George Soros

George Soros

Postby winston » Tue May 20, 2008 6:26 pm

Soros Sees Recessions Looming as `Acute Phase' of Crisis Passes
By Jennifer Ryan and Svenja O'Donnell

May 20 (Bloomberg) -- Billionaire investor George Soros said the ``acute phase'' of the global credit crisis is over, and the fallout will lead to recessions in the U.K. and the U.S.

``Financial institutions have been severely damaged and we are currently in a situation that will probably, I think almost inevitably, result in a recession certainly in the United States and most likely in England also,'' he said in an interview with BBC Radio 4 today.

Policy makers in the U.S. and Britain have cut interest rates to protect their economies from falling house prices, and banking losses from the subprime mortgage collapse that now total $379 billion. The Bank of England said last month that the credit crisis may abate, and Governor Mervyn King says the economy may face ``an odd quarter or two'' of contraction.

``We've had a pretty serious crunch, but the acute phase is behind us,'' Soros said. ``Now we have to feel the effects. In the case of the U.K., you've had a housing bubble that in terms of price increases has been greater than in the U.S.''

U.K. house prices had their first annual decline since 1996 in April after tripling in the past decade, reports by HBOS Plc and Nationwide Building Society have showed.

Home prices in 20 U.S. metropolitan areas fell in February by the most on record. The S&P/Case-Shiller home-price index dropped 12.7 percent from a year earlier, the most since the figures were first published in 2001. The gauge has fallen every month since January 2007.

Bank Collapses

Soaring interbank borrowing costs led to the collapse of Bear Stearns & Cos. earlier this year and sparked a run on Newcastle, England-based mortgage lender Northern Rock Plc in September.

European Central Bank President Jean-Claude Trichet refrained from saying that the worst of the credit crisis is over, in an interview with the BBC Radio 4, broadcast yesterday. He said the world faces ``an ongoing, very serious market correction.''

``We're entering a period of much greater instability because we've got the threat of recession and at the same time the threat of inflation,'' Soros said.

The Bank of England signaled last week that it has little scope to lower borrowing costs further to counter slowing economic growth because inflation will exceed the government's 3 percent upper limit for ``several quarters.''

The U.K. central bank has cut the benchmark rate three times since December to the current 5 percent to ward off the first recession since 1991. The Federal Reserve has reduced its benchmark rate seven times since September to 2 percent.

Soros told the BBC in a separate interview that the U.K. central bank's actions were ``like a Greek tragedy'' because it couldn't lower its rate until too late. He urged central bankers worldwide to focus on fighting what he called asset bubbles, such as the boom in U.K. house prices, rather than bailing out the financial industry whenever it got into trouble.
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Re: George Soros

Postby winston » Mon May 26, 2008 9:48 pm

Soros says oil boom is increasingly speculative

LONDON - Soaring oil prices are increasingly the result of speculation, financier George Soros said in an interview published on Monday.

The billionaire investor said the money pouring into the oil market increasingly had the look of a bubble, but that it would not burst until both the United States and Britain were knocked into a recession.

'Speculation ... is increasingly affecting the price,' Mr Soros was quoted as saying by The Daily Telegraph. 'The price has this parabolic shape that is characteristic of bubbles.'

But the cost of oil - which briefly reached new record highs of more than US$135 a barrel in trading on Thursday - was unlikely to fall dramatically until the US and Britain economies began contracting, the paper quoted Mr Soros as saying.

He has frequently been a voice of gloom and doom as the US economy slows amid a wrenching housing crisis and tightening credit.

But the pessimism hasn't stopped his fund from making money.

According to Institutional Investor's Alpha Magazine, the Quantum Endowment Fund - which Mr Soros no longer manages - made US$2.9 billion last year with returns of over 30 per cent. -- AP
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Re: George Soros

Postby winston » Wed Jun 04, 2008 4:43 pm

Soros Says Record Oil Prices Result of `Bubble' (Update3)
By Matthew Leising


June 3 (Bloomberg) -- Billionaire investor George Soros said the record oil prices weighing on the economy are the result of a ``bubble'' caused by speculation from index funds and a tight balance between supply and demand.

