David Tice, manager of the $897 million Prudent Bear Fund and also known as “Dr. Death,” believes the U.S. economy is on the verge of the most severe recession since World War II, The Australian reports.
Tice points to the slumping housing market, the subprime loan mess and the tightening of credit on Wall Street. As a result, he expects housing prices to fall another 30% by next year, earnings to crumble, GDP growth to stall, bankruptcies to rise and the subprime crisis to affect the entire credit market, including mergers and acquisitions.
“People have got to open their eyes to the risk out there,” Tice said. “There are calamitous times ahead, and some naïve people are going to be badly burned.
“We think credit market deterioration is very, very significant, and the Federal Reserve is going to be limited in how it can respond. It’s easy to be bullish because the economy seems O.K., unemployment is low, inflation is low and there’s a tendency for human beings to see the glass being half full [rather] than half empty.
“But if you look at what’s been going on, how can anyone be bullish?”
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