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Markets could be derailed again, warns Soros
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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…
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Soros is just a Marxist progressive socialist, who created the last bubble, to get Obama elected, and he has been handsomely rewarded, it is his policies that are the problem, Government control of anything is more unstable than the market forces. It is GOV that is the problem! You cannot control markets artificailly for very long, too many variables, and Government is too erratic and political to do it. You cannot make money, if you cannot lose money! Risk and reward go hand in hand. If he is saying all of this then watch out because he is one of the puppet masters running Obamanomics and therefore world markets.
Love him or hate him, there is a reason G. Soros is a Billionaire today. He has an uncommon sense of financial matters. Although I can’t stand the guy, everyone cannot deny he has more of a knack for making profits rather than losing them.
Soros — a liberal, socialist, progressive, etc., — lives by the credo “the means justifies the end.” In other words, he is willing to use anybody and do anything in order to achieve his goals. The 10 commandments, for example, are nothing more than the 10 suggestions. Soros “greatest commandment” is: he who has the gold makes the rules. Consequently, he has no problem with telling you and me that our world viewpoints are either right or wrong. Money talks–but it doesn’t mean the viewpoints behind the money are logical, factual, and correct.
When the world embraces a world currency as well as a world government, Soros (if he lives that long) will be raking in the dough. Take that to the bank.
Geesh….didn’t see that coming. Its not like they solved the structural problems that have lead to unsustainable growth. Paulson, who should be arrested for contempt of Congress and abuse of funds, did not use the money available to him to “buy up bad mortgages” and instead bought stock in failing companies. So with high risk gamblers unchecked and with a blank check ( zero percent interest rates) we are headed toward the same cliff.
Laying all of the elements of the current market situation out on a floor plan view the only conclusion one comes to is a complete market destruction on a global scale in which NO government or groups of governments will be able to claw their way out of.
Currently, all central banks are leveraged to their hilt at the current moment and further leveraging by deficit spending will only propel the descent to sub terrain lows. All markets will be affected and none will be spared. It is quite remarkable how so many trading outfits of all sorts are playing the game on a single square strategy when the bigger game is being played on millions of squares out of view of the single square players. As an old farmer in Nebraska once said, “when it’s hog calling time in Nebraska, then it’s hog calling time in Nebraska”. It will be hog calling time soon.
Soros, a man who breaks countries financially to try to change their political system….why isn’t he ever investigated & fined like Hungary fined him after his market dealings of Oct. 2008?
Soros doesn’t even like the USA, he backs Obama, illegal alien’s marches in our streets, etc.
It’s elites like him that think they know better and try to social engineer societies…they have screwed up everything!
I’d like to see him sitting next to Madoff!
This from a guy that is at least somewhat responsible for what happened and because of his support of Bam Bam and the Progressives will be responsible for the future problems.
Let’s see. Soros makes his fortune in an unstable market. He supports the election of Obama. What does that tell you about his opinion of Obama? Obama is going to make Soros even richer! Unfortunately in this case, it may be a zero sum game. We all lose, except Soros gets richer.
tomdennen: got some facts wrong… Teddy Roosevelt and Jack Kennedy were dead when the events you ascribe to them occurred. You probably meant FDR and LBJ.
Attica,Attica Attica !!!!
Maybe the rest of the world will help bail us out of trouble like we continually do for them….. What was I thinking?
Within a short ten years, we’ll all need gold, ammo and a plot of land to grow food. Soros is buying oodles of gold. Why? He knows the market will crash and then when the states go down like dominos it will be every man/woman for him/her self here in this country. Just imagine what will happen when the “entitled” don’t receive their gov’t checks every month. Just the thought of that possibility led to riots in Greece. Unlike the Greeks, we have actual weapons. It won’t be pretty.
I do not like him, or the likes, since he earns his money by cheating our retirement, etc. It is therefore no wonder, that Vaclav Havel did not give him a visa to enter the Czech Republic. Maybe the US should do the same.
