BILLIONAIRE investor George Soros said the financial crisis is the worst since the Great Depression and the markets will fall once more this year after a brief rebound, it was reported today.
“We had a good bottom,” Soros told Bloomberg News, referring to Wall Street's rally following JPMorgan Chase's deal to buy beleaguered Bear Stearns.
“This will probably not prove to be the final bottom,” he predicted, adding the rebound may last anywhere from six weeks to three months as the US moves closer to a recession.
Soros said he recommends the creation of an exchange with a sound capital structure and strict margin requirements, where current and future contracts could be traded.
He also said banks must control their own borrowing and curtail lending to clients such as hedge funds by demanding greater collateral and margin requirements on loans.
His words re-state the warning he gave in January, in an article in the Financial Times.
Then, he said that although the financial crisis resembles other crises since the end of the Second World War, “There is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency.
“The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.”
He criticized the tendency of authorities to intervene in the economy and markets - as the US Fed did during the market turmoil earlier this year. This "moral hazard" encouraged more borrowing and expansion and led to widespread belief in "market fundamentalism" in the Eighties - "regulations have been progressively relaxed until they have practically disappeared".
“The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves.
“Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.”
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Munhumutapa • munhu.mutapa@yahoo.co.uk Subject: Conflict of interest / Insider Trading Tue, 14 Oct 2008 03:58:16 • Mr Soros`s Billions of worth attest to his acumen in the business world but I believe he is fundamentally wrong with this analysis. As someone who is a some-what a perma-bear ( a person who usually takes a negative stance about economic prospects) , this analysis is really self serving. In this current crisis were confidence is thin, an influential person like him coming out with such statements only fuels more pessimism which benefits his short positions in the market like his famous hedge against the pound sterling in the early 1990s. He also had his expensive mistakes but because he is wealthy he can hold a position till his prediction seemingly comes true just like we know that what goes up must eventually come down some time.
It is also convenient on his part to talk about the end of credit expansion when the Fed Reserve ,ECB and BOE are all cutting interest rates and plying the market to the tune of over a trillion dollars as I write this. All this points to attempts to expand credit availed to the world economies. When ever the Fed Reserve cut rates, the aim is to stimulate liquidity and they have cut rates from 5% a little over a year ago to about 1.5% now. Add the $140 billion stimulus passed in the US earlier this year with another stimulus being mooted by Democrats to the near $850 billion availed to sort out the wall street madness only a week ago and you will realise credit has actually been boosted beyond what it was a year ago except that its only availed to rich men like Mr Soros. The suggestion that hedge funds should have access to funds tightened is a means to choke the life out of stocks and bring down stock prices once more. Hedge Funds can be a nuisance and bring down the market through abusive short selling yet they remain a valuable source of liquidity in the market. you have brilliant investors like Warren Buffet who look at the long term picture so do not necessarily boost the market in the short term which is where hedge funds come in as they have a mandate to make a good return on investments since they are rated on how they have performed on a shorter time frame.
