George Soros is having a very good crisis. When the wheels started coming off in 2007, Soros came out of semi-retirement and took back control of his Quantum investment fund. By year's end, Quantum was up almost 32%, delivering Soros profits of $US2.9 billion. His fortune of $11 billion is now estimated to be up another 9% and as he has told The Australian, he now plans to hand back control at Quantum.
In this fascinating interview, Soros is till backing Obama but expresses concern about the solution to create a bad bank that would be the dumping ground for toxic assets. What they should be doing, he says, is capitalizing the good banks. "What they propose currently is creating this aggregator bank which will take the toxic assets out of the banking system, out of the banks, so it really injects government money into the bad banks, and I am saying that they ought to be injecting money into the good banks."
While others are calling for more regulation of credit default swaps, Soros goes one step further. He says they so toxic that they should be used only by prescription.
He says that we are in for a period of slow growth, and that it will be at least a decade before there is robust growth in the US. And he warns that the US needs to stop relying on the Chinese buying US debt. It's not going to last forever, he says, and the Chinese are becoming wary of the US economic model.
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