New York (HedgeCo.Net) – The co-founder and chief executive officer of hedge fund DoubleLine Capital LP predicts bleak financial times ahead, according to a Bloomberg article.

Jeffrey Gundlach says that the first phase of the coming debacle consisted of a 27-year buildup of corporate, personal and sovereign debt. That lasted until 2008, when unfettered lending finally toppled banks and pushed the global economy into a recession, spurring governments and central banks to spend trillions of dollars to stimulate growth.

In the ominous third phase, he predicts another crisis: Deeply  indebted countries and companies, which Gundlach doesn’t name, will  default sometime after 2013. Central banks may forestall these defaults  by pumping even more money into the economy — at the risk of higher  inflation in coming years.

Gundlach doesn’t know when the  third phase will get here, but says everybody needs to gradually get ready for it.

He recommends buying hard assets: Gemstones, art and commercial real estate are high on his list. DoubleLine has been buying the stocks of Chinese companies, U.S. natural gas producers and gold-mining firms because it considers them to be bargains.