A high-profile hedge European fund manager is predicting a “very severe recession” in the U.S. and Britain. 

Philippe Jabre said he supported the Federal Reserve’s emergency rate cut last week, but warned that it left monetary authorities unprotected against a spike in inflation, and will not prevent a serious economic downturn.

“We’re at the end of a 10-year credit orgy,” he told the Financial Times. “We are going into a very slow cash period so those who have debt have to liquidate at any price. The system is reaching self-cleaning.”

The former star GLG trader suggests that hedge funds are ready to profit from the pain.

“It is going to be a fabulous year for convertibles,” he said. “Whatever you lose through credit exposure you can make back through high volatility, and my industry will buy.”