Dalio Warns Recent Geopolitical Events “Raise Probabilities Of Capital-, Cyber-, And Even Shooting-Wars”

Monday, April 9, 2018
By Paul Martin

by Ray Dalio via LinkedIn.com,
Mon, 04/09/2018

Summary: Nowadays, we can’t avoid considering geopolitical developments because they are playing a greater than normal role in affecting economies and markets.

Recent geopolitical developments have led me to raise my probabilities of trade and other types of wars, such as capital wars, cyber wars (and possibly even shooting wars).

To be clear, I’m not saying they’re probable, and I’m not sure that my assessment is right. I’m just saying that it seems to me that the odds have increased relative to where they were, and I am just sharing the thinking that leads me to that conclusion.

What Happened?
Most recently, Donald Trump threatening to raise the stakes by $100 billion and the Chinese promptly indicating that they will match the moves dollar for dollar and step by step took me and people closer than me to the negotiations by surprise. These developments broke my scenario that trade tensions would subside and increased the odds that a different and scarier agenda might be in play that raises the odds of trade, capital, cyber, and/or shooting wars on the horizon.

Before the last few days’ events, I thought trade tensions would subside because the Chinese are very amenable to a trade deal, because there are lots of ways to make a good deal happen, and because aggressive posturing ahead of midterm elections is understandable. Because I’m confident that those three things are true, I had expected the saber rattling to go quiet as the negotiations happened behind the scenes. That was the picture I painted for you. When I painted it, I said that if there was a step-up in the conflict, my scenario would be broken and I’d seriously worry. Then Trump raised the stakes by another $100 billion, which led the Chinese to promptly shift their mode from quiet negotiation to publicly stating that they will match the Trump administration’s moves dollar for dollar and minute for minute. Now we have a very public game of chicken going on. Maybe Trump’s statement was just an impulsive slip-up that he will backtrack on, or maybe he was serious.

In any case, I’m worried and forced to look harder at the question of where Donald Trump is leading us. What is his real agenda? Are these statements just negotiating maneuvers that will eventually lead us to having peace with better terms for the US, or are they steps on a path toward trade and other types of wars (and what might those other types of wars look like)?

Right now, I don’t think it’s clear to anyone, including some of the people closest to Donald Trump, what exactly his strategic objectives are.

The Rest…HERE

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