Ray Dalio: Losing ‘Reserve Status’ Would Lead To 30% Drop In The Dollar

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During a live interview with Barry Ritholtz for his “Masters In Business” podcast on Monday, Bridgewater Associates CEO – who has been on a seemingly never-ending media tour to promote his new free e-book “A Template For Understanding Big Debt Crises” – once again expounded upon his “1937” markets thesis: That is, his theory that the US economy increasingly resembles the late-cycle dynamic from the 1930s where equity prices topped out as the Federal Reserve tightened monetary policy. Like the 1930s, the global economy is awash and debt, and populist politicians gaining power and influence in the West.

But more interesting than Dalio’s retread of his calls for a recession to begin some time during the next two years, he also repeated a claim he first made back in September, which has been getting more attention since BlackRock CEO Larry Fink said something similar earlier this month: That the US dollar’s days as the dominant global reserve currency are numbered. Continue reading

China Rattles Markets With Yuan Devaluation

In other words: China has officially entered the currency wars.

 

China devalued the yuan by the most in two decades, a move that rippled through global markets as policy makers stepped up efforts to support exporters and boost the role of market pricing in Asia’s largest economy.

The central bank cut its daily reference rate by 1.9 percent, triggering the yuan’s biggest one-day drop since China unified official and market exchange rates in January 1994. The People’s Bank of China called the change a one-time adjustment and said it will strengthen the market’s ability to determine the daily fixing.

Chinese authorities had been propping up the yuan to deter capital outflows, protect foreign-currency borrowers and make a case for official reserve status at the International Monetary Fund. Tuesday’s announcement suggests policy makers are now placing a greater emphasis on efforts to combat the deepest economic slowdown since 1990 and reduce the government’s grip on the financial system. Continue reading

Hedge Fund Hackers Expose Another Vulnerability

Six years ago, during that fateful summer of 2008 when everything began to unravel, we first raised issues of financial terrorism as a risk to the stock markets, our economy, and indeed our way of life. In hindsight, it should be obvious that an attack on our markets does indeed have the potential to attack the very heart of America. Our initial research, later confirmed in a formal Pentagon report, served as the basis for the 2012 bestseller, Secret Weapon; How Economic Terrorism Brought Down the U.S. Stock Market and Why It Could Happen Again.  Overall, we documented a variety of vulnerabilities that could be exploited through hidden market activity, cyber-manipulations, and other subversive efforts. As with any new concept, there was a considerable amount of skepticism. Since then, however, virtually every concept we described has been documented or validated. Continue reading

Despite Promises, Obama Planning to Close ICBM Squadron

The Obama administration has drafted a plan to shutter an intercontinental ballistic missile (ICBM) squadron three years after it assured hesitant lawmakers that the New START U.S.-Russia arms reduction treaty would not lead to deep cuts in the ICBM force.

A new timeline prepared by the Office of the Secretary of Defense (OSD) and obtained by the Washington Free Beacon maps out a strategy to eliminate an ICBM squadron—and destroy its missile silos—by Dec. 5, 2017. An environmental assessment would begin next month. Continue reading