George Soros on the Economy – ‘I am not here to cheer you up’

George Soros is a financial celebrity. In spite of having nothing more to do with the world’s financial markets than his investments made as Soros Fund Management and whatever effect his philanthropic work may have on those markets, Soros is quoted on just about anything to do with the economy – and why not? He is, after all, “the Man Who Broke the Bank of England.” He has the record for making more in one day trading than any other investor after making £1 billion after betting against the sterling on Black Wednesday in 1992. And, he has enjoyed impressive success since.

Now, as Soros and the rest of the world’s movers and shakers converge for the World Economic Forum this week, the question on many minds is what is this high-stakes, successful investor investing in? The Daily Beast writes that Soros doesn’t know what to do.“It’s very hard to know how you can be right, given the damage that was done during the boom years,” says Soros. “At times like these, survival is the most important thing.” People who know the man well, say that he is advocating long term stock picks and avoiding gold. Soros isn’t even shorting the euro or the US dollar. In fact, he is backing the euro and urging European leaders to do what they can to ensure it survives. “The euro must survive because the alternative—a breakup—would cause a meltdown that Europe, the world, can’t afford.” And Soros is just as bullish about bonds. “He has bought about $2 billion in European bonds, mainly Italian, from MF Global Holdings Ltd., the securities firm run by former Goldman Sachs head Jon Corzine that filed for bankruptcy protection last October.”

According to the Daily Beast, “He doesn’t just mean it’s time to protect your assets. He means it’s time to stave off disaster.” It writes, “As he sees it, the world faces one of the most dangerous periods of modern history—a period of “evil.” Europe is confronting a descent into chaos and conflict.” In America Soros “predicts riots on the streets that will lead to a brutal clampdown that will dramatically curtail civil liberties. The global economic system could even collapse altogether.”

“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” says Soros. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”