Veteran Investor Jeremy Grantham Predictions

British investment mogul Jeremy Grantham made grim predictions about the global economy. If his theories prove true, we could be in a worse position than in 2007, just before the great recession.

The stock market had just its worst weekend since June 2020, and it seems like we should brace for tough economic times.

Jeremy Grantham predictions

“This is a more dangerous looking moment in global economics than even the madness of the housing bubble of 2007,” Grantham told Rueter’s Global Markets Forum. Similar to the crash in ‘07, highly overvalued assets Grantham dubbed “superbubbles” could cause an economic catastrophe.

The investor published an opinion through his firm, Grantham, Mayo & van Otterloo (GMO), warning these superbubbles are about to pop.

He says there have only been three other cases of superbubbles before this one. 1929, before the Great Depression, 1972, before the Great Inflation, and 2000, eventually leading to the Great Recession in 2007. He warned that the S&P500 could fall more than 25% within the following year.

What is a superbubble, and why is it about to pop?

A superbubble, according to Grantham, is when several corners of the global market all experience rapid, unsustainable growth. Then, after an “extended build-up of market and economic forces,” the bubble eventually pops, causing worldwide economic turmoil.

Grantham notes that currently, high inflation, among other issues, will most likely be the needle that ultimately causes the puncture.

Grantham says the global market faces short- and long-term issues world authorities must address. The current energy and food crisis made worse by the war in Ukraine is of particular significance.

Russia and Belarus export nearly half of one of the world’s most common fertilizers, potash, which exacerbated the food crisis.

China is also facing several issues that threaten economic collapse. They still face hardship from the pandemic. And the Chinese housing market is “under dire stress,” according to Grantham.

He also notes that governments globally are experiencing extreme fiscal tightening due to withdrawing their COVID stimulus. And, along with the ever-growing global climate crisis and unsustainable population decline, it’s not looking great for the long-term either.

Grantham says to “prepare for an epic finale”

Grantham’s become quite the doomsayer with this opinion. However, he admits that there is every chance the current bear market could deflate the superbubble. However, he ended the piece by likening the current state of global affairs to a theatrical production.

“If history repeats, the play will once again be a Tragedy. We must hope this time for a minor one.”

Reports /TrainViral/