George Soros, About Face? Not!
In early April George Soros: "The whole world is facing a very serious financial crisis.
I call it the most serious financial crisis of our lifetime and the financial system is seriously disrupted."
Soros said the seizure in global credit markets caused by the subprime collapse will get worse before it gets better.
He told reporters that regulators and the U.S. administration "failed to perform their job."
Yesterday: "I personally think we have the acute phase of the financial crisis largely behind us.
But the damage that has been done to the financial system has to affect the real economy, and that is only starting to be felt.
The markets are breathing a sigh of relief but the fallout in the real economy is only now beginning. There is a certain time lag."
Just as housing prices "overshot on the upside, they will overshoot on the way down".
The U.S. is in the "very beginning of an uptrend" in foreclosures.
With home prices declining, "to expect that by the end of the year you will have passed through that" is unrealistic.
Soros noted "house price declines are accelerating, nothing policy makers can do, can slow that down much."
Soros also reiterated his view that there is a "bubble element" to global commodity prices.
U.S. stocks are in "a bear-market rally. I think we’ll retest the lows, depending on what measures the authorities take. We may go beyond those lows."
Encouraging words: A repeat of Japan’s 1990s experience is “the pessimistic extreme.
It is a source of reassurance that the system is not going to fall apart."
Japan had “a real estate bubble and a financial system loaded down with bad debt.
The big difference between Japan and us is here, the losses are being recognized, written off."
The Nattering One muses... There is still $700 billion on book; and $2 Trillion hidden off book (SIV) in bad debts that have not been recognized.
These debts and the losses must be fully recognized (marked to market) and written down. Japans mistake was rather than allowing the debt to be written down,
the BOJ forced the banks to keep the bad debt on the books, which strangled lending and growth, resulting in an 80% decline in real estate over 18 years.
I call it the most serious financial crisis of our lifetime and the financial system is seriously disrupted."
Soros said the seizure in global credit markets caused by the subprime collapse will get worse before it gets better.
He told reporters that regulators and the U.S. administration "failed to perform their job."
Yesterday: "I personally think we have the acute phase of the financial crisis largely behind us.
But the damage that has been done to the financial system has to affect the real economy, and that is only starting to be felt.
The markets are breathing a sigh of relief but the fallout in the real economy is only now beginning. There is a certain time lag."
Just as housing prices "overshot on the upside, they will overshoot on the way down".
The U.S. is in the "very beginning of an uptrend" in foreclosures.
With home prices declining, "to expect that by the end of the year you will have passed through that" is unrealistic.
Soros noted "house price declines are accelerating, nothing policy makers can do, can slow that down much."
Soros also reiterated his view that there is a "bubble element" to global commodity prices.
U.S. stocks are in "a bear-market rally. I think we’ll retest the lows, depending on what measures the authorities take. We may go beyond those lows."
Encouraging words: A repeat of Japan’s 1990s experience is “the pessimistic extreme.
It is a source of reassurance that the system is not going to fall apart."
Japan had “a real estate bubble and a financial system loaded down with bad debt.
The big difference between Japan and us is here, the losses are being recognized, written off."
The Nattering One muses... There is still $700 billion on book; and $2 Trillion hidden off book (SIV) in bad debts that have not been recognized.
These debts and the losses must be fully recognized (marked to market) and written down. Japans mistake was rather than allowing the debt to be written down,
the BOJ forced the banks to keep the bad debt on the books, which strangled lending and growth, resulting in an 80% decline in real estate over 18 years.
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