In his 22-page annual letter to investors, Baupost Group’s Seth Klarman warned that increasing political and social tensions around the globe may end in an economic disaster. This according an article in The New York Times that describes the letter as a “warning shot.”

“It can’t be business as usual amid constant protests, riots, shutdowns and escalating social tensions,” Klarman wrote in the letter, which was reportedly shared during the annual meeting of the World Economic Forum held earlier this month in Davos, Switzerland.

“As the post-World War II international order continued to erode,” Klarman notes, “the markets ignored the longer-term implications of a more isolated America, a world increasingly adrift and global leadership up for grabs.” He highlights that increasing levels of sovereign debt since the 2008 financial crisis could lead to financial “panic,” and underscores worries about what the debt load in the U.S. will do to the dollar’s status as the world’s reserve currency. Klarman writes: “There is no way to know how much debt is too much, but America will inevitably reach an inflection point whereupon a suddenly more skeptical debt market will refuse to continue to lend to us at rates we can afford. By the time such a crisis hits, it will likely be too late to get our house in order.”

The letter asserts Klarman’s belief that the American public has become desensitized to these risks, that investors are “prone to project their own recent experiences into the future.” He adds, “So, when adversity is absent, investors become complacent. They assume good times will continue, and they grow careless about risk, perceiving it through rose-colored lenses.”