Page 113 - Ray Dalio - Principles

Just as all human bodies work in essentially the same way,
so do the economic machines in different countries. And just
as physical diseases infect people without regard to nationality,

so do economic diseases. So, while the policymakers were at
first skeptical, I approached my conversations with them by
looking at the physiology of the case at hand. I would
diagnose the economic disease they were suffering from, and
show them how its symptoms progress by referencing prior
analogous cases. Then I’d explain the best practices for
treating the disease at its different stages. We would have

high-quality back-and-forths about the linkages and the
evidence.

Yet even when I did succeed in helping them see the
linkages, the political decision-making systems they had to
work within were dysfunctional. Not only did they have to
decide what they would do as individual countries, the
nineteen countries of the European Union had to agree with

each other before they could act—in many cases unanimously.
There was often no clear way of resolving disagreements,
which was a big problem because what needed to be done
(printing money) was objectionable to German economic
conservatives. As a result, crises would intensify to breaking
points while Europe’s leaders grappled in long closed-door

meetings. Those power struggles tested the nerves of everyone
involved. I can’t possibly convey the amount of bad behavior
these policymakers had to endure for the benefit of the people
they represented.

For example, in January 2011, a few weeks after he’d been
appointed minister of economy and competitiveness by

Spain’s new president, I met Luis de Guindos, a man I learned
to admire for his forthrightness, intelligence, and heroic
willingness to sacrifice himself for his country’s well-being.
The old government in Spain had been thrown out and the new
government took office as Spanish banks were about to
collapse. The new Spanish policymakers were immediately
forced to haggle with representatives from the IMF, the
European Union, and the European Central Bank (the “Troika”

as it was called). They did this into the wee hours of the
morning and at the end were required to sign a loan agreement