``The bubble is superimposed on an upward trend in oil prices that has a strong foundation in reality,'' Soros said in testimony before the Senate Committee on Commerce, Science and Transportation. ``The rise in oil prices aggravates the prospects for a recession.''

The committee is holding hearings on potential energy price manipulation. Congressional leaders are pushing the Commodity Futures Trading Commission and other agencies to step up efforts at overseeing the markets for fuels such as gasoline as retail prices are forcing consumers to drive less. The hearings come as oil has retreated from a record $135.09 a barrel on May 22.

The average nationwide pump price for regular gasoline rose to a record $3.978 a gallon yesterday, AAA said. The price was above $4 in 12 states and the District of Columbia.

Gasoline demand in America fell 4.7 percent last week, which included Memorial Day weekend, from a year earlier, according to MasterCard Inc.'s SpendingPulse report. Sales have declined in 16 of the past 19 reports.

Soros laid some of the blame on recent oil price rises on commodity index funds, which only buy oil contracts, helping to push prices higher.

Not `Legitimate'

``Commodity indexes are not a legitimate asset class,''
he said. He added that raising margin requirements would not affect index trading but could function to limit speculation.

Soros attracted renewed controversy with his 10th book warning that an exploding ``superbubble'' threatens the global financial system, the New York Times reported on April 11. The book bases its conclusions on the idea that individual inclinations and actions generate market fluctuations, rather than the conventional view that markets move toward some kind of equilibrium, the newspaper said.

The current oil market price ``is a textbook illustration of my theory'' on bubbles, Soros said in an interview after his testimony today. ``The buying is based on a misconception'' as well as a fundamental driver of higher prices, he said.

Soros said he does not consider himself an expert in oil markets and is not investing in them now. ``I stay away from the oil market because it is a very tricky market.'' He added ``I don't find it an attractive market.''

Failing Americans

The Senate committee also heard testimony from a consumer advocate who said U.S. regulators are failing Americans by not properly regulating energy markets.

Minnesota Senator Amy Klobuchar said the U.S. spends $600,000 per minute on foreign oil. ``I want to follow the money and figure out how American consumers are getting ripped off,'' she said. ``We need a cop on the beat. We also need a prosecutor on the beat.''

Mark Cooper, director of research for the Consumer Federation of America, said the current commissioners of the CFTC and Federal Energy Regulatory Commission are to blame for allowing energy prices to rise to records.

``Just fire the commissioners and clean the problem up,'' Cooper told the committee. He compared the federal regulators' reaction to recent price spikes to ``the regulatory equivalent of the FEMA's response to Hurricane Katrina,'' referring to the Federal Emergency Management Agency.

``Americans are suffering needlessly due to the financial bubble'' in energy prices, he said.

Soros disagreed with Cooper's analysis that $40 of the current oil price is related to the cost to get it out of the ground, $40 is added by the ``OPEC cartel,'' and $40 is due to speculators in the market.

`Underlying Factors'

``I think that is an exaggeration,'' Soros said. ``There are serious underlying factors for the rise of oil.''

Soros said too much regulation of oil markets could drive trading into unregulated areas such as the over-the-counter market.

Oil has gained 91 percent in a year. The CFTC said last week it's been investigating the transportation, storage and trading of U.S. crude since December. The commission took the unusual step of announcing an on-going investigation due to ``unprecedented market conditions,'' it said May 29.

The agency said today that it will tighten rules for investors and index funds, including increased disclosure about holdings in agricultural markets, after farmers and lawmakers alleged speculators had inflated food prices. It also said it's investigating possible manipulation of the cotton market.

Incomplete Data

Senator Jeff Bingaman, chairman of the Senate Energy and Natural Resources Committee, said last week that acting CFTC Chairman Walter Lukken may have used incomplete data in discounting speculators' impact on soaring oil prices.

