'Big Short' investor Michael Burry sounds the alarm on shaky markets - and fears a worse disaster than the financial crisis

Dr. Michael Burry
Michael Burry.Astrid Stawiarz/Getty Images
  • Michael Burry fears the market turmoil could herald a worst disaster than the financial crisis.

  • He cited soaring interest rates, volatile currencies, and reactionary central banks as concerns.

  • The "Big Short" investor diagnosed a historic asset bubble last year, and predicted a massive crash.

Michael Burry, one of the few investors to see the financial crisis coming, fears the current market mayhem could be the prelude to an even greater catastrophe.

"Today I wondered aloud if this could be worse than 2008," Burry said in a now-deleted tweet on Thursday. "What interest rates are doing, exchange rates globally, central banks seem reactionary and in CYA mode," he added, using an acronym for "cover your a--."

Burry was likely referring to the Federal Reserve and other central banks frantically raising rates to curb stubborn inflation. The Fed's aggressive hikes, combined with overseas headwinds such as the Russia-Ukraine war and continued lockdowns in China, have driven the US dollar to record highs against other world currencies such as the British pound.

Moreover, the Bank of England embarked on a £65 billion ($72 billion) bond-buying spree this week, as soaring gilt yields were threatening the UK's financial stability. As for the People's Bank of China, it is reportedly preparing state-run banks to sell dollars and buy offshore yuan in a bid to shore up the Chinese currency.

Soaring rates, whipsawing currencies, and authorities scrambling to calm markets and prevent economic disasters are clearly red flags to Burry, and remind him of the frenzied run up to the Great Recession.

Other experts have voiced similar concerns, warning an overzealous Fed could plunge the US economy into a deep recession or spark "stagflation," where inflation remains high but growth stagnates and unemployment jumps. They have also cautioned that volatile markets and a loss of trust in policymakers could threaten consumer and investor sentiment, undercutting growth.

Burry shot to fame after he predicted and profited from the collapse of the mid-2000s housing bubble, and his wager was immortalized in the book and the movie "The Big Short."

The Scion Asset Management boss is also known for betting against Elon Musk's Tesla and Cathie Wood's Ark Innovation fund last year, and for buying a stake in GameStop before it became a meme stock. Moreover, he diagnosed "the greatest speculative bubble of all time in all things" in June last year, and predicted it would end in the "mother of all crashes."

Burry ended his Thursday tweet on an ominous note. He wrote that one of his analysts said it was "spooky" to hear him compare the current chaos to the 2008 meltdown, on the 14th anniversary of Congress failing to pass a $700 billion plan to bail out banks reeling from the housing crash. The news sparked one of the steepest one-day declines in US stocks in history.

Here's a screenshot of Burry's deleted tweet:

Burry tweet 30 September 2022
Michael Burry/Twitter

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