Funds Hub
Money managers under the microscope
Markets could be derailed again, warns Soros
Email 
Print
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…
Comments RSSPost Your Comment
-
Author Profile
-
Soros has money that will be burned if he does not turn this around folks. Either way, ask him for a hand out not the people that are trying to keep this country together. Educate yourself please. Do you trust lawyers? Politicians are the same. Always out for themselves.
I don’t know George. Yes we have to be careful in the markets, but I gotta wonder how much you had a hand in the troubling times last year.
Goldman Sachs has too much power in DC. Both parties are living in fantasy-land. Dems think you can have for-profit entities provide benefits to preferred constituencies without consequence. Repubs think markets can sort it out without understanding moral hazard.
Make government smaller. Let the stupid fail. No government insurance if you are trading your own account.
JoeJoe
That’s just great. Soros, a commie lib, has been arguing for more government control of the US economy and more taxes and entitlement programs for years (just like all commie lib Keynesians educated at the London School of Economics). And now he has the temerity to feign concern that these socialist policies are bad for the US and the world; that these policies are setting us up for a big fall? Trust me, he’s hoping for a big fall because he has already positioned himself to PROFIT from such an outcome! (ooh, there’s that nasty word again…PROFIT. Good for Soros but bad for we mere mortals.)
yeah if thier a another crash I look at soros as chief designer of that and health care in states. he want to crash the us dollar so north american union can be set in place along with the amero as new form of currency.
Given President Obama’s penchant for divorcing his policies from reality, we’ll be lucky to have 10 months before the next crash, let alone 10 years. The Democrats cannot even write a “health care” bill without screwing up their own health care, let alone not screwing up the health care of the American people.
He the one crook to keep an eye on, He want to implode so new currency can be in place called the amero in the us and north american union to be up and running.
History doesn’t dublicate itself, it repeats itself… trouble is it never happens in a measured cycle until its over.
This guy looks suspiciously like Emperor Palpatine. I think there are self serving interests in his comments. I would recommend we don’t listen to him. He is pushing philosophy. What he wants is not in the interest of USA.
Amazing hypocrisy from someone who has made billions off of market volatility and instability. He on a daily basis, manipulates markets for his own profit. If Soros is going to influence public policy he should be making public what positions his funds have in the markets. Otherwise he should keep his trap shut.
He is right. The US and the British governments are borrowing massive amounts of money with no prospects of paying it back. Hence we are going to enter a period of hyperinflation, which is a form of tax, and then a really bad bust. I cannot understand why Soros is a liberal and supported Barack Obama who is profligate spender. He is probably shorting the dollar, which is a good idea. Anyway, the money is not going into the main street economy which is bad, because this will hurt the little guy.
he can build and create a bust upon his capacity dollar wise along with his followers. do the opposite like OBAMA ride the tide.
This Keynesian HACK must have picked up some Austrian Economic books recently. I can’t believe such a manipulative and spineless man would speak words that even slightly echo the truth.
THE TRUTH – Washington needs to start listening to RON PAUL and Peter Schiff. They’ve been sounding the alarm for YEARS and continue to advise us that the next bubble is building on the back of our flawed monetary policy.
END THE FED, allow the free market to work.
I find it interesting that nobody’s comment concerning this man made it past the moderator. (Or is my computer broken?)
Why do I want to take Soros’ advice? He supported Obama who spends at rates that make drunken sailors blush.
Here’s the Soros observation: “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.”
By the way, isn’t he a value buyer, meaning dips in markets in general and select stocks per se work to his favor?
Never mind that this guy once tried to break the Bank of England.
And which form of public policy does the self-proclaimed communist favor?
Mr Soros is due a certain amount of respect for a level of success that has eluded so many. The two references to a part time college job is petty and without relevance to this story and suggests a lack of good judgment by the reporter
Don’t count on that crumb of comfort – The world is spinning much faster nowadays
Well, if you are calculating when our outstanding Treasury debt (currently $8,347,257,429,111.42) will return to bite us in the ars… I doubt we breathe easy until 2018… we are running $1.5 Trillion+ deficits, so expect the nation to directly owe roughly $12 Trillion by December 2012. Maybe the Mayans were looking at the financial end of the planet.
Every time government tries to straighten these ups and downs out they ALWAYS create the beginning of the next bubble, unwittingly, of course.
soros, what a joke–the markets need less regulation–let the people and the free markets work and you’ll see a stable economy. Government interference and regulation cause the instability–you should have gone to school in America.
criminal…..goes short and then talks the market down…
Our country is being run by left wing socialist lunatics who are trying to turn us into a third world nation. It’s not an extremist opinion, it’s happening right now in front of your eyes.
