In depth 

Markets at risk from a debt avalanche

Markets at risk from a debt avalanche

Browsing asset managers' notes for the fourth quarter of 2018, it was unsurprising to find many attempts to reassure investors spooked by the whipsawing markets at the end of the year. More interesting were a couple of very detailed pieces of research discussing reasons to be pessimistic. The overriding issue, discussed at length in the new e-book by Ray Dalio of Bridgewater Associates, Principles for Navigating Big Debt Crises, is the world being in the late stages of a debt super-cycle. Such phenomena have occurred throughout history and Niels Clemen Jensen, author of The Absolute Return Letter, cites allusions to the economic effects in The Old Testament. Ominously, the last debt super-cycle ended with World War II.

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