Hedge fund manager George Soros is one of the world’s richest and most successful market watchers (and market manipulators?). Zakaria reports that Soros’ recent plays have netted him over 2 billion. He’s very controversial for his political views though my take is that great business folks can easily separate their politics from their business decisions.
Consuming more than you produce:/ That game is over.
Houses as piggy bank, instead of savings. [BAM! We are seeing this obvious but profound observation coming up a lot]
Misconception: Markets will correct themselves. They won’t. We have reached the end of a bubble cycle started in the 1980s when massive global markets and deregulation frenzy began.
Mortgages as the “detonator” of the nuclear bomb that is the current global crisis. Stock market in capitulation phase that has followed credit problems.
Can’t predict future because it depends on decisions. He says he was wrong in 1998 to predict some sort of climax to the bubble.
“The cost will be greater, the damage will be greater”.
“You need a government that believes in government”
Paulson bailout plan as ill concieved – same kind of financial engineering that got us into the mess. Paulson as behind the curve “all the way” because he buys into market fundamentalism.
The authorities have lost control of the situation.
Soros recommends: Mobilize private capital to buy into distressed banks and lift minimum reserve requirements to free up lending.
Reduce number of foreclosures by renegotiations to sound mortgages that will not exceed 85% of house value. Loss to be absorbed by mortgage owners (banks?). Govt will then guarantee mortgages to 85% value, which would encourages renters to buy. Some losses, short recession.
Soros: I understand the flaws which allows me to profit, but as a citizen I want better regulation. Markets and Govts are flawed. Less regulation, better regulation.
Soros (like Gates and Buffett?) believes the anti-tax positions are false because supporting infrastructure with taxes is so critical to wealth formation.
Soros said he does have inordinate influence as a rich person on politics but , unlike many other rich folks, does not use it to improve his financial positions. He thinks market fundamentalism abets power abuses in politics.
China built assets while we built debts. Tremendous power shift. But America will remain a leader and could be *the* leader with some changes.