Crispin Odey made millions correctly predicting the financial crisis thinks it’s all be about to happen again – but that this time it’s going to be even worse.
‘We are in the first stage of this downturn. It is too early to see what will happen - a change of this magnitude means the darkness and mist is very great. This down cycle is likely to be remembered in a hundred years,’ he wrote last week in a portentous letter to clients at his hedge fund Odey Asset Management, which manages around $12bn (£8bn).
The recession he sees looming over the horizon will ‘devastate’ stock markets, and the European Central Bank’s €1.1tn (£830m) quantitative easing bazooka will not stop the coming storm.
‘We used all our monetary firepower to avoid the first downturn in 2007-09, so we are really at a dangerous point,’ he warned. ‘If economic activity far from picks up, but falters, then there will be a painful round of debt default.’
And with the Chinese economy slowing down and commodity prices and emerging market incomes falling, that could be just around the corner, according to Odey.
But like any good hedgie, for Odey there is of course money to be made out of all of this doom and gloom. ‘The shorting opportunity looks as great as it was in 07/09,’ he told his clients. That will of course make him many friends amongst the chattering classes – especially if his extreme predictions come to pass.
'It was like a prison door opening' - Crispin Odey tells MT why he went it alone.