Investor Who Predicted 2008 Stock Market Crash Issues Warning About Elon Musk and DOGE
Written by
Chris Adam
Edited by
Jenna Klaverweiden
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The market might be underestimating the economic impact of mass spending cuts in the government. That’s the warning from Danny Moses, the founder of Moses Ventures who was made famous by the book and movie “The Big Short.”
Moses, who bet against mortgage-backed debt before the 2008 stock market crash, warned that spending cuts from Elon Musk and the Department of Government Efficiency (DOGE) may have much more of an impact on the economy than previously thought. According to Moses, those impacted extend beyond the federal workers let go from their jobs.
Read on for more about how these cuts could impact the economy and market.
Revenue and Consumer Confidence
In an interview with CNBC, Moses said many Americans are being overly optimistic about how the mass DOGE spending cuts will play out. According to Moses, these moves are hurting what he called the “revenue side of the equation.”
These comments were made after President Donald Trump’s administration fired thousands of federal workers — and Musk claimed DOGE helped to eliminate more than $100 billion in government spending, per Fortune.
Moses said the markets have yet to see the full impact of one result of the cuts and uncertainty — disruptions in consumer confidence. Shaken consumers who slow their spending could have a significant hit on many aspects of the economy — including drops in the stock market due to spooked investors.
Contracts and Small Businesses
According to Moses, the cuts to some programs also deal a blow to contracts in the private sector and the associated small businesses. Moses said those cuts to federal jobs and contracts make for an “unvirtuous cycle.” Fired federal workers will look for work in the private sector and compete for fewer job opportunities because of cuts in government contracts, per Fortune.
The numbers can help show just how much money is in play. According to the U.S. Government Accountability Office, the government spent around $759 billion on contracts in fiscal 2023. More than $171 billion went to small businesses.
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Sources
- CNBC, “The markets are being overly optimistic about economic impact, says Moses Ventures’ Danny Moses.”
- Fortune, “‘The Big Short’ investor who predicted the 2008 crash warns the market is ‘underestimating’ the economic impact of DOGE’s mass spending cuts.”
- U.S. Government Accountability Office, “A Snapshot of Government-Wide Contracting for FY 2023.”
