Former Trump economic adviser Carl Icahn, who last November was slapped with a subpoena from the U.S. Attorney’s office in the Southern District of New York related to his work influencing Trump administration energy policy, sounded the alarm on Tuesday about the health of global financial markets.
Icahn, a billionaire investor, called in to CNBC to talk about Monday’s massive drop in the Dow-Jones Industrial Average. While he thought that Monday’s crash was a mere blip, he did say that many institutions are over-leveraged right now just as they were right before the great financial crash of 2008.
“You have way too many derivatives,” Icahn said, referring to financial instruments whose value is backed by underlying assets such as mortgages, currencies or commodities. “It is not really a place for the average person to be playing around in derivatives.”
Icahn said that while he expects the stock market to recover its losses, he thinks that this week’s crash was the “beginnings of an earthquake” that would lead to a bigger crash down the road.
“I think eventually, you get through this little panic thing, but one day, this thing is going to implode because you have too much leverage with too many people buying these things,” he said. “And Wall Street sells them these products, and it’s extremely dangerous.”
Watch the video below.