Funds Hub

Money managers under the microscope

Markets could be derailed again, warns Soros

April 14, 2010

CLIMATE-COPENHAGEN/Railway porter-turned-billionaire financier George Soros delivered a stark warning last night that the financial world is on the wrong track and that we may be hurtling towards an even bigger boom and bust than in the credit crisis.

The man who ‘broke’ the Bank of England (and who is still able to earn a cool $3.3 bln in a year) said the same strategy of borrowing and spending that had got us out of the Asian crisis could shunt us towards another crisis unless tough lessons are learned.

Soros, who worked as a porter to pay for his studies at the London School of Economics after emigrating from Hungary, warned us to heed the lesson that modern economics had got it wrong and that markets are not inherently stable.

“The success in bailing out the system on the previous occasion led to a superbubble, except that in 2008 we used the same methods,” he told a meeting hosted by The Economist at the City of London’s modern and impressive Haberdashers’ Hall.

“Unless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble.

“We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.”

One crumb of comfort could be the 10-year period between the 1998 Asian crisis and the 2008 credit crisis. If the pattern is repeated, it should at least mean we have another 8 years to go before the next crash…


Soros also said gold was the ultimate bubble at some economic forum while his fund was busy buying it up. Its hard to trust what Soros says when he has billions riding on it.

Posted by afr6262 | Report as abusive

Who would trust anything Soros would say. He got kicked out of Russia for trying to take over their economy, and he broke the bank in England. He is behind a lot of ills in our American economy.

Posted by Eyeball | Report as abusive

So George Soros, who supported Barney Frank and the democrats in forcing the banks to offer subprime mortgages to bad credit risks, and then encouraged fellow Socialist Barack Obama to quadruple the debt, compared with George Bush’s budget, now thinks his policies are going to cause a financial collapse.

Don’t worry, George Soros is scheduled to make another 10 Billion from the crash.

Posted by BotBot | Report as abusive

nothing happens by chance, especially with the globalist banksters. warnings are thrown out there for purposes of influence, and also for the purpose of trying to make the masses think that they guys like soros are just rugged individualists who do ‘care’ and are trying to warn people. but if you follow the NWO crowd, you see the cohesion of their statements.

THe people of the USA are not as dumb as they used to be, and they are the main economic TARGET of the globalists at present – for the purposes of destabilization and collapse. but people arent going to sit idly by and let america be totally trashed by these bankster criminals.

A lot of these banksters are old and almost dead, it seems they are wanting to go for the gusto with the NWO.
It WILL NOT totally “take” in the USA.

Dont depend on markets. Buy hard assets, etc.

Posted by Republic2 | Report as abusive

I just signed up for the “crumb of comfort”…..what a relief!!!

Posted by EddyCurrent | Report as abusive

Glenn Beck? Are you joking? Peter Schiff and Jim Rogers have been talking about this for many years. Alex Jones and Gereld Celente are also light years ahead of Glenn Beck. Those are the people he gets his information from. Soros is basically Obama’s boss along with Zbignew Brzenski so he is also a good person to listen too.

Posted by b2b | Report as abusive

Soros is wrong. Markets are inherenlty stable (like ecosystems). They become unstable when government interference impedes the feedback mechnisms that make them work. Less government involvement would be better than more. Let failing enterprises fail. That frees capital to fund more rewarding (and sustainable) enterprises.

Posted by kmne68 | Report as abusive

Unlike MarkWG, I do not believe that Soros is wrong or that markets are inherently stable.

However, the rest of his observations are accurate with one important omission: the reason that governments and central banks make markets unstable.

Governments spend more than they should to appease their citizens and advance their power. Wealthy private enterprise coerces and/or encourages governments to make decisions that benefit the few over the many ion order to advance their wealth.

If governments and wealthy private enterprise were more altruistically motivated, there would be few if any bubbles… but there is a lot of money changing hands during those bubbles and much less changing hands during stable market conditions.

Posted by breezinthru | Report as abusive

I can’t access the previous 100 comments, can only read 5 items above, header does not provide for ‘Comments’ tab ?

