A leading US economist has issued a stark warning about an impending stock market crash that could surpass the severity of the Great Financial Crisis. Speaking to Fox News Digital, Harry Dent emphasised that the “everything” bubble has yet to burst, predicting it could be even more catastrophic than the Great Recession.
“From 1925 to 1929, it was a natural bubble. There was no stimulus behind that, artificial stimulus per se. So this is new. This has never happened. What do you do if you want to cure a hangover? You drink more. And that’s what they’ve been doing. Flooding the economy with extra money forever might enhance the overall economy long term. But we’ll only see when we see this bubble burst,” said Dent, a Harvard Business School alum.
Dent is known for accurately predicting the Japanese asset price bubble burst in 1989 and the dot-com bubble burst in 2000. He bases his forecasts on demographic trends, economic cycles, and market analysis.
Dent noted that most bubbles last five to six years, but the current one has been inflating for 14 years. “So you’d have to expect a bigger crash than we got in 2008-09,” he added.
He projected that when the bubble bursts, the market downturn could eclipse the 2007-2008 financial crisis. “I think we’re going to see the S&P go down 86 per cent from the top, and the Nasdaq 92 per cent. A hero stock like Nvidia, as good as it is, and it is a great company, [goes] down 98 per cent. Boy, this is over,” he stated, suggesting a potential multi-trillion dollar market collapse.
Dent also predicted that the fallout could occur early to mid-next year due to the Federal Reserve’s rapid monetary policy tightening to combat inflation. He pointed to the housing market as central to this potentially devastating bubble.
According to Dent, the U.S. government is to blame for the long-standing bubble. “The government created this bubble 100%… artificial, injecting a drug to artificially perform stronger. And again, everything from human life to history shows, you don’t get something for nothing, and bubbles always burst… it’s a much, much higher possibility than anybody gives it,” he said.
Major Financial Crises of the Past
COVID-19 Pandemic (2020)
The COVID-19 pandemic triggered an unprecedented global economic crisis. As countries worldwide imposed strict lockdowns to control the virus spread, economic activities ground to a halt. This resulted in a severe global recession, with stock markets plummeting and unemployment rates skyrocketing. Governments around the world responded with massive fiscal stimulus packages to support businesses and individuals, yet the economic impact was deep and far-reaching.
Eurozone Debt Crisis (2009-2014)
The Eurozone Debt Crisis was fuelled by high sovereign debt levels in several European countries, notably Greece, Ireland, Portugal, Spain, and Cyprus. The crisis led to a series of EU and IMF bailouts to prevent the collapse of these economies. In exchange, affected countries had to implement austerity measures, which led to high unemployment rates and significant political instability. This crisis exposed significant flaws in the economic structure of the Eurozone.
Global Financial Crisis (2007-2008)
The Global Financial Crisis was precipitated by the collapse of the US housing bubble, exacerbated by high-risk mortgage lending and complex financial derivatives. The crisis led to a global economic downturn, causing major financial institutions to fail and necessitating substantial government bailouts. The aftermath saw a prolonged recession and significant loss of wealth, highlighting the dangers of unregulated financial markets and excessive risk-taking.
Dot-com Bubble Burst (2000-2002)
The Dot-com Bubble Burst was characterized by a speculative boom in internet-based companies during the late 1990s. When the bubble burst, stock markets crashed, and trillions of dollars in market value were wiped out. Numerous dot-com companies went bankrupt, leading to an economic slowdown. This crisis demonstrated the volatility of speculative investments and the inherent risks within the technology sector.
Asian Financial Crisis (1997-1998)
The Asian Financial Crisis began with the devaluation of the Thai baht, which triggered a series of currency devaluations and speculative attacks across East Asia. The crisis led to severe economic downturns in affected countries, such as Thailand, Indonesia, South Korea, and Malaysia. The IMF intervened with bailout packages that required stringent economic reforms. This crisis highlighted the vulnerabilities of emerging markets to currency instability and the interconnected nature of global finance.
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