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To: Alan Whirlwind who wrote (23816)	12/3/1998 10:03:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116759

Soros: System Caused World Crisis Thursday, 3 December 1998 W A S H I N G T O N (AP) BILLIONAIRE FINANCIER George Soros said Thursday the global economic crisis of the past 17 months shows that the international financial system is broken and needs to be fixed. He said that while many countries affected by the crisis suffered from misalignment of exchange rates, poor banking systems and inadequate financial regulation and crony capitalism or budget deficits, there was no common link to the spread of the financial contagion. "International capital flows must have been at the root of the problem," Soros told an audience at Johns Hopkins University's School of Advanced International Studies. Soros said attention should not be confined to the countries affected by the crisis that started in Thailand in July 1997 and then spread to Russia and Latin America "because the international banking system must also be at fault." "Otherwise how could it have been threatened with a meltdown" when Russia defaulted on its debt and devalued the ruble last summer and the Federal Reserve had to rescue the hedge fund Long-Term Capital Market in October. Soros said some economists argued that free markets ensured an equilibrium in capital flows, "but recently we have seen financial markets sometimes move more like a wrecking ball, knocking over one economy after another." Soros said multilateral organizations like the International Monetary fund should offer "international credit insurance" to help countries whose economies are threatened to ensure their stability and avoid the expense of massive bailouts when they tumble into crisis. He said he opposed the idea of new curbs, such as taxes, on short-term capital flows to prevent international investors from heading to the exits when its markets start to decline. Soros runs the $20 billion Quantum Group of hedge funds, which have been rattled by the turbulent global economy this year. Such funds are highly speculative investments with little regulation.