A case in point is when short trading was banned in the US, the market briefly rose but then fell harder because a huge chunk of money was on the sidelines because hedge funds had their wings clipped. While banning shorts was meant to stop prices falling the unintended effect was the market did not have these hedge funds to call the market bottom, a point where they reverse their activity by by buying back stocks to close the short position and in the process contribute to market rises. As the adage goes..Bears are the best bulls because when they take profits they buy back short positions and markets make huge gains. The markets may yet fall but its extremely unhelpful when a person with an interest in markets falling comes out to fuel a drop..boy, dare I whisper conflict of interest. Advise people to bail out so that I can gain on my bets that people will bail out
n/a • n/a Subject: Soros Mon, 13 Oct 2008 18:32:26 • It is a well known fact that Soros is funding regime change groups in many developing countries including Zim. MDC and other civic groups in Zim have been recipients of such largesse. It is interesting to note that Soros is predicting another fall in world markets. Soros has a track record of benefitting from market crashes. For example, after the 1987 crash (Black Monday) Soros made billions from hedging his bets on the UK exiting the Exchange rate mechanism. During the same crash(1987), Warren Buffet (a very rich american) bought shares in Coca-Cola for US 5.76 dollars per share and ten years later the share price had risen to US88 dollars.That is a hefty return on investment.The above examples illustrate that for some rich people, the global financial crises is an opportunity to get even richer. Wealth like energy can never be destroyed. What is happening now during the global financial crisis is that wealth is being transferred from millions to a few very rich people. If shares have crushed, one can buy them cheaply, If house prices are falling, one can purchase a house cheaply etc. Now transferring this scenario to Zim,the question then arises why MDC-T wants the Finance Ministry. MDC-T has never even run a beer hall in Zim, why is it hell bent on getting the Finance ministry. The answer is that for the MDC-T, it is payback time to its backers. The payback will be in terms of making the resources of Zim accessible to MDC-T backers.Land,minerals,companies etc will be offered to foreign investors at give away prices in exchange for stabilsation packages.There will be an unreversable transfer of wealth from Zims to foreigners (couched under the guise of property rights,land rights,mineral rights,international law etc). There will be unprecedented asset stripping in Zim. That's why the MDC-T wants the Finance Ministry because it will be the International Bankers running the show rather than MDC-T. MDC-T behaviour can be likened to that of an arsonist who sets fire to a building and then hangs around to douse the flames and then claim to be the hero of the hour. MDC-T set the economic fire that is raging in Zim by calling for sanctions against Zim populace in te first place.It shows a callous regard for the Zim populace by the MDC-T to now purport to have the solutions to the situation they caused in the first place. If the MDC-T really care about their fellow Zims, they should ask for the sanctions to be removed immediately.
N/A • N/A Subject: L.O.V.E = love Mon, 13 Oct 2008 10:04:23 • Soros' opinions together with his ENOUGH regime change charities being set up all over the third world underline some of the reasons why Britains unblinking gaze trained firmly on Zimbabwe has become so excrutiatingly, unimaginably, jaw droppingly embarrassing to witness.
However, this discomfiture is somewhat mitigated by reading the prenuptial agreement of the morganatic marriage between Britain and Tsvangirai. In her dowry Britain has been unfailingly generous to Morgan, his family and his acolytes. The dowry includes worldwide travel, globe trotting or trotting the globe and generous donations to his rented crowds, as well as lesson in how to win friends and influence people. In return all Morgan has to do is deliver Zimbabwe's key government ministeries and hand full control of Zimbabwes resources to Britain.
Like a giddy love-sick teenager, Britain gushed her love for Morgan with breathless enthusiasm by declaring to the world Morgan is MORE as she designed his big, bold slogan. This was not enough. Britain is crazy in love. She then bought him a Morgan is MORE bus. [Don't laugh! It's not as if your lover ever bought you a bus with your name on it!]. Zimbabwe too grasped the intensity of this love and is turning out in droves to help Morgan celebrate his good fortune.
Perspiration, desperation, inspiration - Today Britains lens is firmly and lovingly glued to the matchless visage of her dearly beloved Morgan. Britain's every thought, word and deed is presented to the world as Morgans dearest wishes. Unless Morgan gets a better share of all the important ministeries which will enable Britain to fully control Zim, Morgan is always going to be a pain in the neck for all Zimbabweans and Zimbabwe is going to pay dearly. Sanctions are never going to be removed without Britain getting all she wants. Britain is predictable because Morgan is predictable. Morgan is predictable because Britain is predictable.
Like all great love affairs such as Romeo and Juliet, Anthonly and Cleopatra, Bonnie and Clyde - Morgan and Britain are keeping the embers of their intensely young and deep love burning on the world stage. One day plays will be written about it. Operas will be sung. Cliches will be spoken. Poems will be recited and tragic/comedies will be enjoyed.
Britain - Less is More, More or Less!!!
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