Speculators are not driving oil prices higher, according to energy exchange executives.

``We don't see that from our data, but I think it's important the CFTC assure everyone about what's driving prices,'' Nymex Chief Executive James Newsome said in a May 30 interview. ``Our data indicate the prices are moving by fundamentals.''

Intercontinental Exchange's Chief Executive Officer Jeff Sprecher agreed. ``In fact, it looks like the amount of speculators in energy markets has been decreasing as a percentage. What's been increasing is hedgers,'' he said in an interview the same day.

Commercial Users

``We've seen this rapid influx of commercial users,'' Sprecher said. ``That's why we want to get data in the hands of regulators so they can provide assurance it's not speculators'' causing prices to rise.

A U.S. probe into whether speculators manipulated oil prices up to more than $135 a barrel is a ``waste of time,'' billionaire hedge-fund manager Boone Pickens said yesterday.

``What you're trying to do is trying to find a scapegoat and place blame for it when what you have is demand that is greater than supply,'' Pickens said in an interview. ``We're using 400,000 barrels of oil less today than we did a year ago, but the Chinese are now using 500,000 barrels greater than they did last year.''

Pickens himself was criticized for his comments on the investigation.

``To say that investigation and, by implication, regulation, are useless is an indication that what he wants is a Wild West, not an orderly market that has some reaction to supply and demand,'' Judy Dugan, research director of Consumer Watchdog, a nonprofit based in Santa Monica, California, said in a telephone interview.

Airline Industry

Record oil prices are hurting industries such as airlines. Higher fuel prices may push some carriers into bankruptcy by next year, Soleil Securities Corp. said in a note to clients on May 21.

AMR Corp., parent of American Airlines, and UAL Corp., owner of United Airlines, are more likely to be forced into Chapter 11 in 2009 if fuel prices don't fall to ``sustained lower levels,'' analyst James M. Higgins said in the report.
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Re: George Soros

Postby winston » Fri Jun 06, 2008 3:44 pm

“Markets are constantly in a state of uncertainty and flux and money is make by discounting the obvious and betting on the unexpected.”


- George Soros
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Re: George Soros

Postby winston » Sun Jun 08, 2008 6:53 pm

MarketWatch: Soros says commodity bubble echoes ‘87 climate

“The investment flood into commodity indexes bears eerie similarities to the craze for portfolio insurance that led to the stock-market crash of 1987, according to hedge-fund investor George Soros, who warned that the rush into oil has created a ‘bubble’.

“‘In both cases, the institutions are piling in on one side of the market and they have sufficient weight to unbalance it,’ said Soros in testimony prepared for a Senate panel on energy manipulation. ‘If the trend were reversed and the institutions as a group headed for the exit as they did in 1987, there would be a crash.’

“Tuesday’s hearing by the Senate Committee on Commerce, Science and Transportation aimed to determine what factors the Federal Trade Commission should consider when it makes rules on preventing manipulation in the wholesale oil and petroleum-distillates markets.

“It’s the latest public forum focused on whether drivers besides supply and demand are responsible for the recent spike in oil, grains and other commodity prices.

“Soros, who made his fortune speculating on currencies, advised lawmakers to use caution when considering regulations designed to reduce speculation.

“Such rules could push investors further into unregulated markets, he said. Still, varying margin requirements can be used to more actively prevent asset bubbles from inflating, he added. ‘That is one of the main lessons to be learned from the recent financial crisis.’

“He said there are fundamental factors behind the rise in oil prices. Namely, there are increasing costs of developing new reserves and waning oil production in countries like Russia and Venezuela, as well as domestic subsidies in countries such as China that keep prices artificially low.”

Source: Laura Mandaro, MarketWatch, June 3, 2008.
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Re: George Soros

Postby winston » Tue Jul 15, 2008 9:29 am

15-07-2008 07:38:56
INTELLIGENCE: (USD) George Soros on the current credit crisis

(USD) George Soros says the current credit crisis is the most serious financial crisis in our lifetime and it is inevitable that it will affect the real economy.

