Renowned former U.S. businessman and politician David Stockman, who has for years been predicting an economic collapse worse than 2008, this time blasted all who don’t share his belief as people who must be “smoking something stronger than what” he “can legally buy in Colorado,” where he lives.
“There is a recession that’s going to engulf the entire world economy, including the United States,” Stockman told CNBC over the phone on Thursday. “Everywhere trade is drying up; shipping rates are at all-time lows.” (Source: “I don’t know what the bulls are smoking: Stockman,” CNBC, February 19, 2016.)
The 70-year-old celebrity said that a rapidly deteriorating economic environment will send stocks and oil prices dropping even more than they already have.
The S&P 500 has fallen 6.5% since the beginning of the year and crude oil has plummeted more than 17%. However, Stockman believes that the worst is yet to come, forecasting the S&P 500, which is now in the 1,900 territory, will plunge to 1,300 before making any new highs. He also predicts crude, which is now hovering around $30.00 per barrel, will slide below $20.00.
In the meantime, gold prices are making use of the opportunity and have gained 20% since they hit a 52-week low late last year.
Stockman, who expects to see a recession by the end of the year, said traders who are too upbeat about the U.S. economy do not consider global risk.
He blamed the turmoil on central banks and monetary policymakers who have exhausted all options.
“They should have the good graces to resign,” he said. “They are lost.”
Countries representing almost a quarter of global gross domestic product (GDP) now have negative interest rates, including the eurozone, Switzerland, Denmark, Sweden, and Japan.
However, Stockman doesn’t expect the Federal Reserve to adopt a sub-zero interest rate policy. Earlier this month, Stockman told Bloomberg television that the market is going to be mauled by bear.
Stockman headed the Office of Management and Budget in the early 1980s during President Ronald Reagan’s first term.