Carlyle Co-Founder Predicts a Recession
David Rubenstein, a co-founder of Carlyle, caused a stir at the World Economic Forum in Davos last month. Citing both growing consumer and government debts, geopolitical turmoil, and the unpredictably of world events in the 21st century, Rubenstein claimed a new recession is imminent.
Speaking on a panel called ‘The Next Financial Crisis’, Rubenstein says the threat is in people believing there are no actual threats to the global economy. When people are confident, they are more vulnerable to sudden events. The strong consumer confidence we see today means savings are likely to be minimal. Rubenstein points out the effects of a potential recession might be exacerbated by financially ill-prepared consumers.
The current turmoil in geopolitics is another area which could spark recession according to Rubenstein. He referred specifically to ‘black swans’, sudden events like the tragedy of 9/11, having unprecedented ripple effects across the global economy. According to the Institute for the Analysis of Global Security, the total monetary cost of 9/11 amounted to approximately $2 trillion: through losses in the stock market for example. With the fragile world economy we see today, it is likely a ‘black swan’ could spark the uncertainty needed for recession.
Though Rubenstein might be labelled a scaremongering member of the world’s economic elite, we would do well to heed his warnings, particularly given Carlyle’s winning record.