Does it make you wonder how a man who makes over a billion dollars a year profiting from unstable markets, can be comlaining about market instability? The very vehicle which has made him one of the richest men in the world.
Someone please explain why he backed and bankrolled Obama’s election?
Don’t you love they way Reuters sells this wacko leftist fricking multi-billionaire by painting him as a “poor little porter”…you radicals can’t have it both ways, you want to trash the wealthy, unless he’s your leftist darling – it ain’t flying anymore.
show the comments you gutless jerks.
This guy sure likes talking out both sides of his mouth. He supports the politician in the US that openly wants to run up debt, then says running up debt creates instability. Then says markets are unstable and stability should be the objective of public policy (?????). How about make a few common sense rules, ENFORCE THEM, and otherwise stay out of the way and let companies fail. Pain is how businesses learn to behave, and the employees will get work with the next entities to take the failed companies places. This guy has already proven he’s a meddler, albeit a smart one. Soros is in it for Soros.
Yeah, wasn’t it Soros who so strongly supported the bank busting Obama? Soros = hypocrisy.
Thanks for the tip. Mr. Soros. I will now invest heavily in the stock market. Betting against you puts me on the side of the angels.
NOT A SOROS FAN – BUT HE IS RIGHT ON THIS ONE! TALKING HEADS TELL US THERE IS NO CORRELATION BETWEEN THE STOCK MARKET AND UNEMPLOYMENT – CONSTANT MSM TALKING POINT! EVERYONE AFRAID TO CRITICIZE OBAMA FOR FEAR OF BEING CALLED A RACIST – FACT IS – HE IS TOTALLY UNQUALIFIED TO HOLD THE OFFICE OF THE PRESIDENCY. OBAMA IS NAIVE AND NARCISSTIC AND ARROGANT! LOOKED LIKE A SISSY BOY TRYING TO THROW THE OPENING DAY PITCH – I CAN NOT BELIEVE THAT BOOB IS OUR PRESIDENT. BUSH WAS BAD, REALLY BAD – NOT A TRUE CONSERVATIVE AND THEN JOHN “NIGHT OF THE LIVING DEAD” MCCAIN! CANT THE REPUBLICANS FIND A CREDIBLE CANDIDATE? LOVE TO SEE RON PAUL BUT THE MSM WILL DEMONIZE HIM. GINGRINCH VERY SMART – BUT TOO MUCH BAGGAGE. PALIN MAY END UP BEING THE BEST OF ALL – AT LEAST SHE IS A LOT EASIER TO LOOK AT THAN OBAMA!
So basically, Soros – the man who gave us a “spend until you drop” socialist in Obama – now agrees with the fiscally conservative Tea Party movement(40% of whom are democrats).
He agrees that borrowing trillions on the backs of future generations, just because someone is willing to extend you a line of credit, is a fools game that can only end in tragedy.
Since there are no free markets, anywhere, I don’t understand why Soros is talking about them.
Sobering thought isn’t !
Of course “markets are inherently unstable . .” and that is why the free market works so well. It self-adjusts through supply and demand. Each individual item, product, service, industry is adjusted by the vote of every individual who participates in a market transaction through the use of his vote, i.e. his DOLLAR. In this way, the market is regulated by the choices of the consumer. Producers react to sales data as evidenced by positive (profit) or negative (loss) and adjust their output in order to stay in business. This is the most effective and efficient means of economic adjustment possible. With the exercise of the individual’s preference, no industry or market sector can ever be monopolized (read government-controlled) to any degree that could radically affect all other sectors, which is the situation we are in now owing to out-of-control government interference. LAISSEZ-FAIRE. I don’t know what Soros studied at his Schoold of Economics !!
Well no wonder! He’s the one who is going to CRASH IT! GRRRRR!!!
Soros the puppetier behind Obama.Believe the oposite of what either of them say. He crushes currencies with the help of crooked politicians. He’s for “public policy” as long as the “objective” of lining his pockets and adding to his power are satisfied.
8 years? How about 8 months.
I wouldn’t count on the next crash to take 8 years to develop, or even 8 weeks. The insane, immoral measures the US took to paper over this most recent crash with borrowed, stolen, and newly printed money, and Enron-esque accounting rules changes, are unprecedented in history. This time it could indeed be different.
A very interesting article. I was unaware that Mr. Soros worked his way through college as a railway porter and rose to be one of the wisest people on the planet. A truly amazing man.
