http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BDA520BF5%2D1170%2D4CF0%2D8381%2D8EEF45655B05%7D&siteid=yhoosnip>
Bridgewater also tried to show through a sophisticated analysis that hedge funds do tend to march in lockstep. That means, paradoxically, that they are vulnerable to the same things: "tight credit, widening credit spreads, and falling equity markets."
Bridgewater's summary: "We estimate that an unfavorable environment, in degrees comparable to 1994, 1998, and 2000/01 will cost ...equally to about 2/3 of the S&L crisis and twice the size of the Mexican default in 1994 - i.e. it is material, but not system threatening."
That's the good news. The bad news: "'the system can withstand a moderate economic crisis (like those that occurred post-1993) but not a major one (like 1974)."
snip>
And then there's the REALLY bad news: Bridgewater also expects a major international system crunch exactly like the collapse of the fixed exchange rate Bretton Woods system, which lead directly to the inflationary crisis of 1974. See my March 16 column
Wednesday morning, Bridgewater's Daily Letter was headlined, "The Tremors Before the Big One" and concluded: "We believe the odds of a dollar/ U.S. debt crisis in the next twelve months are elevated (say 50 percent)."
more...check out the closing comments on Chopper Ben.