements. Comparing the debt cycle to the human circulatory system, he explained that excessive credit functions like plaque, restricting the healthy flow of capital. 'The United States alone is paying US$1 trillion in debt interest annually,' Dalio cautioned, emphasising the strain this places on financial markets. If debt issuance continues to exceed demand, bondholders may become reluctant to absorb the excess supply. This could drive interest rates higher, spark economic distress, and force central banks to print money to cover shortfalls—devaluing currencies and destabilising markets. While the US is a prime example, Dalio stressed that this issue extends beyond America, affecting major economies worldwide, including China and Europe. To avoid severe economic repercussions, Dalio argued that the US deficit, currently at 7.5% of GDP, must be reduced to 3%. Achieving this requires a delicate balance of tax adjustments, spending cuts, and interest rate management. He urged policymakers to set aside ideological differences and prioritise pragmatic fiscal reforms. While difficult, he noted that similar measures were successfully implemented between 1992 and 1998 – proving that such an adjustment is possible if approached strategically. However, time is running out. 'Waiting too long is like ignoring plaque buildup until a heart attack occurs,' he warned. Beyond economic policy, Dalio highlighted the profound impact of AI and technology, predicting that in just four years, technological advancements will reshape economies and societies at an unprecedented pace – akin to stepping into a time wormhole. While technological advancements will drive efficiency and productivity, he predicts a 'shockingly' different world. Dalio concluded with a call for urgent, coordinated action among policymakers, business leaders, and citizens to stabilise global debt, manage inflation, and harness technology responsibly. His latest work, 'How Countries Go Broke,' provides an in-depth analysis of economic cycles and policy solutions. It is available as a free resource for those seeking to understand the mechanics behind financial stability. This year's summit convened over 30 heads of state and government, more than 80 international and regional organisations and 140 government delegations. Its agenda featured 21 global forums exploring major future trends and transformations, over 200 interactive sessions with more than 300 prominent speakers—including presidents, ministers, experts, thought leaders, and decision-makers—and over 30 ministerial meetings and roundtables attended by more than 400 ministers. The summit also published 30 strategic reports in partnership with its international knowledge partners. Follow Emirates 24|7 on Google News.
