http://www.timesonline.co.uk/tol/news/uk/article5989163.ece March 28, 2009 George Soros, the man who broke the Bank, sees a global meltdown Alice Thomson and Rachel Sylvester George Soros was 13 when the Nazis invaded his homeland of Hungary. As a Jew, he was forced to adopt a false identity and live separately from his parents in Budapest. Instead of being traumatised by the experience, though, he found the danger exhilarating. âIt was high adventure,â he says, âlike living through Raiders of the Lost Ark.â Sixty-five years later, he still thrives on danger. He famously made $1 billion on Black Wednesday by shorting the pound, earning him the label of âthe man who broke the Bank of Englandâ. Last year, as the world tipped into financial chaos, Mr Soros pocketed another $1.1 billion by correctly predicting the downturn. âIâm an expert in crises,â he says. The man who has a phobia about maths has made his name as the philosopher king of economics â his book The Crash of 2008, out in paper-back next week, has been a bestseller on both sides of the Atlantic. Since 1944 he has believed in what he calls âreflexivityâ â the idea that people base their decisions on their own perception of a situation rather than on the reality. He has applied this both to investment and to politics: his skill has been to predict moments of seismic change by identifying a disjunction between perception and reality. When everyone else was convinced that the markets would automatically correct themselves, the 78-year-old âold fogeyâ, as he calls himself, was one of the few warning of recession. He put all his chips on âthe Barack guyâ early on when all around him were still gunning for Hillary Clinton. Itâs almost as if he has been waiting for the Great Recession for the past ten years. When we ask whether he prefers booms or busts, he replies: âI have to admit that actually I flourish, Iâm more stimulated by the bust.â This recession, he explains, is a âonce-in-a-lifetime eventâ, particularly in Britain. âThis is a crisis unlike any other. Itâs 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.â The financial oracle does not know how long it will last. âThat depends on how itâs handled. Allowing Lehman Brothers to fail was the game-changing event. Thatâs when the financial crisis went over the brink.â We could end up with a depression. âUnless we handle it well then I think we would. The size of the problem is actually bigger than in the 1930s.â The problem in Britain, he believes, is in many ways worse than in America or Germany. âAmerican memory is seared by the Depression, the German memory is seared by hyperinfla-tion 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.â He is not worried that an auction of government bonds failed this week â âthat was a blipâ, he says. He would still buy British bonds â âit depends on the priceâ â but he agrees with Mervyn King, the Governor of the Bank of England, that debt is a real problem. It will, he says, put people off investing in Britain. âI think it will have an effect, yes. It is a matter of worry because effectively the hole in the banking system is replaced by increasing the national debt.â There has been some talk that Britain might have to go cap in hand to the International Monetary Fund. âItâs conceivable,â Mr Soros says. âYou 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 . . . if the banking system continued to collapse, itâs a possibility but itâs not a likelihood.â He refuses to say whether sterling has yet hit its lowest point. Has he shorted the pound recently? âI had shorted it last year, but Iâm not shorting the pound now.â Is the euro under threat? âThere is stress in the euro because of the differential in the interest rate that the different countries have to pay,â he replies. Mr Soros is critical of the tripartite regulatory system set up when the Bank of England gained independence. âI have a different view on how the market operates than the prevailing view. I believe that the authorities have the responsibility to forestall, to counter the mood of the markets . . . I think that the problem was that the Bank of England didnât have the supervisory authority.â He does not, however, blame Gordon Brown. âHe underestimated the severity of the problem, but then so did most people. Part of the perceived role of a leader is to cheerlead, so you canât really blame him for that.â From the day he was born, Mr Soros says, he was attracted to crisis. âIt precedes me. I inherited it from my father.â His father had lived through the Russian Revolution and every day after school he would take his son swimming and talk about his experiences. âI sucked it in that way. And then when I was not yet 14, the Germans occupied Hungary, and I would have been deported to Auschwitz if my father hadnât arranged for false papers. So that was a pretty profound crisis. I had to assume a false identity and live a different life.â He was separated from his parents. âWe met occasionally in the swimming pool. But imagine you are 14 years old, you like adventure, and you have a father who seems to understand the situation better than others. Itâs very exciting.â He feels a similar thrill in an economic crisis. âOn the one hand thereâs tremendous human suffering, which is very distressing. On the other hand, to be able to handle the situation is exhilarating.â He has always been something of an outsider. He thinks that this makes it easier for him to see through conventional wisdom. âI have always understood how normal rules may not apply at all times,â he says. In recent years he has been arguing against âmarket fundamentalismâ â âthe accepted theory was that markets tend to equilibriumâ. He believes that the credit crunch has proved him right. âIt reminds me of the collapse of the Sovi-et system, events are always exceeding peopleâs understanding. The situation is out of control. Thereâs a shortage of time to adjust to the change. Change is accelerating.â Like Warren Buffett, he thinks that the complex financial instruments used by the banks were economic weapons of mass destruction. If anything he expected the tipping point to come earlier. âEverybody who realised that this was unsustainable expected it to collapse much sooner,â he says. âIt is so devastating exactly because it took so long.â The urgent task now, he says, is to realise that the system that collapsed was flawed. âTherefore you canât restore it. You have to reform it.â He worries that politicians have not yet accepted the need for fundamental change and that âa lot of bankers have their head in the sandâ. H e was cast as the villain when Britain was forced out of the exchange-rate mechanism. âI didnât speculate against sterling to benefit the public. I did it to make money,â he says. He tells us that he has psycho-somatic illnesses â backaches and pains â that tip him off to changes in the market. âItâs as if youâre a jungle animal, and you see another animal facing you. You have to make a decision: fight or flight? Your hair stands up and you growl and you decide, âAm I going to attack because Iâm stronger or am I going to run away because otherwise heâs going to eat me?â You are very tense. And thatâs the tension that gives you the backache.â The G20 summit in London next week is, he says, the last chance to avert disaster. âThe odds would favour that it fails because there are such differences of opinion. Itâs difficult enough to get it right in your own country let alone with 20 governments coming together, but if itâs a failure I think then the global financial and trading system falls apart.â If the G20 is nothing but a talking shop then he thinks we are heading for meltdown. âThat could push the world into depression. Itâs really a make-or-break occasion. Thatâs why itâs so important.â The chances of a depression are, he says, âquite highâ â even if that is averted, the recession will last a long time. âLook, we are not going back to where we came from. In that sense itâs going to last forever.â
When someone with the experience of George Soros says things could get worse than the 1930s, that's pretty...thought-provoking.
He's trying to replace german sausages sold by street vendors with Hungarian sausages. Its a global conspiracy! http://www.youtube.com/watch?v=f-6n0jlN0Eo
Soros pimps his book more than Bill Gross of PIMCO. Ugh, sick of this sh*t. If I did this I'd be incarcerated.
I still can´t understand why GBP/USD is still hanging around 1,4200. When will itv finally reach parity ?
These articles are just con jobs/bs to sell books by well-connected publishers. The media business is full of this shit.