George Soros

[millionairemind]

Soros sees no bottom for world financial "collapse"
Fri Feb 20, 2009 9:26pm EST

NEW YORK (Reuters) - Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker said.

[winston]

Soros: G20 a "make or break" event for markets

WASHINGTON (Reuters) - The Group of 20 nations meeting next week is a "make or break event" for the global markets, investor George Soros said on Wednesday.

"Unless it comes up with practical measures to support the countries at the periphery of the global financial system, markets are going to suffer another sinking spell just as they did on February 10, 2009, when the authorities failed to produce practical measures to recapitalize the United States banking system," Soros said in testimony to the Senate Foreign Relations Committee.

Soros said President Barack Obama could help make the G20 meeting a success by raising a possible solution that would involve increasing the amount that developing countries -- from Eastern Europe to Africa -- can effectively borrow from the International Monetary Fund.

The urgent task of re-inflating the global economy has to be carried out mainly by the IMF, "imperfect and beleaguered as it is, because it is the only institution available," Soros said.

While the IMF's resources were likely to be doubled at the G20 meeting of big developed and developing countries, that would not provide a systemic solution for the developing world, Soros said.

But a systemic solution was readily available in the form of special drawing rights (SDRs), an international reserve asset created by the IMF in 1969 that has the potential to act as a super-sovereign reserve currency.

In addition to the one-time increase of the IMF's resources, there ought to be substantial annual SDR issues, say $250 billion, as long as the global recession lasts, he said.

While it is too late to agree on issuing the SDRS at the G20 meeting, "if it were raised by President Obama ... it would be sufficient to give heart to the markets and turn the meeting into a resounding success, "Soros said.

Soros also warned that if the United States failed to live up to its responsibility in helping solve the global crisis, "we shall cease to be the dominant financial power."

If the global financial system falls apart, "China is liable to come up ahead," he said.

While the United States wanted to re-inflate and Europe wanted to regulate, "it should be possible to find common ground in the need to protect the periphery countries from a calamity that is not of their own making," he said.

"Actually, we need to both re-inflate and regulate, but re-inflation is urgent and regulatory reforms will take time to implement," Soros said.

[iam802]

Soros Says Commercial Property Values Will Fall 30%

http://www.bloomberg.com/apps/news?pid= ... CDwyRZkAUI

By Michael Forsythe

March 26 (Bloomberg) -- Billionaire investor George Soros said U.S. commercial real estate will probably drop at least 30 percent in value, causing further strains on banks.

“Commercial real estate has not yet fallen in value,” Soros, speaking at a forum in Washington, said. “It is inevitable, it is written, everybody knows it, there are already some transactions which reflect and anticipate it, so we know, they will drop at least 30 percent.”

U.S. commercial real estate values have fallen 30 percent from the 2007 peak as cheap financing disappeared and the recession reduced occupancies, RREFF, the real estate investment unit of Deutsche Bank AG, said yesterday in its 2009 forecast. Total returns in a commercial property index used by pension funds may decline as much as 11 percent this year, the group said.

Soros, 78, said the risk of further declines in property prices is reason for the administration of President Barack Obama to move quickly to recapitalize banks. Soros said Obama acted too slowly on a banking overhaul and should have moved immediately upon taking office.

“At that moment of enthusiasm, fresh out of the gate, he would have gotten that money, and then we could have recapitalized the banks the right way, which would be to draw a line over the existing past accumulated bad assets and create new banks on top of these old banks,” Soros said.

‘New Bank, Old Bank’

“Instead of good bank, bad bank, have new bank, old bank and keep the old capital to cover the old assets which are still deteriorating and will continue to deteriorate for several years” because of the coming decline of commercial real estate values, Soros said.

Soros also said that the U.S. may face a new round of inflation should the flow of credit recover because of the large increase in the money supply stemming from the Federal Reserve’s purchases of Treasury securities.

U.S. central bankers decided last week to buy as much as $300 billion of long-term Treasuries and more than double mortgage-debt purchases to $1.45 trillion, aiming to lower home-loan and other interest rates.

“In order to make up for the collapse of credit, we are effectively creating money,” Soros said. “If and when credit is restarted, you would then have an incredibly swollen monetary base, which, if it were leveraged, you would have an explosion of inflation.”

“Right now we are in a period of deflation, but it could easily tip over, where you are facing inflation,” Soros said. “You are then faced with the prospect of draining money supply as fast as credit is created.”

[winston]

Soros sees risk of Britain needing IMF bailout

AFP - Sunday, March 29LONDON (AFP) - - Hungarian-born billionaire George Soros said on Saturday that it is "conceivable" that Britain would have to resort to a bailout from the International Monetary Fund (IMF).

"It's conceivable," Soros said in an interview with The Times. "You have a problem that the banking system is bigger than the economy... so for Britain to absorb it alone would really pile up the debt."

