A day after declaring the war on drugs a failure in need of reform, legendary investor George Soros delivered some more provocations and critiques at a dinner for media and friends of his Open Society Foundations.
The billionaire philanthropist spent a hour in a freewheeling exchange
at the World Economic Forum in Davos, Switzerland, focused mainly on his
issues with Europe’s approach to repairing its economy, but he had some
choice words about Russia and Obama’s flanking of the GOP.
Regarding the European economic collapse, which he deems the world’s most pressing issue for investors, Soros said the most acute phase is over but the correction may still seem severe, comparing the situation to a car skidding out of control, in which the “driver” has to steer into the skid before righting the wheel and resuming the correct path.
Soros reiterated his impatience with what he deems a far too minimalist approach by German Chancellor Angela Merkel. “She did what she had to do to save the Euro by backing Draghi instead of the head of the Bundesbank and now the Euro is here to stay. But any sense of complacency and optimism is immature.” He added, “Germany did the minimum to save the Euro and now that it is saved the concessions her government made are being whittled down.”
“Europe is in a similar situation to the Latin America debt crisis that began in 1982, which led to a lost decade,” says Soros. “Europe could have its own lost decade, particularly in the debtor countries.”
On China, Soros says the country has to change its economic model from depending on export-led growth to consumption-led growth, and that that transition is already underway.
On Russia, Soros has very little good to say. “It’s a sinking economy and is being taken in the wrong direction by Putin.” The best thing to do there is to not invest in Russia.
On the U.S. partisan politics, Soros said that the tables have turned on GOP, which not long ago was working to weaken the Democrats’ power base by going after the public and private pensions and the social safety net. With the power of the Tea Party waning, Obama is shrewdly trying to drive a wedge between the GOP extremists and the mainstream. If it works, he says, the two-party system that can usually be relied upon to reach some kind of compromise might once again be allowed to function.
http://www.forbes.com/sites/bruceupbin/2013/01/24/soros-lets-it-rip-in-question-time-at-davos/
Regarding the European economic collapse, which he deems the world’s most pressing issue for investors, Soros said the most acute phase is over but the correction may still seem severe, comparing the situation to a car skidding out of control, in which the “driver” has to steer into the skid before righting the wheel and resuming the correct path.
Soros reiterated his impatience with what he deems a far too minimalist approach by German Chancellor Angela Merkel. “She did what she had to do to save the Euro by backing Draghi instead of the head of the Bundesbank and now the Euro is here to stay. But any sense of complacency and optimism is immature.” He added, “Germany did the minimum to save the Euro and now that it is saved the concessions her government made are being whittled down.”
Soros doesn’t like the structure that has emerged from the debt
crisis, with Europe divided into creditor and debtor nations and the
creditors are in charge and the periphery nations “reduced to permanent
inferiority.” Says Soros, “This is against the original intention of the
European Union.”
The austerity approach promoted by the Merkel government won’t work,
says Soros, because you can’t lower debt by reducing GDP and especially
by pushing nations into recessions. There are signs of repair in the
hardest hit countries, Italy, Spain and Greece, such as narrowing credit
spreads. (One Greek tycoon at Davos told me he was heartened by the
fact that at least two or three tax cheats are being thrown in jail
every day in his country.) But Soros fears that if these countries stay
in recession long enough the Euro in in danger of destroying the EU.“Europe is in a similar situation to the Latin America debt crisis that began in 1982, which led to a lost decade,” says Soros. “Europe could have its own lost decade, particularly in the debtor countries.”
On China, Soros says the country has to change its economic model from depending on export-led growth to consumption-led growth, and that that transition is already underway.
On Russia, Soros has very little good to say. “It’s a sinking economy and is being taken in the wrong direction by Putin.” The best thing to do there is to not invest in Russia.
