There’s a Global Market Slump Ahead, Elliott's Paul Singer Says
“Global debt is at an all-time high. Derivatives are at an all-time high,” he said.
(Bloomberg) -- The global economy is likely heading toward a “significant market downturn,” according to billionaire Paul Singer.
“The global financial system is very much toward the risky end of the spectrum,” Singer said during a panel Thursday at the Aspen Ideas Festival. “Global debt is at an all-time high. Derivatives are at an all-time high.”
The co-founder and chief executive officer of Elliott Management Corp. estimated that there will be a market correction of 30% to 40% when the downturn hits. He said he couldn’t predict the timing.
A frequent critic of U.S. monetary policy, Singer said the market meltdown late last year after interest rates rose was the world’s first hint of a pending slump. It indicated that the Federal Reserve and other central banks were now victims of their policies, he said.
“December supported the notion that they’re trapped,” he said. “What they should have done, and what they should do now, is try to restore the soundness of money. They should not be cutting rates right now. They should be calling on the congresses and parliaments around the developed world to take steps to deal with the economic slowdown in growth.”
A fellow panelist, David Rubenstein, co-founder and co-chairman of the Carlyle Group, said nothing cataclysmic will happen to the U.S. economy until after the presidential election in 2020.
“Presidents who run for reelection in a time of recession or perceived recessions, don’t win,” Rubenstein said. “Everyone in Washington is focused on one thing, which is the presidential election and how long you have to keep the economy going to get through that.”
While the trade dispute between the U.S. and China is weighing on both economies, Rubenstein said he was “100%” certain a deal could be reached.
Singer, meanwhile, said the dispute with China was about much more than just trade.
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, he said.
“This is the first pushback to China, and China is, at the moment possibly, very surprised and doesn’t really know how to deal with it,” Singer said.
To contact the reporter on this story: Scott Deveau in New York at sdeveau2@bloomberg.net
To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Matthew Monks
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