And it is not a great honor, that he broke the Bank of England either.
I think, that the US law should be much more serious about such matters. Otherwise people or organizations (banks) with big capital can influence the markets to their own good and the little men looses only.
It is hard to believe Soros as he has no qualms about making statements that will influence the market for which he has already placed his bets. If I recall he did very well as a result of the market’s last round of problems and was happy, if not gleeful, at the market’s collapse because the worse the market the better he did.
He is a brilliant man and that brilliance allows him to understand how to exploit others
I strongly suspect Soros was involved in bringing down Bear Stearns and Lehman Brothers to discredit McCain and therefore put Obama in office! It was just too convenient for them to go down right before the election like that.
Soros is a leech off of the financial system all the money he has made was caused by him betting against things and sometimes he even causes things to fail just by causing panic, I’m sure he is making money somehow by causing this so called Panic
A fools fool.
gts58: probably want a prez who has experience; any experience running a company, government, something…not a community agitator. the guy to do this is Romney. Some morons can’t look past religion though, but they’ll vote a guy who has none or someone who listens to REV Wright. al sharpton is tame compared to this guy Wright. Romney is a true conservative that has the right experience and has made things happen in places most conservatives wouldn’t and couldn’t. judge this guy on what he does m-sat, and not simply what he does on sun.
“We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.” – can someone please explain the first part and the missing part ? See how we lap it up ?
risenstar – if all financial journalists would just type up: $ 8 000 000 000 000. I like the 42 cents, at least your Auditor General is unfettered. We are on a British convention in Africa, so it really gets confusing when translating into local currencies, and cross rates and having to drop or add three zeros every time.
michaelmoore, it that really you ?
04July55, exactly, Laisezz-Faire and the Invisible Hand, only problem, the Invisible Hand is Feds, and as Karen22 puts it, the Corporate Cloud & Soros Types, where will you be in 2036 ?
They should give you a job at Reuters, tomdennen, those stats would be graphically awesome – indexed line graph,with periodic notes appended, especially 911 !!, hopefully they take the call.
OK, that settles the obituaries, now for the death-blow-blindside-sucker-punch, the markets are collapsing every 15 minutes through carry trade and HFT’s, it is all around us, like a fog, and these financial celebs also want their share of the quota of 15 minutes of fame, if only they would leave that to Holly- and Bollywood.
“We have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.” – can someone please explain the first part and the missing part ? See how we lap it up ?
risenstar – if all financial journalists would just type up: $ 8 000 000 000 000. I like the 42 cents, at least your Auditor General is unfettered. We are on a British convention in Africa, so it really gets confusing when translating into local currencies, and cross rates and having to drop or add three zeros every time.
michaelmoore, it that really you ?
04July55, exactly, Laisezz-Faire and the Invisible Hand, only problem, the Invisible Hand is Feds & Soros Types, where will you be in 2036 ?
They should give you a job at Reuters, tomdennen, those stats would be graphically awesome – indexed line graph, with periodic notes appended, especially 911 !!, hopefully they take the call.
OK, that settles the obituaries, now for the death-blow the markets are collapsing every 15 minutes through carry trade and HFT’s, it is all around us, like a fog, and these financial celebs also want their share of the quota of 15 minutes of fame, if only they would leave that to Holly- and Bollywood.
Think about this, people. This guy shorts the markets and then manipulates those markets to tank. What better tool to tanking markets than putting Marxist-Socialist-Democrats in charge of government.
It’s a 100% guarantee markets are going to go down. So he profits off of the capitalist system while decrying capitalism and promoting his marxist agenda. Brilliant, in a twisted sort of way.
I hope he has a disease named after him.
Why isn’t the article complete?
Shout conspiracy…the media doesn’t want us to know what is really going on?
Come on, print the truth, the whole truth and nothing but the truth
Debt=Slavery.
