Hidden Forces The Great Rebalancing: Why Debt, Demographics, and Politics Will Crush Forward Returns | Sony Kapoor
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Aug 25, 2025 In this engaging conversation, economist Sony Kapoor, who has advised global governments and major investment funds, discusses the urgent need for a portfolio rebalancing amidst shifting economic dynamics. He explains how developed countries face demographic challenges and stagnant growth, driven by excessive debt and political instability. Kapoor analyzes how AI might impact productivity but warns of its limitations in mitigating declining birth rates. The dialogue also covers capital misallocation and emerging market opportunities in a complex financial landscape.
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From Lehman To Policy Advising
- Kapoor recounts starting at Lehman in leveraged finance and becoming disillusioned with market incentives.
- That experience pushed him toward advising governments and nonprofits instead of full-time finance.
A Career Blending Finance And Public Purpose
- Sony describes his 'portfolio career' mixing paid advisory work with pro bono public-interest projects.
- He advised governments, sovereign funds, charities, and ran an EU think tank over decades.
Capital Allocation Has Become Misaligned
- Global capital allocation has drifted away from productive investments in emerging markets toward developed-market assets.
- Sony Kapoor expects a delayed but sudden rebalancing away from the US toward emerging economies.