Tuesday, April 7, 2009

George Soros on Yahoo Tech Ticker

Mr. Task over at Yahoo Tech Ticker keeps landing some very interesting guests. Today he has George Soros. What I love is George would not go to the lowly studio to interview; you must come to George to interview him - it's like the mob ;)

I have yet to listen to these 3 videos but judging from the headlines I anticipate I will be agreeing with much of it. As I said quite a few times, if the Federal Reserve is "successful" they will move us out of the 1930s redux and into the 1970s redux. Bernanke has said over and over the big mistake of the 1930s was government's mistake in thinking things were improving and taking away the (much smaller) punch bowl they had. Now we have an Olympic size punch bowl and Ben will make sure he does not make the same mistake - so the great faith that this group of economists will "see the light" at exactly the right time and pull away the punch bowl at the appropriate time is a dream. They will overshoot and once the global economy picks up, we'll combine our quite jobless recovery with inflation. Thankfully the global economy is so weak (ex government paper printing) this won't be a problem in the near term. However in the intermediate term, I am sure the populace will be enjoying their 15%+ unemployment while gas heads to $3+. Here's to success Ben!

George Soros: "Danger of Collapse Has Passed", But Stock Rally Not Sustainable

"The real danger of collapse has passed," says legendary financier George Soros. But the "fallout of the collapse" of the banking system "will linger."

In the wake of Lehman Brothers' bankruptcy on Sept. 15, 2008, authorities were forced to put the financial system remains on "artificial life support, which is where it is now," says Soros, the chairman of Soros Fund Management and author of several books, including most recently The Crash of 2008 and What It Means.

As a result, the billionaire speculator says the stock market's recent rally is doomed to fail. "Now we will face reality," he says, referring to a belief policymakers "did not succeed in recapitalizing the banks to the point where they can lend freely." He added, "talk of zombie banks – unfortunately that's where we are now," Soros says. "Instead of providing lifeblood of credit, [banks] are effectively drawing the lifeblood of activity of profit to themselves."

That, in turn, will keep the economy from producing anything more than a fleeting bounce for the foreseeable future, says Soros, in this first part of our extensive interview.

George Soros: Dollar's Strength a Measure of System's Sickness; Euro Will Remain Viable

George Soros is a man of many skills. The billionaire has been very successful as an author, philanthropist, and as a force in liberal politics.

Arguably Soros' greatest skill – and undoubtedly where he made his fortune – is as a speculator, specifically in the realm of currencies. Soros is best known as "the man who broke the Bank of England" for his infamous short bet against the pound in 1992. Less known but nearly as successful was his 1985 "Plaza Accord" bet that the dollar would fall against the yen.

So when George Soros talks currencies, people listen.

In the accompanying clip, part 2 of a series from my extended interview, Soros provides insights on three of today’s big currency questions:

  • Will the dollar maintain its status as the world’s reserve currency?
  • Is there are risk of a breakup of the Eurozone?
  • Is he still short the British sterling today?
George Soros Says Federal Reserve in Bind; Beware Stagflation, Bursting of Bond Bubble

After the financial market collapsed last fall, the Fed responded with a massive injection of liquidity and expansion of the monetary base.

Eventually, Ben Bernanke & Co. will face the challenge of having to remove that liquidity from the system. "That's a big and difficult task and probably the authorities will not be able to do it well," says legendary financier George Soros, chairman of Soros Fund Management. "That's the fear that drives people into gold."

Soros wouldn't say whether he's actively trading gold but certainly implied it's a good bet; more explicitly, he agreed with the view there's a "bubble" in Treasuries that's likely to burst sooner rather than later.

"The moment this fear of deflation turns into a fear of inflation, you'll find interest rates rise in the long end which is going to choke off the recovery," he says. "If we are successful [in reviving the economy] we are heading from the prospect of deflation to stagflation."

[Mar 31: UK Times: George Soros Sees Global Meltdown]
[Feb 23, 2009: George Soros - This is the End of the Free Market Era; Situation Similar to Disintegration of Soviet Union]
[Jan 28, 2009: Roubini & Soros on Bad Bank]
[Apr 9, 2008: Soros Believes Global Subprime Costs to Reach $1 Trillion]
[Jan 22, 2008: Soros Says World Faces Worst Financial Crisis Since World War II]

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