CNBC: Investor Ray Dalio Estimates the Corporate Losses in the US from Coronavirus Will Top $4 Trillion

March 19, 2020

Article by Yun Li in CNBC finacial

Investor Ray Dalio told CNBC on Thursday the coronavirus outbreak will cost U.S. corporations up to $4 trillion, and “a lot of people are going to be broke.”

“What’s happening has not happened in our lifetime before ... What we have is a crisis,” Dalio said in a “Squawk Box” interview. “There will also be individuals who have very big losses. ... There’s a need for the government to spend more money, a lot more money.”

The total U.S. GDP at the end of 2019 was more than $21 trillion. The founder of the Bridgewater Associates hedge fund also estimated the global corporate losses will amount to $12 trillion due to the pandemic.

Dalio said the fiscal stimulus package should be $1.5 trillion to $2 trillion at a minimum, depending on the form of the financial relief such as loan guarantees and credits.

The White House is proposing a stimulus package worth anywhere from $850 billion to more than $1 trillion to fight the impact of COVID-19 and to help soften the blow of a sudden recession. The package will include direct payments or tax cuts and small business assistance.

On the monetary front, the Federal Reserve announced plans to pump an additional $1 trillion into the U.S. economy through asset purchases and to cut interest rates to zero.

Dalio said there’s an “inability of central banks to stimulate in a way that’s normal,” adding they have less capacity to ease monetary policies when interest rates have already hit the floor.

“We are now at a point where there will have to be a debt restructuring and a monetization of that,” Dalio said. “We’re living in a different world, like the 1930s in which 1930s, 1932, you have a devaluation of the dollar. You have the printing of money.”

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