Fannie & Freddie face a 'solvency crisis', not a liquidity crisis and this won't be the last of the financial disruption.

Value of Fannie & Freddie shares will severely impaired over time. Adds the dollar vulnerable as economy faces recession and Gov't actions involve debt accumulation.
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Subprime

Postby millionairemind » Tue Jul 15, 2008 7:33 pm

Soros says Fannie, Freddie crisis not the last
By Jennifer Ablan

NEW YORK (Reuters) - Billionaire investor George Soros said on Monday that the crisis over Fannie Mae and Freddie Mac will not be the last, and noted that the broader credit meltdown will impact an already slowing U.S. economy.

The Treasury Department agreed to raise Fannie and Freddie's credit lines above the existing $2.25 billion apiece and buy shares to strengthen their finances, if needed. The Federal Reserve offered to let the mortgage finance companies borrow at the rate it charges banks for direct loans.

The government's aggressive move on Sunday underscored problems plaguing the markets and the potential for them to send the U.S. economy into a severe recession.

"This incident (with Fannie and Freddie) is not the last one," Soros told Reuters in a phone interview, adding the year-long global financial market turmoil represented "the most serious financial crisis of our lifetime."

"Freddie Mac and Fannie Mae have a solvency crisis not a liquidity crisis," said Soros. "There's no problem in their borrowing. And in fact, insofar there is a problem, the Fed is there to provide the liquidity."

That said, both Fannie and Freddie are "extremely leveraged," he said. "The deterioration in the housing market, the foreclosures are going to cause losses which exceed their equity," said Soros, whose famous bet against the British pound earned his Quantum Fund $1 billion in 1992.

Fannie and Freddie shares rose as much as 30 percent in trading before the opening bell on Monday, but was unable to hold those gains throughout the session. At close, Fannie shares ended down 5.07 percent to settle at $9.73 while Freddie shares lost 8.26 percent to settle at $7.11.
U.S. stock indexes also posted losses. The Dow Jones industrial average .DJI> lost 0.41 percent to close at 11,055 points, while the Standard & Poor's 500 Index .SPX> shed 0.90 percent to end 1,228. The Nasdaq Composite Index .IXIC> slid 1.17 percent to 2,212.
The government's drastic measures could keep the U.S. dollar under pressure, Soros added.

"I think the dollar is vulnerable because the economy is going into a recession and the actions of the authorities do involve the accumulation of debt," he said. "There is various ratios by which the creditworthiness of a country's assurances are deteriorating."

Soros said the credit crisis is having a growing effect on the U.S. economy, not just financial markets. "It is an idle dream to think that you could have this kind of crisis without the real economy being affected," he added.

All told, Soros said Ben Bernanke, chairman of the Federal Reserve, is in a bind.

"When he recognized the seriousness of the credit crisis, he acted very radically lowering interest rates and he used the tools that are at his disposal," Soros said.

However, now the "armory" is depleted, he said adding that Bernanke can't lower interest rates because of the effect it would have on the dollar and he can't raise interest rates because of the looming recession.

"Therefore, his options are limited -- he is boxed in," Soros said.
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: George Soros

Postby winston » Sun Aug 17, 2008 9:52 am

Soros Hedge Fund Bought Petrobras Stake Worth $811 Million
By Jeb Blount and Miles Weiss

Aug. 15 (Bloomberg) -- Billionaire investor George Soros bought an $811 million stake in Petroleo Brasileiro SA in the second quarter, making the Brazilian state-controlled oil company his investment fund's largest holding.

As of June 30, the stake in Petrobras, as the Rio de Janeiro-based oil producer is known, made up 22 percent of the $3.68 billion of stocks and American depositary receipts held by Soros Fund Management LLC, according to a filing with the U.S. Securities and Exchange Commission. Petrobras has since slumped 28 percent.

