ALTER-EGO IS A GLOBALIST:
Soros issues warning calls for U.S. aid in global crisis
By Kimberly Seals McDonald/New York Post
Billionaire investor George Soros headed to Capitol Hill yesterday to drum up support for the IMF's depleted coffers amid signs that the global economic crisis continues to take its toll.
Yesterday, BankAmerica, the nation's fifth-largest bank, disclosed yet another round of losses related to the turbulence in global markets.
Its third-quarter trading losses have ballooned to a total of about $330 million from a projected $220 million in August.
BankAmerica said the losses won't cause a material hit to earnings, and still expects to report an after-tax profit.
Still, BankAmerica is just the latest in a round of casualties from the rout in global markets and economies.
In testimony before the House Banking Committee, Soros - whose own firm has admitted losing $2 billion from the turmoil - said the IMF programs in East Asia and Russia clearly did not work, and called for the creation of more international institutions to aid in rehabilitation efforts.
So far our stock market has escaped relatively unscathed and our economy has actually benefited from the global crisis, Soros said.
But make no mistake: Unless Congress is willing to support the IMF, the disintegration of the global capitalist system will hurt our financial markets and our economy as well because we are at the center of that system.
One sector of the market where the problems have already been particularly intense is the bank and brokerage stocks.
Over the past few weeks, a flurry of banks and brokerage firms warned that third-quarter profits would be trimmed because of turmoil in emerging markets like Russia and tough trading conditions.
Although most of the companies have already made announcements, that does not mean that the negative impacts are over. The problems continue, said Diane Glossman, banking analyst at Lehman Brothers.
Shares of financial services stocks have been hammered, dropping some 50 percent off their highs.
But the fundamentals are stronger than the stock prices suggest. The turmoil impacts only a handful of banks directly, Glossman said.
Last month, Soros' own Quantum fund admitted it lost $2 billion so far this year because of bad bets on Russian equities and currency.
But the list of losers ballooned daily, as more banks, multinational consumer products companies, hedge funds, and mutual funds joined the parade.
BankBoston said it lost $30 million so far this quarter in international and domestic trading, including $10 million related to Russia.
Credit Suisse Group said its investment banking arm lost between $245 million and $500 million.
Deutsche Bank, Europe's second-largest, disclosed it has uninsured credit risk of $750 million and that it increased provisions by $103 million for Russian losses.
With the tally of casualties still growing, Soros said the IMF is still essential and echoed calls by President Clinton, who's seeking $17.9 billion to restore the IMF's depleted capital.
Congress bears an awesome responsibility for keeping the IMF alive, Soros said.
I am convinced that the attitude of the Congress was already an important element in the failure to deal with Russia.
Investors yesterday focussed on growing hopes for a rate cut, sending stocks higher for a third day. The Dow Jones industrial average rose 79.04 to 8024.39, giving it a three-day lift of 5.4 percent. The S&P 500 gained 7.96 to 1,037.68 and the Nasdaq Composite closed 12.42 higher at 1,678.11. |
