While the debt crisis of Chinese real estate developer Evergrande shook the markets, the cryptocurrency markets took a big hit, along with stocks. Ray Dalio, the founder and chairman of the Bridgewater company, also shared his views on this crisis. Speaking on the “Bloomberg Surveillance” program, Ray Dalio said the situation is solvable. Details are here.
Evergrande, China’s second largest real estate developer, came to the fore with its $305 billion debt. The company said it was unlikely to meet an interest payment due Thursday and could default on its debts. Global stock markets rallied on Monday, fearing that Evergrande’s impasse would hurt China’s economic growth. There were speeches in the markets reminiscent of the Lehman Brothers incident that led to the 2008 global financial crisis. But, contrary to these views, Dalio, founder of Bridgewater Associates, considers the situation “manageable”:
“The Lehman Brothers incident was a pervasive crisis. There was structural damage. It could not be fixed until the Fed and Treasury stepped in. However, this crisis is not the type to shake the system. There’s a $300 billion debt, and that’s a manageable amount. If the debt resulting from the crisis will be paid in the country’s own currency, there will be no problem here. This is the basis of the economy. Investors always suffer in such cases, but the rule of thumb is always and in every country. That’s how the system works and that’s how problems are resolved.”
It is unclear how the Chinese government will respond to the Evergrande crisis, but some analysts have said they expect Beijing to undertake partial restructuring of Evergrande to stabilize markets and limit any wider impact.
In addition to these, Dalio, who shared his views on Bitcoin, used the following statements:
“Bitcoin has no real value right now. It has a value attributed to it. If it succeeds, it will reach far more than it is worth today.”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.