US Debt to China = Slavery to China.
Goodbye US Superpower, indeed. And Obama will be laughing all the way.
When Soros speaks, it’s always veiled and meant to achieve a result for his purposes, not for the good of the world.
As an aside, it’s uber-funny that, for the liberal/leftist/socialists/Marxists here in the United States, everyone EXCEPT Soros is an “evil, greedy, rich, white man” who must have made their fortunes by lying, cheating, and taking advantage of the “little guy”. Global Socialist/Fascists like Soros are immune to the MSM demonization. Don’t you ever wonder why? Wake up, sheeple….
Oh, surprise surprise. Soros must be listening to Glenn Beck. Glenn Beck said this last week. I think we need to close Washington and give back all, if not most, control to the states. That includes health care issues education issues, agriculture issues, etc. It goes on & on. Let each state deal with all of it. Then each state can contribute to the federal gov. to fund interstates, military, etc. The country is becoming a “state” in itself. That way it will transform smoothly into a global state. WAKE UP & vote them all out!
People just use regulation and “market forces” as justification for swindling each other out of house and home.
Human behavior is the real problem. Regulations and various rules are in place to keep basically honest people, honest. But as we can see the rules do nothing to curb fraud. No one involved will ever claim to be acting criminally. I’m sure that most everything companies did to start this whole mess was “legal”. But the word legal seems to be used these days as nothing more than a means to justify dishonorable, self serving behavior. What possible advantage was there to the removal of the glass steagall act which erected a strict separation between commercial and investment banking? How was removing protections from bank depositors a good thing?
This crash didn’t “have to” happen. It happened because people, seeing problems in the system, did not talk with each other to try and find solutions. Instead business found a way to exploit the system. And regulators didn’t want to do the work so they turned a blind eye. Both sides acted in order to please themselves and provide immediate comfort. If service had been the real motivator this collapse would not have happened. All this talk about rules and regulations are just smoke and mirrors that deflect responsibility away from the individual players.
Wall Street and Big Government are both ponzi schemes run for the benefit of insiders. The rest of us ride or collide with them.
Cynical and duplicitous…that is Soros. Why the hell does he support all these socialist causes? Is it to HELP the economy? No way. He is talking down the markets to cover his numerous short positions. That is his history. IF REUTERS WERE A REAL NEWS AGENCY…THEY’D DO SOME SIMPLE ANALYSIS. But they are not…they are a bunch of HACKS!
Soros is incorrect that markets are inherently unstable. It is the governments and the central banks that make them unstable. Their random manipulation of regulations and the constant but random increase in the supply of credit crates havoc in the market place. If governments ran a balanced budgets, stop creating incentives to speculate in real estate and other markets, and central banks quit expanding their balance sheets, excesses would not be crated.
http://www.TheAngryGrapes.com
You know when a guy like Soros says stuff like this we are at the point of no return. More than likely Soros is protecting himself since he is one of the main architects of the coming economic collapse of America.
What a strange article. “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…”
The ill effects of the Soros/Obama deficit, which Soros is still advocating here, will catch up to the US financial markets long before anything in this mystical and, I suggest, diversionary reference.
Mr. Soros has quite the track record.
Not only did he break the Bank of England, but remember that he was the disease vector for the Asian Flu.
Indonesia, Malaysia, Thailand, Korea…all the Little Dragons got “broken” by Soros.
Now a question: who or what triggered the fantastic outflow of capital from Money Market funds, all at once on the morning of September 18, 2008? There were orders for as much as 500 Billion to be withdrawn from money market funds. Some of this was a reaction to the market forces. But, one wonders how similar it was to events in the UK, Indonesia, Malysia, Thailand, and Korea.
If it flies like a duck, walks like a duck, and quacks like a duck, it might just be a duck…
Certainly quite interesting in light of his other involvements, in politics (bankrolling institutions such as the Daily KOs and Air America).
I’m always amazed at the idiocy of the rightwingers. Under Bush, a free marketer I’m sure, the markets lost a third of their value. Under Obama, a socialist of course, the market has already gained that third back and then some.
The free markets never seem to agree with Republican talking points, do they?
Yes, of course the market is going to crash. Let’s just call it a “reset”. It needs to reset. The whole country needs to financially reset. I got out of the market 2 years ago. Buy gold; if you can’t buy gold, buy food. Live cheaply. Save what you can and put the $ under your mattress. It’s gonna go.
I have been saying this for some time. The combination of false stock market increases that run off of incorrect retail and unemployment rates and then the people buying foreclosed homes as rental properties, it is going to blow up in my opinion by the end of summer. You can’t have high unemployment and a housing market centered on rentals… Who is going to rent a house when they barely can afford a loaf of bread? Then when you research the job numbers you find that the unemployment rate is because of hundreds of temporary census jobs that will end around mid summer or a little after… No jobs, no buying, no taxes being collected… Means government raising taxes and bankrupting more people and businesses.
Underlying all the comments made here including that of Mr. Soros is the fact that there is a harmonic oscillation at play in all aspects of our lives including our financial systems. In order to get the global financial system back into a functioning state and indeed maintaining it in that state it would be crucial to permit these oscillations to continue.
From this perspective we must create an environment where small businesses are permitted to grow, turn into larger businesses and either split or close. In no other industry is this process better demonstrated than Automotive.
The engine of growth and economic stability in almost all countries is small business and unless we are able to help this sector out of the current dilemma I would submit that we will eventually see more global crisis, perhaps of even greater magnitude. Majority of the current financial problems are rooted in lack of employment and this is precisely what small business can resolve in record time.
Consider facilitating a credit, through the unemployment office, to all small businesses so they can hire only three employees at market rates. 3 million jobs at $100k per year would require only a $300B facility. This represents only a fraction of what we have spent so far in USA for stimulus while its impact on the financial crisis would be immeasurable.
Currently credit facilities have only been made available to the largest of our large businesses while very little if any is available to small business. This in my opinion is root of comments by Mr. Soros.
the allusion to the 10 year period between two crises “if repeaated” of course means eight years to go. But there is no rationale, no evidence, no basis for thinking that there is some predictable timeframe here.It’s conincidence, nothing more, and to lull readers into thinking another bust might be 8 years away is a suggestion to suspend one’s critical evaluation skills and rely on chance.
Sorry friends, particularly MarkWG. Black Thursday in 1929 was not the result of ‘random’ gov’t manipulation. It was an unchecked, superheated market with no regulation. Left to their own devices, the biggest, most callous and inventive entities in the market will find new ways of suckering the average investor. The only way to check it is through regulation. Past recessions and depressions prove that time and again new products and schemes arise which knock the legs and confidence out of the market. While 8-10 years of superficial stability may equal a stable investing environment to you, it is a house of cards which needs constant reinforcement to protect those who don’t know any better.
DO I HAVE HIS MESSAGE CORRECT?
1. The replacement of private debt with sovereign debt was a big screwup by the world’s governments.
2. Markets need to be superceded by even more powerful governments.
HUH!!??
He is probably betting on it. This is how he has made all of his money.
Well, we must shrink government. Cut pensions, State and Federal. Pensions are the the biggest accounting lie that have yet to surface.
I think markets get carried away, and self correct via recession, but when gov gets involved stimulating, perturbing banker prudence as allowing everyone to be able to qualify to own a home, borrowing wealth excessively for no-production gov waste, raising taxes in a recession, bailing out bankers and business whose personnel rightly deserve to walk the street, that causes a depression. Soros is right we used the same tools to bail us out as Greenie did after the 2001 crash. Obama would never do this, but the country needs to take a page out of Harding’s playbook when he got gov off our backs, unemployment went from 10% to 2% and the roaring 20s are the proof. Crash of 29 ensued, Hoover increased federal expenditures every year of his term and then of course we got the New Deal, locking in poverty for the next 15 years.
