More Shoes to Drop: Stanley Druckenmiller Warns of Further Financial Failures Beyond US Banking System
Stanley Druckenmiller, the legendary investor, has issued a warning on the state of the US economy in a new interview at the Bloomberg Invest New York conference. He says that the economy is still trying to adjust to a more restrictive climate after more than a decade of low interest rates and free money. The markets veteran says that Dogecoin (DOGE), which had more than an $80 billion market cap during its rally of 2021, is a prime example of the irrational behavior of traders amid an asset bubble. With the credit cycle now well into a phase of contraction, Druckenmiller says the pricier cost of capital is starting to manifest with bankruptcies and weakness in the banking system. He predicts ‘more shoes to drop’ and hints at further corrections in risk assets. He also suggests that the bankruptcies from the 2007-09 financial crisis only just started to happen. The same thing is true this time also: after 11 years of free money, people have done stupid things. Druckenmiller predicts economic trouble ahead in the US after the latest asset bubble as there has been for the past 500 years.
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