This is weird. Twice in the past two days hedge fund managers have brought up Hitler.Leon Cooperman said it first. Ray Dalio said it the day after.
Very generally speaking, both comments were made in the context of the U.S. political situation and the economy.
Dalio said that (we’re paraphrasing what he said at the Bloomberg Markets 50 Summit on Thursday) the biggest problem right now, [and perhaps why traders are having difficulty navigating these markets], is people are not having the quality conversation about, how does the machine work?
Dalio says there’s a certain process that works a certain way for a certain reason. He asks, Do you understand how the machine works? That’s the important question.
For example, how does politics work?
Dalio’s view, which he says is true historically, is that there is greater polarity in Democracy. And when there’s polarity, there’s disorder.
[Then came the Hitler comment.]
“Hitler came to power because there was disorder and because that’s how the machine works,” he said. “He came to power during the Depression.”
When Cooperman spoke, he also commented on the way that Hitler came to power. He said what happened is a young charismatic leader with no business experience made it into power. But Cooperman made the comment in the context of Obama’s leadership, while Dalio did not.
Instead, Dalio concentrated on what has happened historically in the “machine” and what it means for the future.
He said, once you can’t lower interest rates anymore, you have to borrow. You can make credit out of thin air. It is just a promise to create money. But you reach a certain point where you can’t do it anymore.
There is no reason to be surprised by any of this, he said.
The question now is: How much restructuring will there be? Let’s look at the numbers, he suggests. That’s a better path than the path we are on now, which is, every day there’s a surprise.
(Everyone laughed after that one.)
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