We do not have 8 years. What Greece is going through now, and the scenario of informing its creditors that it can only pay 35 cents on the dollar, when it comes to sovereign debt, will be repeated time and time again, by other countries.
When the ratio of contracted financial obligations, globally, to the global gdp is 10:1, and rising, the carnage will be widespread. Old financial institutions razed like Coventry or Belgrade during the Second World War, currencies as worthless as reichmarks, which was the currency of Nazi Germany, to my understanding.
We will see alliances formed, with common currencies, and
a distancing of policies that got us into this mess. For instance, no stimulus, no quantitative easing, no sloppy research when it comes to bigotry in the financial
markets.
Hold onto your hats, folks, the bumpiness of the ride is just getting started.
Odd that Soros has invested heavily in gold the past year, now he’s chicken little about stocks. Too bad there isn’t a law against this.
THE SHIFT IN WORLD ECONOMIC PREDOMINANCE
From ‘The Great Reckoning’, by James Dale Davidson & William Rees-Mogg, 1993.
All long-term credit cycles end with asset crashes in the markets of the leading economy. Measuring from crash to crash the dates of the modern credit cycles are as follows, starting with the South Sea Bubble in 1720:
Span Duration
1720 – 1772 52 years
1772 – 1825 53 years
1825 – 1873 48 years
1873 – 1929 56 years
1929 – 1990 61 years
Next big one: 2036 or not at all if Capitalism is replaced with Sovereign currencies.
“The crashes and resulting depressions appear to be less intense and traumatic when the end of the cycle does not coincide with a shift in world economic predominance.”
Recent benchmarks are Common Cause:
1907 Financial Panic
1913 The privately-owned American Federal Reserve (FED) System Created
1929 The Great Depression – (Nice work, FED and Benjamin Shalom B. is returned to office!)
1933 Theodore Roosevelt’s Executive Order 6102 outlaws owning gold
1934 Gold Reserve Act freezes gold at $35 per ounce
1971 United States abandons gold standard
1966 Jack Kennedy introduces sovereign money – Silver Certificates
1974 U.S. citizens allowed to own gold
2009 Gold exceeds $1100 per ounce”
The depression following the 1990 crash is fully upon us and the consequences are global because we are in the middle of the biggest shift in world economic predominance ever.
We will not see the end of it for a long while – all we will see are frightening reports of the transfer of huge amounts of money to the banking cartels and hear their stories of ‘green shoots’ and ‘recovery.
Until work is returned to the people there is no recovery.
Fair point Billybob… we’ve been slow to clear the backlog. The occasional comment has been knocked back, but only the most gratuitous abuse which steers wide of fair comment. thanks for contributing to the debate
Fair comment Gotthardbahn.. though as the UK conservatives would say, ‘we’re all in this together’
Well, through it all the rich get richer and the poor just starve. Breaks my heart (not really)when I hear some Billionaire lost 50-60 million dollars because of the market. Greed, avarice and cupidity drives the markets nothing else. It is no longer impossible for a man to spend a billion dollars but it would take quite some time to do it. Why someone feels the need to acquire several billions or more is beyond me. The interest earned in a day is more than my disability is for a year. Obama is all he should not be and we need to throw him and the rest of the fools on Capitol Hill out in the next election.
Globally, government’s stimulus money is creating historically unprecedented,incomparable, and unstable macro-economy with tremendous liquidity chasing commodities, stocks, currencies and other asset classes.
Enhancing fiscal and current account imbalances of some nations in relation with government credit, and creating super-bubble simultaneously in financial market are the contradiction looks like EURO problem that TB issuance of Greece makes no sense because fundamental mechanism of EU does not work.
Funny, I never would have thought that Soros would have said something like that. But he is right. We are borrowing ourselves into oblivion, and it will cause a lot of pain if it is not brought under control. The solution is simple, balance the budget, pay down the debt. The answers are hard for politicians to swollow, it means cutting favorite programs, and bringing spending, not only under control, but cutting it. And also, wow, raising taxes? I personally don’t think they need to raise taxes, just start slashing spending.
The sooner it crashes the better.
Just a couple of recent quotes from daily press from the lucky country.
Australia lost 80,000 manufacturing jobs last year.
5% of taxpayers paid 80% of personal income tax.
The concentration of capital in few hands and the loss of jobs in ‘developed’ countries is not sustainable.
If it is not another market crash, it must be another revolution.
2017 will be a nice anniversary!!
Do you honestly think that the Obama administration can be respnsible enough (notice not a single real business person is part of this cabal!)to correct and control markets? Give me a break! Their answer is to spend other people’s money, OURS!
Soros should be investigated—what are his current positions—short I’ll bet