Soros Warns of Recession Ahead
NEW YORK (AP) -- Billionaire financier George Soros believes that despite the recent upswing in
world markets, the global economy could slip into a recession in the next couple of years, Newsweek
reported.
Though U.S. stock markets have regained momentum and are now at all-time highs, "we are still in a
bear market, and the previous lows will be retested, let's say, next year," Soros told Newsweek in the
issue due out on newsstands Monday.
The near-collapse of hedge fund Long-Term Capital Management LP nearly drove the market to a
meltdown, said Soros. It was staved off by a rescue package brokered by the Federal Reserve, as well
as subsequent interest rate cuts by the Fed that injected liquidity into the markets, he added.
Still, that won't be enough, Soros said. The United States is in the midst of a "fairly mature boom" and
faces increasing cost pressures. Japan remains in recession, and Brazil likely will follow suit, despite a
recent global aid package of $41.5 billion, he added.
As investment opportunities decrease, Soros said "the global economy is liable to slip into a recession
next year or the year after."
The creation of a global society could help stabilize the world's financial systems Soros argues in his
upcoming book "The Crisis of Global Capitalism," excerpted in the same issue of Newsweek.
"To put it bluntly, the choice confronting us is whether we will regulate global financial markets
internationally or leave it to each individual state to protect its own interests as best it can," Soros wrote.
Ironically, the United States remains a key obstacle in creating this global society, Soros added. "With
the right sense of leadership and with clarity of purpose, the U.S. and its allies could help to stabilize
the global economic system and to extend and uphold universal human values. The opportunity is
waiting to be grasped."
Soros runs the $20 billion Quantum group of hedge funds, which have been rattled by the turbulent
global economy this year. Hedge funds are highly speculative investment funds with little regulation,
though Soros told Newsweek that should change.
"I think hedge funds should be regulated, just like any other market participant should be. Now, since
hedge funds are offshore, they're more difficult to regulate, but I don't think it's at all impossible if the
national authorities cooperate with each other," Soros said. |