Soros said that "if the banking system continued to collapse, it's (an IMF bailout) a possibility but it's not a likelihood."

The man who made one billion dollars on short-selling sterling on 'Black Wednesday' in 1992 described the current recession as a "once-in-a-lifetime event", particularly in Britain.

"This is a crisis unlike any other. It's a total collapse of the financial system with tremendous implications for everyday life.

"On previous occasions when you had a crisis that was threatening the system the authorities intervened and did whatever was necessary to protect the system. This time they failed."

He said he feared the problem in Britain, with its huge financial and banking interests, could be greater than in the United States.

"American memory is seared by the Depression, the German memory is seared by hyperinflation but Britain has a pretty serious problem in many ways worse than America because the financial sector looms bigger and the overvaluation of real estate is bigger than in America."

Soros said the G20 summit in London next week was the world's last chance to avert economic disaster, but he was not optimistic of a breakthrough in efforts to spur the global economy into recovery.

"The odds would favour that it fails because there are such differences of opinion. It's difficult enough to get it right in your own country let alone with 20 governments coming together, but if it's a failure I think then the global financial and trading system falls apart," he said.

"It's really a make-or-break occasion. That's why it's so important."

Increasing IMF funding to allow it to intervene to help troubled economies is one of the main issues on the G20 agenda.

[winston]

George Soros seems to be trying to focus everyone's attention onto the G20 next week..

Is the G20 really that important ? If not, then why is he trying to focus everyone's attention onto the event ?

[winston]

Bright view eludes Soros

George Soros, the billionaire hedge- fund manager who made money last year while most peers suffered losses, said the four-week rally in US stocks is not the start of a bull market because the economy is still shrinking.

"It's a bear-market rally because we haven't turned the economy around yet," Soros said. "This isn't a financial crisis like the other financial crises that we have experienced in our lifetime."

The Standard & Poor's 500 Index of largest US companies has climbed 24 percent since March 9 on optimism the worst of the 16-month US recession is over. In Tuesday morning trading in New York it was down 2 percent.

The economy continues to contract, and there is a risk the United States falls into a depression, Soros said. "As long as we deal with this in a multilateral and more or less coordinated way, I think we'll get through," said Soros, whose Quantum Endowment Fund rose 8 percent last year, compared with the average 19 percent decline of hedge funds tracked by Hedge Fund Research.

Marc Faber, managing director of Hong Kong-based Marc Faber Ltd and publisher of the Gloom, Boom and Doom Report, said the S&P 500 may drop 10 percent before resuming gains.

BLOOMBERG

[kennynah]

he said on TV...expect 3-4 qtrs of bad economy...

but is he among the few who started buying in arly mar09???

heng heng : lai lai...discuss...

[winston]

Soros sat down today with Reuters Television and Bloomberg News.

From Bloomberg:

Billionaire George Soros said the change to fair-value accounting rules will keep troubled banks in business, stalling a recovery of the U.S. economy.

“This is part of the muddling through scenario where we are going to keep zombie banks alive,” Soros, 78, said today in an interview with Bloomberg Television. “It’s going to sap the energies of the economy.”

The Financial Accounting Standards Board last week relaxed so-called mark-to-market rules, allowing banks to use “significant” judgment in gauging prices of some investments on their books. While analysts said the measure may reduce writedowns and boost net income, investor advocates and accounting-industry groups said it will help financial institutions hide their true health.

Soros said that banking system is “seriously under water” with banks on “life support.” U.S. stocks fell for the first time in five days today on concern that government measures to shore up banks may not help as much as expected and loan losses will exceed levels from the Great Depression.

“They are weighed down by a lot of bad assets, which are still declining in value,” he said. “The amount is difficult to estimate, but I think it’s in the region of maybe a trillion- and-a-half dollars.”

Soros said there is a risk the U.S. economy will fall into a depression if nations don’t act collectively to solve the economic crisis.


From Reuters:

The U.S. economy is in for a "lasting slowdown" and could face a Japanese-style period of relatively low growth with the added problem of high inflation, billionaire investor George Soros said on Monday.

Soros told Reuters Financial Television that rescuing U.S. banks could turn them into "zombies" that suck the lifeblood of the economy, prolonging the economic slowdown.

"I don't expect the U.S. economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown," Soros said, adding that in 2010 there might be "something" in terms of U.S. growth.

Most economists expect the U.S. economy to stop contracting in the third quarter and resume growing in the fourth quarter, according to a latest monthly poll of forecasts by Reuters.

The recovery will look like "an inverted square root sign," Soros said: "You hit bottom and you automatically rebound some, but then you don't come out of it in a V-shape recovery or anything like that. You settle down -- step down."

In the fourth quarter, the U.S. economy contracted at a 6.3 percent annualized rate, and economists think the first quarter's slide will be at least as severe, if not worse.

