Masthead graphic based on a painting by Gudrun Thriemer.

Thursday, November 27, 2008

George Soros, "Interview: The economy fell off the cliff," Der Spiegel, November 24, 2008.

[In this interview, Soros reveals many of his beliefs about the relationship between government and markets, territory that is fraught with sectarian differences. For example, Soros declares himself to be "against market fundamentalism" largely because he believes that "the state should set the rules and enforce them--but not become involved as a market player."

While this runs counter to the neo-liberal embrace of wholesale de-regulation, Soros says he believes "regulation should be kept to a minimum." For him, regulation arises mainly out of a need for "some cooperation between market participants and authorities," which is a far cry from setting the rules and enforcing them.

Still, he articulates the judgement that "it is better to have a government that wants to provide good government than a government that doesn't believe in government." Survivors of Katrina would probably agree.

Soros also rejects public private partnerships, but looks forward to "a cap and trade system with auctioning of licenses for emissions rights." He believes that "transactions involving credit should be regulated" but that "it is impossible to prevent speculation." The only difference between speculation and investment is "basically that investments are successful speculations."

Evidently, Soros does not speculate (or invest) in military products, but he is prepared to do so with carbon production. -jlt]

  The situation is very similar to the 1930s -- but it is going to unfold differently. We have learned not to allow the financial market to collapse. We will spend all the money in the world to prevent that from happening.

SPIEGEL: Mr. Soros, in spite of massive interventions by governments and federal banks the financial crisis is getting worse. The stock markets are in free fall, millions of people could lose their jobs. More and more companies are in trouble, from General Motors in Detroit to BASF in Ludwigshafen. Have you ever seen anything like it?

Soros: Never. I find the present situation dramatic and overwhelming. In my latest book “The New Paradigm for Financial Markets: The Credit Crisis of 2008” I predicted the worst financial crisis since the 1930s. But to tell you the truth: I did not actually anticipate that it would get as bad as it did. It has gone beyond my wildest imagination.

SPIEGEL: What are your fears for the coming months?

Soros: I think that the dark comes before dawn. The financial markets are under great pressure because of the lack of leadership during the transition period. In the next two months, the markets will experience maximum pressure. Then we will see some initiatives from the Obama administration. How long the crisis lasts will depend on the success of these measures.

Read the rest here =>
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