On the U.S. partisan politics, Soros said that the tables have turned on GOP, which not long ago was working to weaken the Democrats’ power base by going after the public and private pensions and the social safety net. With the power of the Tea Party waning, Obama is shrewdly trying to drive a wedge between the GOP extremists and the mainstream. If it works, he says, the two-party system that can usually be relied upon to reach some kind of compromise might once again be allowed to function.
http://www.forbes.com/sites/bruceupbin/2013/01/24/soros-lets-it-rip-in-question-time-at-davos/
Interest Rates Will Spike This Year: Soros
There will be a
dramatic rise in interest rates as soon as there are clear signs the
U.S. economy is picking up, billionaire financier George Soros told
CNBC.
Soros said that the U.S. needs to reestablish growth to help shrink its debt pile and that the Federal Reserve's policy of buying U.S. debt, is the right one since it doesn't add to the net amount of debt outstanding. "It's about as close to a free lunch as you can get," he said.
Soros said that the U.S. needs to reestablish growth to help shrink its debt pile and that the Federal Reserve's policy of buying U.S. debt, is the right one since it doesn't add to the net amount of debt outstanding. "It's about as close to a free lunch as you can get," he said.
But there is a risk, Soros warned, "Once the economy gets going, then interest rates are going to take a big leap."
He called it a "delicate two-phase maneuver," where first the Fed throws more money at the economy and then as the economy picks up the money needs to be taken back out. But as money comes out of the economy, it could arrest the recovery.
Soros expects interest rates to jump this year as soon as there are clear signs the economy is on the mend.
"It may already have begun," Soros said of the move in rates. "I think it's most likely to happen this year. Once you're past the uncertainty about the budget and investment decisions are made I think you'll see it."
Soros also pushed back against austerity as a way to deal with excessive debt levels in developed economies. If the economy is falling, then the debt burden is actually increasing, he said.
Soros also warned that the political situation in Europe could get worse over the next two years. "I don't think that Europe can live politically with a situation where there's a center — namely Germany — and countries like Italy and Spain are condemned to perpetual inferiority," he warned.
He also said there could be a potential currency war brewing. "The rest of the world follows a different recipe from the Germans," Soros said. "Germans believe in austerity and the rest of the world believes in quantitative easing, throwing more and more money at the crisis. And actually that works, in the sense that it avoids a depression."
Soros said that Japan has now switched to more quantitative easing, which is bringing down the value of the yen, whereas the euro is more likely to appreciate since the Eurozone doesn't engage in quantitative easing, Soros said.
"That could push Germany into a potential recession or a slowdown," he said.
http://www.cnbc.com/id/100401701
ο ίδιος προειδοποίησε πως το 2013 δεν θα είναι εύκολο στους εξής τομείς:
- αγορά συναλλάγματος
- διαμόρφωση επιτοκίων
- πολιτικές αποφάσεις
He called it a "delicate two-phase maneuver," where first the Fed throws more money at the economy and then as the economy picks up the money needs to be taken back out. But as money comes out of the economy, it could arrest the recovery.
Soros expects interest rates to jump this year as soon as there are clear signs the economy is on the mend.
"It may already have begun," Soros said of the move in rates. "I think it's most likely to happen this year. Once you're past the uncertainty about the budget and investment decisions are made I think you'll see it."
Soros also pushed back against austerity as a way to deal with excessive debt levels in developed economies. If the economy is falling, then the debt burden is actually increasing, he said.
Soros also warned that the political situation in Europe could get worse over the next two years. "I don't think that Europe can live politically with a situation where there's a center — namely Germany — and countries like Italy and Spain are condemned to perpetual inferiority," he warned.
He also said there could be a potential currency war brewing. "The rest of the world follows a different recipe from the Germans," Soros said. "Germans believe in austerity and the rest of the world believes in quantitative easing, throwing more and more money at the crisis. And actually that works, in the sense that it avoids a depression."
Soros said that Japan has now switched to more quantitative easing, which is bringing down the value of the yen, whereas the euro is more likely to appreciate since the Eurozone doesn't engage in quantitative easing, Soros said.
"That could push Germany into a potential recession or a slowdown," he said.
http://www.cnbc.com/id/100401701
ο ίδιος προειδοποίησε πως το 2013 δεν θα είναι εύκολο στους εξής τομείς:
- αγορά συναλλάγματος
- διαμόρφωση επιτοκίων
- πολιτικές αποφάσεις
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