George Soros said this week in Vienna, “We have just entered Act Two of the drama… when the financial markets started losing confidence in the credibility of sovereign debt.”
Soros once told a meeting organized at the New America Foundation in Washington, DC that there was a test of sorts underway challenging his own economic views and principles.
Soros said that what had burst in September 2008 was a “super bubble” — not just an ordinary asset bubble. This one had different characteristics and thus had to be approached in a different way, according to the billionaire investor.
He told me during discussion that White House National Economic Adviser Lawrence Summers was using normal tools as if the U.S. and global economies had experienced a sizeable, but normal, recession. Soros said, “If I am right, their approach will fail.”
And given jittery markets worried about sovereign debt defaults and new asset bubbles as well as credit-deleveraging consumers and other potential economic shocks, Soros looks more “right” than the Obama team.
As reported by CNBC’s Barbara Stcherbatcheff, Soros also stated:
We find ourselves in a situation eerily reminiscent of the 1930s. Keynes has taught us budget deficits are essential for counter-cyclical policies, yet many governments have to reduce them under pressure from financial markets. This is liable to push the global economy into a double-dip.
— Steve Clemons
18 comments on “Soros: It’s Only Act II of the Crisis”