Dr. Michael J. Burry, the hedge fund manager who made hundreds of millions of dollars betting that the US housing market would crash and helped inspire the bestselling book, ‘The Big Short’, described this week what is happening in the markets as “the biggest speculative bubble of all time in all things by two orders of magnitude”.
Some of Burry’s 497,000 followers tweeted, asking what he did with the last bubble, while other followers replied for Burry.
“Can I ask you a serious question man?” When you understood that everything was going to shit in 2007-08, did you go to see the authorities? Have you been in the media, say hello, I’m a super smart billionaire, please listen to me so I can help people? Joe @NucleotideSoup asked. “Or were you just like, nah, making money”.
“No one believed him,” Flag of Netherlands replied @Bartcavu. “The banks laughed at him when he wanted to make a short sale.”
Burry predicted in February, also on Twitter, that the United States was headed for Weimar-style hyperinflation, referring to a period after World War I when Germany printed massive amounts of banknotes to buy foreign currency. that were used to pay for the repairs. This strategy has exacerbated the inflation of the paper mark. By 1922, the German mark was virtually worthless, leading to misery for the general population, internal political instability, and the occupation of the Ruhr by France and Belgium. The resulting discontent in the German population aided Hitler in his rise to power.
In a since-deleted tweet, Burry quoted “Dying Of Money,” a 2011 book by Jens O. Parsson on the lessons of the great German and American inflations. The cover of the book depicts old German currency – a Reich banknote issued on August 22, 1923 for 100 million marks, worth around $20 on the day it was issued. Three months later, it was worth only a few thousandths of a US cent.
Burry is used to predicting when bubbles will burst. He called the bubble during the subprime mortgage crisis and said this one is bigger. His billion-dollar bet on a crash in the US housing market was so epic that it was chronicled in Michael Lewis’s book and subsequent hit movie, “The Big Short.”
Burry also predicted that GameStop shares would skyrocket. “We are in a top all round,” he tweeted, referring to a chart pattern that shows a sharp rise in an asset’s price and trading volume, followed by a rapid price decline, Business Insider reported.
“Markets have now boiled dangerously,” Burry tweeted.
Bank Of America Chief Information Officer Michael Hartnett described post-World War I Germany as “the most epic and extreme analogue of rising velocity and inflation after psychology. of the end of the war, the pent-up savings, the loss of confidence in the currency and the authorities”. Hartnett specifically referenced German central bank debt monetization and extrapolated that this is similar to what is happening now.
“DC’s political bubble is fueling Wall St’s asset price bubble,” the strategists led by Michael Hartnett wrote in a January 2021 note. “When those who want to stay rich start acting like those who want to get rich, this suggests a late-stage speculative move.
Bank of America strategists predicted a market correction and positioning to top in the first quarter of 2021, with the BofA Bull & Bear indicator approaching a “sell signal”, Bloomberg reported. They highlighted past bubbles, including the dotcom bubble of 2000 and the housing market bubble of 2007-2008. Two weeks before the start of the third quarter, the speculative bubble has not yet burst.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles and Biden. He talks about risk factors for Bitcoin as an investment asset, including origin risk, speculative market structure, regulation, and environment. Are the broader financial markets in a massive speculative bubble?