Principles for Navigating Big Debt Crises: The Archetypal Big Debt Cycle / Detailed Case Studies / Compendium of 48 Cases

Big Debt Crises offers concise and lucid insight into evaluating how an economy works. The book is split in three parts: (1) key principles for analyzing debt cycles, (2) seminal deflationary and inflationary crisis, and (3) a compendium of various crises occurring since the 1900s. Beyond the core text of explaining how economic crises are developed, solved, and avoided, insights include: Banks look healthiest right before a bubble! Asset values are high and deposits are steady, while underlying debt growth is funneled into unproductive activity. Central banks do not take into account asset inflation or debt growth, resulting in the build up of bubbles in pockets of speculative activity. Nonperforming loans in speculative activity spills over into tightened lending for real activity, just as lower paper wealth spills over into tighter spending on goods and services. A classic investing mistake is to underestimate the future decline in earnings at the beginning of a recession. If you’re not thinking about what’s going to happen, you’re missing what’s happening. Right actions done too late or with insufficient strength are indistinguishable from wrong actions. An economy will continue to suffer despite any monetary or fiscal policies if the underlying structural problem causing economic distress remains unaddressed. Shadow banking evolves because it is advantageous, with borrowers getting lower rates as lending costs are lower due to less regulation. It is not intrinsically flawed until overconfidence and leverage negate positive outcomes. One person’s expense is another person’s income. Do not make decisions off of a single headline. Anyone interested in navigating the economic markets with greater acuity and sensitivity to financial assets will benefit from reading the book.

There are always "those guys" that like to stop at a car accident to observe the damage; I personally feel bad getting any enjoyment out of the loss of human life and turn away from such "disaster porn", as do most others. But the study of debt crises has always been a guilty pleasure of mine as it is always fun to observe economic disaster porn from a distance. And this book gives a thrilling tour through some of the lesser-known debt crises in the past, viewed from a decision-makers perspective which I feel is particularly gripping. Of course, the reality is that debt crises cause the same human suffering and loss of life as car accidents or natural disasters. Just as with accidents, we should learn from past crises in an effort to best mitigate their impact in the future. And that is the value of this book, that it is focused on providing the correct framework for our decision-makers to solve such crises in such a way that this human suffering is minimized. There is also plenty of quality investment advice here as well.

Really great book on the pending crisis. Ray always does a great job of taking complex financial topics and distilling them. This book is quite a challenging hill to climb on making these topics accessible. There is also a lot of repetition on the idea that debt held in a foreign currency is the key to a countries economic melt down. There is a great explanation of the historical patterns of debt and how its unraveled economies across the world. My biggest gripe is that if you get this on kindle be prepared not to look at any of the graphs since you cannot tell what line is what in black and white. I had to read it on my phone to get around that. Nevertheless, great read for what will probably be the defining economic issue of our time. (hopefully not)

For those with good financial savvy this is good reading.

Ray Dalio is a student of history, and the rare one with a proven track record of success. His approach to looking at the macro situation, his ability to direct research through the great number of history and economic PhDs that he employs, his social connections, etc. make his perspective invaluable. All of his recent writings have been a great contribution, and my hope is that more great minds like his produce popular writing as opposed to niche esoteric writings. We need more Voltaire's. As a negative, I find his some of his asides - presumably to make it more digestible - as unnecessary, pedantic, and tedious.

Admittedly a narrow subject for most people to dig deep into but, if this is your sort of thing, you are not going to do better than reading Ray Dalio. Dalio already had a stellar investment track record before the 2008 crisis but it grew exponentially post it with his deft positioning of Bridgewater's positions. I am amazed at how much analysis he had done prior to the crash. It seems like after studying past crises, he was expecting and prepared for the mortgage bubble. This book looks at the signs to diagnosis a crisis, then prescribes the right remedies to ameliorate it. It also foresees the popular backlash that is always present. After his exhaustive review of past crises, you see that there are indeed common threads among all credit bubbles. In fact, the bible was well aware of debt's ability to become unmanageable and therefore called for a year of jubilee or debt forgiveness. What becomes clear is that speed and action are vital. Hoover would not attend to a "banker made crisis" and that led a depression. Dalio compares that to the 2008 crisis where Tim Geithner estimates that the cost of the financial rescue, rather than losing its typical 5-10% of GDP, actually made 2%. Although regulators have improved their toolkit there are still some issues lurking: mark to market accounting could still lead to forced sales, banks still have asset/liability mismatches and its hard to decipher where exposures lay. Its also hard post Dodd Frank to see if the Fed could take the extraordinary actions it took in 2008.

Good

Item well received.

This book simply represents the term "looking at forest rather than trees". Mr. Dalio has done a very generous work for all his readers.

Ce livre présente une analyse des crises à travers le temps et les pays, et permet de comprendre le fonctionnement cyclique de l'économie.

Muy bueno, excelente, cuando lo termine me rei un poco, pues lo que este libro considera malos manejos en términos de política monetaria, han sido los manejos de política monetaria que han tomado gran parte de los países haciendo énfasis en los Estados Unidos