The problem with the crisis now is that we have this illusion of market fundamentalism, that the markets are ultimately perfect and self-correcting. But that's a religion built on false premises, says financier George Soros in this interesting New York Review of Books interview.

Soros blames a lot of it on the regulators. Whilst a lot of people could see disaster, the regulators at the Federal Reserve and Treasury ignored it until it was too late.

"But I don't hold them personally responsible because you have a whole establishment involved. The economics profession has developed theories of "random walks" and "rational expectations" that are supposed to account for market movements. That's what you learn in college. Now, when you come into the market, you tend to forget it because you realize that that's not how the markets work. But nevertheless, it's in some way the basis of your thinking."

Soros says the situation is a lot worse than recognized with the disruption in the financial markets and the US housing crisis which, he warns, is going to get a lot worse and problems with such adjustable-rate mortgages shaping up to be as as bad as subprime mortgages.

And in the final wash-up, he says, the US will no longer the economic superpower.