The world is on the cusp of an unprecedented debt crisis – that is the warning of American investment guru Ray Dalio.
Speaking at the World Governments Summit in Dubai in a conversation with Tucker Carlson, Mr Dalio said there is now a big global debt issue.
Mr Dalio, the founder of hedge fund giant Bridgewater Associates, said he had forecast this based on historical trends which revolve around five major cycles.
The first is money debt markets. The others are internal order or civil wars, natural disasters, technology and, finally, great world power conflict such as with the US and China.
“There is a supply and demand situation”, said Mr Dalio. “The way the debt cycle works is think of credit, and credit systems as being like a circulatory system. Credit brings buying power, brings nutrients to all of the system.” Debt however, is like plaque in the system, if it accumulates the system “begins to have a problem”.
“In the US, about a trillion dollars a year now goes to pay interest rates, and over the next year, we're going to have over $9 trillion of debt that we have to pay back or roll forward,” Mr Dalio said during the summit session.
US needs to slash debt
Keeping his lens on the US, Mr Dalio said that the country needs to slash its deficit. He said the United States will run a deficit of about 7.5 per cent of GDP if the Trump tax cuts are continued as planned. This, Mr Dalio said needs to be reduced to 3 per cent.
Tech entrepreneur Elon Musk has been on a mission, backed by US President Donald Trump, to stamp out overspending through the Department of Government Efficiency (Doge). Is this enough to bring the economy and spending back into line?
“You have to take sharp pencils and you also have to think: what are you going to break along the way? Because you don't want to break too many things along the way, but you've got to do it fast.” said Mr Dalio.
But he believes it is possible to bring the deficit down to 3 per cent. “There's taxes, there's spending, cut the spending in various ways, cut it down as far as you can, and that becomes tolerable.”
Video: Ray Dalio speaks to The National
UAE currency: the story behind the money in your pockets
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Women’s T20 World Cup Asia Qualifier
ICC Academy, November 22-28
UAE fixtures
Nov 22, v Malaysia
Nov 23, v Hong Kong
Nov 25, v Bhutan
Nov 26, v Kuwait
Nov 28, v Nepal
ICC T20I rankings
14. Nepal
17. UAE
25. Hong Kong
34. Kuwait
35. Malaysia
44. Bhutan
UAE squad
Chaya Mughal (captain), Natasha Cherriath, Samaira Dharnidharka, Kavisha Egodage, Mahika Gaur, Priyanjali Jain, Suraksha Kotte, Vaishnave Mahesh, Judit Peter, Esha Rohit, Theertha Satish, Chamani Seneviratne, Khushi Sharma, Subha Venkataraman
Other ways to buy used products in the UAE
UAE insurance firm Al Wathba National Insurance Company (AWNIC) last year launched an e-commerce website with a facility enabling users to buy car wrecks.
Bidders and potential buyers register on the online salvage car auction portal to view vehicles, review condition reports, or arrange physical surveys, and then start bidding for motors they plan to restore or harvest for parts.
Physical salvage car auctions are a common method for insurers around the world to move on heavily damaged vehicles, but AWNIC is one of the few UAE insurers to offer such services online.
For cars and less sizeable items such as bicycles and furniture, Dubizzle is arguably the best-known marketplace for pre-loved.
Founded in 2005, in recent years it has been joined by a plethora of Facebook community pages for shifting used goods, including Abu Dhabi Marketplace, Flea Market UAE and Arabian Ranches Souq Market while sites such as The Luxury Closet and Riot deal largely in second-hand fashion.
At the high-end of the pre-used spectrum, resellers such as Timepiece360.ae, WatchBox Middle East and Watches Market Dubai deal in authenticated second-hand luxury timepieces from brands such as Rolex, Hublot and Tag Heuer, with a warranty.
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Monster
Directed by: Anthony Mandler
Starring: Kelvin Harrison Jr., John David Washington
3/5