ISN’T THIS WHAT SOROS WANTS, AFTER ALL HE DID SUPPORT OBAMA.
Why does anyone take Soros seriously? He is a political animal who happens to be extremely wealthy. It is impossible to separate the political from the non-political in him since for him everything is political, so I do not put any credence in what he says. More than likely he is just stirring the pot here, trying to help create a new crisis for his favorite big government pols to run against in the upcoming November elections. Soros is an anti-capitalist, and he admits it when he talks of the inherent instability of the markets (and hence the need for government control). One can only speculate as to why someone as successful as he has been in the free market system is as anti-capitalist as he is, but it is impossible to overlook his politics. This is nothing more than the rantings of a politically dangerous oddball, and while the community of free people would be wise to keep a sharp eye on Soros and his doings, I do not believe his predictions have any economic merit.
This stupid ass is smart enough to see that the current practice is unsustainable, but too stupid to realize that more centralized control will completely suppress growth and innovation. The Soviet Union was very stable – would anyone want to live under those conditions??? Free markets have small fluctuations. More restricted markets suppress these fluctuations until they build up to a crisis level and they can no longer be held back – hence the housing/banking crisis. We are headed for another one and Soros is partly to blame.
Isn’t he due to croak soon?
Underlying all the comments made here including that of Mr. Soros is the fact that there is a harmonic oscillation at play in all aspects of our lives including our financial systems. In order to get the global financial system back into a functioning state and indeed maintaining it in that state it would be crucial to permit these oscillations to continue.
From this perspective we must create an environment where small businesses are permitted to grow, turn into larger businesses and either split or close. In no other industry is this process better demonstrated than Automotive.
The engine of growth and economic stability in almost all countries is small business and unless we are able to help this sector out of the current dilemma I would submit that we will eventually see more global crisis, perhaps of even greater magnitude. Majority of the current financial problems are rooted in lack of employment and this is precisely what small business can resolve in record time.
Consider facilitating a credit, through the unemployment office, to all small businesses so they can hire only three employees at market rates. 3 million jobs at $100k per year would require only a $300B facility. This represents only a fraction of what we have spent so far in USA for stimulus while its impact on the financial crisis would be immeasurable.
Currently credit facilities have only been made available to the largest of our large businesses while very little if any is available to small business. This in my opinion is at the root of comments by Mr. Soros.
Soros – the human palindrome – who funds left wing organizations like Move On.org and Media Matters and influences policy in the White House, but keeps his own money in tax free havens outside the US. (Check this up if you think I am making this up.)
Soros also profited hugely from the recent downturn. Seems to me he says one thing and does another.
Looks like old Soros is short.
Soros is absolutely correct – big government spending under this administration is going to lead to the downfall of America. We MUST CUT spending.
Remember how Sarbanes Oxley was overburdening companies and jobs were going to be lost? Well it wasn’t Sarbanes Oxley that brought on the financial crisis.
All Soros is saying is that unless we get some regulation in place we’re heading for another crisis. The cyclical nature of these things is the evidence and moral hazard is the engine which needs to be controlled. Free markets do not control moral hazard which can be especially potent when institutions that are too big to fail are caught up in the competition to deliver higher and higher returns for investors. Look what happened when the Government let Lehman Brothers fail.
We will never know what would have happened if the Government hadn’t stepped in. Most rational economists believe that it would not have been pretty. Who are you going to believe, Glenn Beck or Greenspan (who admitted to a free-market failure).
Right now we have to think our way out. We have to consider policies that reduce moral hazard and protect tax payers. This requires policy wonks, not political hacks who cannot spel.
Why is George worried?? He shorts every currency out there and drives them into the ground. Hey George..Bet you shorted the Euro and Dollar before you made this last prediction…LOL..Ya Schmuck