In a surprise to almost no one, Jeremy Grantham thinks we are ripe for a stock market crash.
Speaking with The Financial Times, Grantham warned that financial markets will be “ripe for a major decline” in 2016.
Grantham added that because governments are so indebted we could see a “very different” kind of crash this time around.
We recently heard from Grantham in his second quarter letter to GMO clients, which discussed 10 things Grantham is currently obsessing over that could pose major threats to the world.
Among the concerns currently pre-occupying Grantham are income inequality, food shortages, and a US economy that looks set to grow closer to 1.5% per year, about half what many expect over the long term.
Often considered a “Malthusian” for his belief that a lack of resources poses the greatest threat to humanity and economic growth, bearish outlooks are nothing new for Grantham.
As for his most recent warning, Grantham conceded to the FT that because central banks were able to print money to recapitalize global banking systems during the last crisis, they could perhaps pull it off again.
“We might get lucky and withstand one more crisis and just have an equity washout,” Grantham said, “and on the other hand it might just break the system.”