Hedge fund billionaire Seth Klarman, known as “the next Warren Buffett” and the “Oracle of Boston” in some circles, recently sent a letter warning his investors about the economic impact of global tensions, rising debt, pervasive political divides and what all of that will do to the global economy.
“It can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions.”
Klarman is the CEO of The Baupost Group, a long-only hedge fund founded in 1982. It is the eighth-largest hedge fund by assets under management with more than $29 billion.
“It can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions,” Klarman wrote in the annual letter to investors, according to a New York Times column filed by CNBC “Squawk Box” co-anchor Andrew Ross Sorkin.
The letter reportedly caused a stir at the annual World Economic Forum going on in Davos, Switzerland.
Per CNBC:
In the letter, Klarman expressed confusion at investors’ reaction to the U.S. retreat from international leadership and President Donald Trump‘s Twitter outbursts. Trump scrapped plans to attend Davos due to the government shutdown, which is in its 32nd day with no clear end in sight.
“As the post-World War II international order continued to erode, the markets ignored the longer-term implications of a more isolated America, a world increasingly adrift and global leadership up for grabs,” he wrote.
Klarman also warned about growing debt levels, pointing out that total U.S. government debt now exceeds GDP, a level that other countries like Canada, France, Britain and Spain are approaching.
“The seeds of the next major financial crisis (or the one after that) may well be found in today’s sovereign debt levels,” he said.