Soros has increased his mining and commodities holdings,
a move that accelerated in the first quarter with purchases of such companies as Cia. Vale do Rio Doce, the world's largest iron-ore producer, and Talisman Energy Inc., a Canadian oil and gas company. In November, Petrobras announced the discovery of Tupi, a field with as much as 8 billion barrels of reserves, making it the largest find in the Americas since 1976.

``Petrobras has something that other oil companies don't have: oil -- lots of it and they're going to find more,'' said Ricardo Kobayashi, equity fund manager with UBS Pactual SA in Rio de Janeiro, which manages about $5 billion of stocks, including shares in Petrobras. ``If you can buy now and hang on, if you have the staying power, it's great.''

Tupi is part of a new deepwater offshore region known as the pre-salt that may contain as much as 50 billion barrels, according to Peter Wells, oil analyst with the U.K.'s Neftex Petroleum Consultants Ltd.

Share Slump

The drop in Petrobras' U.S.-traded common shares since June 30 would have reduced the value of Soros's disclosed stake by $235 million.

Soros Fund Management didn't report holding any Petrobras shares at the end of the first quarter. It did disclose much smaller stakes in the Brazilian oil company during 2007, including 150,000 depositary shares, with a market value of about $17.3 million, at Dec. 31. The hedge fund company also had calls on another 35,000 shares at Dec. 31.

Petrobras shares traded at an average closing price of $64.83 each during the second quarter, when Soros bought the stake. The shares today dropped 91 centavos, or 1.8 percent, to $50.68 in New York, valuing Petrobras at $204.8 billion, the world's 11th-biggest company by market capitalization.

Soros funds also bought almost 9.5 million shares of Lehman Brothers Holdings Inc. during the second quarter, according to today's filing. Soros funds held 10,000 Lehman shares at March 31, just before the second quarter began.

Lehman shares closed at $19.81 each on June 30, giving Soros's stake in the New York-based brokerage a market value of about $187.7 million when the quarter ended. Lehman shares have since declined 18 percent, reducing the stake's value to $153.5 million.

Michael Vachon, a Soros spokesman, didn't immediately return a telephone call seeking comment.
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Re: George Soros

Postby millionairemind » Wed Sep 17, 2008 9:27 pm

Financier Soros warns crisis will only get worse
Wed, Sep 17, 2008
AFP

LONDON, Sept 17, 2008 (AFP) - US financier George Soros warned in a television interview Tuesday that the turmoil in the financial markets was far from over, with Britain likely to be the economy most badly hit by the crisis.

As Wall Street braced for the potential collapse of insurance giant AIG, the hedge fund pioneer told the BBC that the wisdom of letting Lehman Brothers go to the wall at the weekend would only be revealed with hindsight.

"I'm afraid we are not through it at all -- in some ways we are still heading into the storm rather than heading out of it," he said.

Asked whether the US government should have rescued Lehman investment bank, he said: "If the financial system survives then it was the right thing to do to let them go bust. If there is a meltdown then obviously it wasn't."

"Saving the system trumps moral hazard. In the end you do whatever it takes to save the system," he added.

However, he said the way US Treasury Secretary Henry Paulson was handling the situation was "very reminiscent of the way the central bankers talked in the 1930s", the time of the Great Depression.

Soros said Britain's reliance on the financial industry make it especially vulnerable.

"The financial industry is a major segment of the British economy and that's why I think Britain is more heavily hit by this financial crisis than most other economies," he said.

More generally, he warned finance had "grown too big, it has taken up too big a share of the world's resources. Now it is shaking and I think when it becomes once again regulated it will be less profitable".
"If a speculator is correct half of the time, he is hitting a good average. Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong" - Bernard Baruch

Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: George Soros

Postby mojo_ » Mon Oct 13, 2008 12:14 pm

Extract from Transcript of 10 Oct conversation with George Soros:

GEORGE SOROS:We are probably at the height of the financial crisis. I think it can't get much worse. I think it could get a bit worse
yet. But then you have the fallout in the real economy.
Not what but when.
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