Acclaimed hedge fund Bridgewater Associates is a little down on the Western world these days, describing the US and Europe as “zombies” that will remain as such until they work through their current massive pile of debt:
“What you have is a picture of broken economic systems that are operating on life support,” Mr. Prince says (co-chief investment officer at Bridgewater). “We’re in a secular deleveraging that will probably take 15 to 20 years to work through and we’re just four years in.”
In Europe, “the debt crisis is [a] long ways from over,” he says. The economic and financial morass will mean interest rates in the U.S. and Europe will essentially be locked at zero for years.
The article goes on to state that Bridgewater is positioned for higher gold prices, stronger Asian emerging market currencies, and lower-yields on high quality government bonds.
Given the ominous demographic challenges facing the West (see our interview with expert Harry Dent), you almost wonder if Bridgewater’s outlook is too positive! I am hard pressed to see any “white knight” that could return the aging, socialist Western world to a state of high growth anytime soon.
I am also sympathetic to the view that sustained growth is an anomaly – and that the gangbuster growth the human race experienced in the 19th and 20th centuries was largely a function of cheap energy. But that’s a subject for another column (or 5!)