Healing the banking system, which is "basically insolvent," and housing markets is crucial to recovery, Soros said.

The public-private investment funds -- unveiled by the Treasury last month to get bad debts off bank balance sheets -- are going to work but won't be enough to recapitalize the banks so they are able to or willing to provide credit, he said.

Even a steep yield curve won't generate enough profits to keep the banks out of their vulnerable situation.

"What we have created now is a situation where the banks who will be able to earn their way out of a hole, but by doing that, they are going to weigh on the economy.

"Instead of stimulating the economy, they will draw the lifeblood, so to speak, of profits away from the real economy in order to keep themselves alive."

Soros said the "stress tests" of banks being conducted by Treasury, to determine their financial resilience, could be a precursor to a more successful recapitalization of the banks.

"Being the main issuer of international currency, we have been exempt and we have abused that because we have effectively consumed 6.5 percent more than we have produced. That is now coming to an end."

China recently proposed greater use of Special Drawing Rights, possibly as an eventual global reserve currency.

"In the long run, having an international accounting unit rather than the dollar may, in fact, be to our advantage so we can't splurge -- you know, it felt very good for 25 years but now we are paying a very heavy price," Soros said.

China will be the first country to emerge from recession, probably this year, and will spearhead global growth in 2010, Soros said. He said world policymakers are "actually beginning to catch up" with the crisis and efforts to fix structural problems in the financial system.

The system was "fundamentally flawed, and there is no returning to where we came from," he said.

EURO ZONE NOT IN DANGER

In Europe, he said the crisis provides an incentive for countries that use the euro to remain inside the monetary union, though countries on the periphery still face serious problems.

The euro has been "a tremendous advantage" to countries that use it, adding there's "no question of a weaker country dropping out," Soros said.

While additional resources for the International Monetary Fund will help it stabilize struggling Eastern Europe, he said the Baltic states still face "serious problems" and Ukraine is not far from default.

Widespread use of credit default swaps has worsened the risks for Europe, he said, though he added that Germany, the euro zone's biggest economy, is becoming more open to offering help. "Germany, which has been the most reserved about being the deep pocket of the rest of Europe, has recognized that it too has a responsibility toward the new member states."

Germany has been one of the most reluctant major economies to meet U.S. calls for more fiscal stimulus spending to boost the global economy and fight the financial crisis.

Soros tells Bloomberg and Reuters today that the "US banking sytem is effectively insolvent" and that new "mark-to-market accounting rules keep zombie banks alive."

He continued his subtle push for a new world reserve currency, mentioning the IMF Special Drawing Rights currency basket as an alternative.

http://seekingalpha.com/article/129932- ... vent-soros

[blid2def]

This is dedicated to HengHeng... if I remember correctly, you're a big Soros fan yah?

Soros Sees Strides in Fixing the Global Financial Crisis
http://www.businessweek.com/magazine/co ... topStories

Nothing new in the rest of the interview, but I like this part:

You saw the story about some hedge funds saying: "We're leaving London. The tax situation is not favorable. We don't like business conditions here."

Where are they going, another planet? There's general agreement that regulation has to be global. If you have global markets, you must have global regulation. There is no alternative now with tax havens being brought under control. Hedge funds will have to get used to being regulated.

[winston]

Record fine for Soros Fund over Hungarian transactions

Hungary's financial supervisory watchdog announced Friday it had slapped a 1.6-million-euro fine on an investment fund founded by US billionaire George Soros, for manipulating the market.

The PSzAF said it had fined Soros Fund Management LLC for transactions on the Budapest stock exchange on October 9 that led to a "significant loss in value" of Hungarian OTP bank stocks, which fell in days from 4,000 forint (13.2 euros, 17.86 dollars) to 2,500 forint.

The PSzAF "is imposing a 489-million-forint fine on Soros Fund Management LLC... for violating the rules regarding the illegal manipulation of financial markets," the supervisory authority said in a statement on its Internet site.

The Soros Fund has 30 days to pay this record fine.

The PSzAF said the fund started putting OTP shares up for sale at 4:27 pm on October 9, just minutes before closing.

"The timing, the number and the effects of these transactions on the market point without any doubt to a an illegal market manipulation," it added.

OTP, Hungary's biggest bank, was already hit hard by the financial crisis, like many other banks, but then saw its share value crumble in a few days after October 9.

In a statement Friday, Hungarian-born Soros responded he had been informed of the fine but insisted that he was not involved in the transactions.

"I no longer control the Soros Fund Management's operations, I retired last year and now only oversee the transactions to do with my private account," he said in the statement, published by Hungarian news agency MTI.

"Soros Fund Management is cooperating with the Hungarian authorities and has also launched an internal investigation" into the illegal transactions, he noted.

He added he was "deeply sorry the Soros Fund Management had carried out such a transaction."

http://news.id.msn.com/business/article ... id=2954977