Posted by Ghandiolfini | Report as abusive

Sorry Ghandiolfini… we’re trying to fix a glitch in the system right now

Posted by Joel Dimmock | Report as abusive

It’s impossible to evaluate Soros’ warning without knowing what he means by markets being “inherently unstable”. He seems to be talking about markets that are “over-leveraged”, but that seems like an odd position for a man like him to take since he himself has used leverage in shockingly unethical ways to destabilize markets like no other robber-baron in history. One has to wonder just what “public policy” he would advocate. Perhaps one that criminalizes an “investment guru” who knows his words will be acted upon from “forecasting” that prices will fall…resulting in prices falling…while accumulating a long position in that same market? A policy like that – presuming it is implemented by the imposition of a good long stretch in prison – is one that I could certainly get behind, but I seriously doubt I’d see Soros standing beside me.

Posted by Battlespeed | Report as abusive

Soros is panicking? This guy make BILLIONS betting on an manipulating down markets. He spends MILLIONS on NGOs that disrupt and influence traditional societies. He is a sel-proclaimed master of the universe. Constitution1st has a similar post. I will say it: SOROS IS EVIL. He is beyond greed, He believes he is G*d.

Posted by Bugler | Report as abusive

Soros is dead on in that financial markets are inherently unstable. Many people become confused because there are many examples of other types of markets that tend to be very stable. You can’t lump all markets into the same basket.

Soros is probably one of the best high-risk investors in history. He makes his money by playing financial market instability. If he were wrong, he’d be broke.

However, he isn’t always correct on the timing. He predicted our latest bubble and crash so far in advance that it seemed like he was wrong, however, he was right. His understanding is very deep, so he knew we were on an unsustainable path far before the markets did, or anyone else did for that matter.

He’s dead on, and it is even very likely that the next complete collapse could end in catastrophe. Almost by definition, the last collapse will be devastating. Our financial markets are driving our country to disaster. If the break up of the Euro seems bad, think of the breakup of the Dollar and the US government. If it leads itself to financial ruin by trying to guarantee financial markets, eventually states will split off and you either have a civil war or a split up like the Soviet Union.

Serious stuff. We’ve been lead into the abyss by terrible economists that cater to big finance, and the politicians that believe what they say.

Posted by smitty123 | Report as abusive

These financial crisises are each larger than the last, and all having a common genesis. The common genesis, in each instance I know of, was public policy. When the crisis hits, the answer is always the same: greater concentration of power. This in turn results in a new, even larger crisis, which is resolved in the same way, ad infinitum. To predict that there will be an even greater crisis is hardly newsworthy. Didn’t Karl Marx predict that “capitalism” would end in this way?

Posted by Wileycoyote123 | Report as abusive

There is stability and stability.
Ecosystems are in dynamic equilibrium but with large excursions. Like in Economics, where large predators consume all available prey. Result is population crashes. Hence wildlife management.

Posted by jantonio | Report as abusive

The inherent instability of markets is, and has always been, a given throughout human history. Only the most economically ignorant would argue otherwise. That is why going back through recorded history, there are always boom & bust cycles, mania (like the East India Company, the Dutch Tulip Craze, the bubble, the mortgage mess, etc.) The real issue is whether regulators have the nerve, much less the authority, to put the proper controls into place.

Posted by TyroneJ | Report as abusive

In Benoit Mandelbrot’s book ‘The (Mis)Behavior of Markets” Benoit presents 10 of what he identifies as “Heresies of Finance” a few of which are:

-Markets are turbulent
-Markets are very, very risky (more risky than standard theories imagine)
-Prices often leap, not glide
-Markets are inherently uncertain, and bubbles are inevitable
-Markets are deceptive
-In Financial Markets, the idea of value has limited value

Read the book to get an insight into what markets actually are in practice, not theory.

Posted by sparafucilli | Report as abusive

Trojan…That’s a great strategy…don’t even attempt to defend Obama just blame Bush and all will be well. Bush fed our arm to the lions so let’s all stick our heads in the sand while Obama feeds the rest of us to the beast.

Posted by MIS91 | Report as abusive

Soros is manipulating the democrats to his benefit-not just the markets. He may be the one who gave us $4 gas which almst halted car sales which then caused mass layoffs which then caused the housing problem. If the government is run by czars who make policy -Make em up as you go- which makes it easy to manipulate whatever market you want.

Posted by chauney | Report as abusive

Over the last year Sorros advised people to get out of Gold while behind the scenes he was buying Gold mines.

Gold is at historical levels with no end in sight, Most all the nations are acquiring Gold for their reserves, and demand seems to be at an all time high.

People brag about Sorros pulling a 30% return on investments, last year I pulled 34.6% by ignoring Sorros.

Be alert and do your own thinking.

Posted by reason | Report as abusive

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see