Paul Singer Warns A 40% Market Crash Is Coming
The comments below are an edited and abridged synopsis of an article by Tyler Durden
Billionaire investor and Elliott Management founder Paul Singer has warned that the global economy is heading for a significant market downturn, cautioning that “the global financial system is very much toward the risky end of the spectrum.”
Singer has been clear that the Fed’s monetary experiment will end terribly, and he sees two reasons why the economy is approaching a tipping point: all-time high global debt, and all-time high derivatives.
Singer predicts that there will be a market correction of 30% to 40% when the downturn hits, although he can’t predict when.
Singer also said the market meltdown last year after interest rates spiked in the 4th quarter was the first hint of a pending slump, as it indicated that the Fed and other central banks were now victims of their policies, something he has been warning about for years.
That same argument could have been made in 2009. A 40% crash would be devastating to not only America’s net worth, but to its economy, which has been financialized beyond the point of no return. It would destroy what little confidence the Fed has left, and could result in terminal damage to the dollar’s reserve status.
Another investing legend on the panel, Carlyle co-founder David Rubenstein, said that nothing cataclysmic will happen to the US economy until after the presidential election in 2020. He also said that while the trade dispute between the US and China is weighing on both economies, he was certain a deal could be reached.
While Singer did not predict that a global war is inevitable, he did point out that China has been able to grow in the past 30 or 40 years without any scrutiny on its effect on national security and intellectual property.