Russia, Germany and UK urge restraint as Iranian threat puts Middle East on edge

SANAA: The Houthis on Thursday threatened to launch new attacks if the United States and Israel go ahead with plans to displace Palestinians from Gaza.
“We will take action by firing missiles and drones and launching maritime attacks if the United States and Israel implement their plan to displace” Palestinians from Gaza, Houthi leader Abdul Malik Al-Houthi said in a televised speech.
US President Donald Trump’s plan to move Gaza’s inhabitants and redevelop the territory has been widely condemned in the Arab world.
The Houthis have launched scores of attacks on Israeli targets and Red Sea shipping during the Israel-Hamas war.
“I call on the armed forces to be ready to take military action in the event that the criminal Trump carries out his threat,” Houthi said on the militia’s Al-Masirah TV station.

DUBAI: The debt problem is not one that only the US is facing — it is a world debt problem that China, Europe and many countries are confronting, according to Ray Dalio, founder of Bridgewater Associates.

During a session conducted by TV host, Tucker Carlson, at the World Governments Summit on Wednesday, Dalio said: “If you have that debt problem, you exacerbate the great conflict that’s going to happen. You create political instability. It’s a geopolitical problem.

“Climate is costly, roughly $8 trillion a year on climate, so it’s a financial thing, and now the question is this new technology and how are we going to handle that and how do we make the most to raise productivity or what is it used for. Is it used for conflict?” 

Carlson said: “You have run one of the biggest hedge funds in the world for a long time, and in order to do that you have had to think about the rest of the world in a systematic way … in doing that, you have developed this framework for understanding what’s happening now and what’s going to happen.”

Carlson then asked Dalio to discuss the five trends that he had looked at to consider what was going to happen next.

As a global macro investor for 50 years, the Bridgewater Associates’ founder said that he discovered that he needed to study history. By doing so, he observed five major forces that operate in a big cycle.

The first is that “we have a big debt issue globally, that is very important… that is a force, a financial force.” 

The second, he said, is the internal order and disorder force that goes in a cycle in which there “is greater and greater gaps and conflicts between the left and the right and populism that forces a great conflict like a civil war.

“I believe we are in a form of a civil war now, that’s going on within countries,” he said.

The third force is the great world power conflict that occurs “when a great power runs the world order and then there is a rising power that challenges that, you have a great power conflict: US-China.”

The fourth force is that throughout history, acts of nature — “droughts, floods and pandemics — have killed more people than wars and have toppled world orders more than anything else.”

The fifth big force is “man’s inventiveness, particularly of technology.”

Dalio said: “Everything that we talk about, everything that we are looking at, falls under one of those and they move in a largely cyclical way and that is the framework that we are now living out.”

Giving his sense of the scale of global debt, Dalio said that “it’s now unprecedented in all of history” and went on to explain how it worked, saying “there is a supply-demand situation.

“The way the debt cycle works is, think of credit, and our credit system as being like a circulatory system, that credit brings buying power, brings nutrients to all the system … but that credit that we buy things with, that we buy financial assets, goods and services with, creates debt.

“That debt accumulates like plaque in a system that begins to have a problem because it starts to squeeze out spending, for example the US budget, about a trillion dollars a year now goes to pay interest rates. Over the next year we are going to have over $9 trillion debt that we have to pay back and roll forward hopefully.”

So there is a supply demand issue with this debt, “one man’s debts are another man’s assets.” Dalio added: “if those assets don’t provide an adequate return, or they feel there is risk in those assets, there is not enough demand for that debt, there is a problem … that problem is that interest rates then start to rise, and those holders of the debt begin to realize there is a debt problem, and worse, on the supply and demand, that they have to sell debt.”

Dalio said that the US would run a deficit of about 7.5 percent of GDP “if the Trump tax cuts are continued,” which he expected.

“That deficit needs to be cut to 3 percent of GDP… all policymakers and the president should have a pledge to get it to 3 percent of GDP, because otherwise we are likely to have a problem,” he said.