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  • Soros on Act II of the Global Economic Crisis

    Count George Soros among those who believe we are heading toward another downturn in a double dip global recession. Speaking in Vienna, Soros said we have weathered the first part of the challenge, but now are entering the second phase: The first phase of the maneuver has been successfully accomplished — a collapse has been averted. In retrospect, the temporary breakdown of the financial system seems like a bad dream. There are people in the financial institutions that survived who would like nothing better than to forget it and carry on with business as usual. This was evident in their massive lobbying effort to protect their interests in the Financial Reform Act that just came out of Congress. But the collapse of the financial system as we know it is real, and the crisis is far from over. Indeed, we have just entered Act II of the drama, when financial markets started losing confidence in the credibility of sovereign debt. Greece and the euro have taken center stage, but the effects are liable to be felt worldwide. Doubts about sovereign credit are forcing reductions in budget deficits at a time when the banks and the economy may not be strong enough to permit the pursuit of fiscal rectitude. We find ourselves in a situation eerily reminiscent of the 1930s. Keynes has taught us that budget deficits are essential for counter cyclical policies, yet many governments have to reduce them under pressure from financial markets. This is liable to push the global economy into a double dip. Read the full speech from The Age here .

  • Soros To Create New Think-Tank to Rethink Field of Economics

    George Soros announced earlier this week that he is launching a new think-tank which will be tasked with, in the words of Alan Rappeport of the Financial Times , "reconceiving the field of economics." And Soros explained his goal for the Institute of New Economic Thinking (INETT) to Rappeport's FT colleague, Chrystia Freeland: There’s been a pretty widespread recognition by professionals that something is fundamentally wrong in the prevailing doctrine about financial markets, that you need a new understanding that this whole idea of efficient market hypothesis, rational expectations theory, is totally devoid of reality, and so there is need for new thinking. I’m, of course, one of the protagonists that are putting forward a different alternative, but there are others and I think these alternatives need to be developed. I feel now sufficiently confident that I’m ready to also act as a financial sponsor for this Institute, which will actually develop the alternative. Soros has been lecturing all this week at the Central European University , in his native Hungary. In Tuesday's lecture, he laid out his thinking for the new think-tank (you can watch the relevant excerpt here ), but the series goes well beyond the financier's views of today's crisis. The Financial Times has made video of all of the lectures available here .

  • George Soros Speaks with Reuters Staffers

    In his new book, The Crash of 2008 and What it Means , George Soros calls for an overhaul of the global financial system, proposing a set of policies to reframe regulatory systems and make sure that the mistakes that led to this "once in a lifetime event" are not repeated. Earlier this week, in speaking with Reuters staffers, he shared his concern that people might be too quick to ignore the lessons of the past, saying "There is a real danger that people don't understand the system was fundamentally flawed and there is no return to where we come from." Here are excerpts from that conversation: