World on the verge of an economic collapse says Soros

Billionaire hedge fund giant George Soros told a panel discussion in Vienna that the world faced a monetary meltdown focused on Greece and that the crisis was developing in front of our eyes.

‘We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread, he said. ‘The financial system remains extremely vulnerable…

‘I think most of us actually agree that Europe’s crisis is actually centered around the euro. It’s a kind of financial crisis that is really developing. It’s foreseen. Most people realize it. It’s still developing. The authorities are actually engaged in buying time. And yet time is working against them.’

No Plan B.

World on the verge of economic collapse says Sorros

I know a lot of people don’t like Soros, but let’s not throw the baby out with the bathwater. I think he has valid points about the Greek debt crisis. The situation isn’t likely viable whether further austerity is implemented or not. The question is contagion and the effects any Greek default will have on other European countries and their debt dilemmas, and further impacts on other countries around the world and the broader global economy. If there is a repeat of a 2008 like crisis, can only imagine central banks and governments scrambling to attempt to rescue the banking sector and financial markets from a massive collapse.

I don't like Soros either he cost me money when he dumped his paper silver and gold on the market.But when guys like him make a statement like that somethings up.

reply to post by surrealist


Very interesting, and not so surprising.

Looks like the well engineered financial plan by TPTB is coming together...out of chaos , they will create their "order"

tried to flag you op, but the flag button is blacked over, and it won't add flags?

reply to post by surrealist


Unfortunately, I think he may be right on target with this. I do take all statements with a grain of salt though,
as people such as this have an agenda. This could be disinfo to deflect an investment strategy.
Then again, this fellow is getting up there in his years and is already at the top of the food chain.
So could this be the statement of good faith? Needless to say, we will all find out soon enough.

S&F

reply to post by surrealist


Of course there will be a world wide economic fall. The markets here in america are expected to start dropping right after july 4th. You cannot loan and loan and loan past the point of repayable income. they dont have it we in america dont have it, yet the man keeps trying to convince us we are ok go spend your money. well no I wont spend my money I will save it for the day the economy crashes.
On the brighter side, if the world economy did crash there is only 1 direction and that is up.

i wonder how much the markets went down after soros spoke. which he then probably swept in a bought up everything for cheap.

GOOD READ
Obama, Democrats, Republicans AND Bernanke All in a Bind – What they will do and when
We have two distinct groups in D.C. that are stuck between a very big rock and a hard place. The first is the Federal Reserve. The second is the Democrats and Republicans and the battle being waged over the debt limit. I see a possible solution to these impasses. It’s so simple that I’m sure it is being considered. The prospect is scaring the crap out of me however.

The Fed is in a bind. The economy is clearly slowing down again. Unemployment will soon follow. According to the Fed’s Dual Mandate they should be doing something about that.

They have few options. They can’t do more Large Scale Asset Purchases (“LSAP”). What has become referred to as “QE”, has not worked. It was also very unpopular (both in and out of the country). LSAPs may come back sometime, but they are on the shelf for at least a year. What could the Fed do in the near future?

I) They could increase the inflation target (core CPI) from “A little under 2%” to “A tad over 3%”.

II) They could alter the ZIRP (zero interest rates) language from: “For the foreseeable future” to: “Until such time as the Fed’s new inflation target has been achieved but not less than one year”.


These relatively minor changes would have very dramatic effects.

-Inflationary expectations would jump. Actual inflation would follow.

-The dollar would crap out. Exports would increase.

-This would result in wage pressure. Exactly what the Fed wants.

-The resulting inflation in all commodities would roll into new home construction costs and therefore be a boost to existing values. (Soft bailout to housing/lenders)

-It is (short-term) supportive of equities. Exactly what the Fed wants.

-Debt costs can’t rise too fast as ZIRP keeps the belly of the curve cheap. This has to happen. Without LSAPs, this is the only way to achieve it.


Are you scared yet? Now consider where the politicians are on the inflation story.

Republicans have drawn a line in the sand on the debt limit with their position of “No New Taxes”. The Democrats have said pretty much the opposite with, “No spending cuts”.

Neither side appears to be giving an inch. There is no common ground. Yet, to go to August 2 without a resolution is just a dumb move. Both sides of this big debate know that the next presidential election is riding on the outcome. If the US is to default; one side or the other will shoulder the blame. The “side” that gets the blame will lose the election. And both sides understand this. So where’s the compromise?

The solution is inflation. The government has got to get out of its inflation indexed obligations. You don’t have to raise tax brackets to raise revenues or cut expenses. You can mess with inflation adjustments to achieve these ends. Both sides can appear to win if this is accomplished.

Consider the words last week of Brian Graff of ASPPA (Lobby for pensions and actuaries) (The conference was sponsored by the IRS!!)
"Eliminating indexing is one of the proposals receiving serious consideration as Congress enters “uncharted territory” with legislation to raise the debt ceiling, If Congress were to stop indexing for a period of time, which would affect tax brackets, individual retirement account contributions, and contribution limits under tax code Section 415, “you could raise a lot of money, and those are the kinds of things they are talking about.”

On the expense side of the equation a great deal of fat can be cut by eliminating/cutting COLA increases in a variety of programs. The most important of which would be Social Security. Depending on how the cuts in COLA are defined and how they are applied a huge amount of money would be saved over an extended period.

If all social obligations had their COLA increases cut in half it would (on paper) put the US on a much more solid long-term footing. It is a very appealing “kick the can down the road” approach. No cuts in programs (just smaller increases) and no new taxes (but higher revenue as the inflation adjustments for AMT and other tax issues kick in).

If you buy into this thinking this is they way it could play out:

We DO go to the 11th hour on the debt limit. But a compromised is reached. Central to the deal is a broad restructuring of the way inflation impacts both revenue and expenses at the federal level. Both sides claim victory.

Two months later Bernanke will announce what will be called QE3. He will make a long-term commitment (at least one year) to maintaining interest rates at near zero levels. And he will raise the inflation target that the Fed is hoping to achieve by 35% ('smidge' over 3% core CPI)

Should things play out along these lines it will be sea change series of events. If anything like this were to be in our future the very worst financial position would be short gold and long bonds. Being short volatility in any market would also be a mistake. Outside of that, I’m not sure where/how to position for this.

My thoughts:

Deflation is scaring us to death. But inflation will kill us. And that is exactly what the ‘Deciders’ have in store for us.
www.zerohedge.com...

Originally posted by surrealist

Billionaire hedge fund giant George Soros told a panel discussion in Vienna that the world faced a monetary meltdown focused on Greece and that the crisis was developing in front of our eyes.

‘We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread, he said. ‘The financial system remains extremely vulnerable…

‘I think most of us actually agree that Europe’s crisis is actually centered around the euro. It’s a kind of financial crisis that is really developing. It’s foreseen. Most people realize it. It’s still developing. The authorities are actually engaged in buying time. And yet time is working against them.’

No Plan B

Soros has warned before that the European authorities were doing the wrong thing in playing for time. There is no Plan B. So we have the Greek parliament this week debating an austerity program that will be painful and fail.

It must fail because the cost of Greek debt is so high that the country will have to borrow to pay its interest payments. This is the death spiral of ever greater debts that inevitably ends in bankruptcy.

Only the replacement of Greek debt with a new European bond issued at low interest rates can salvage this mess, although it risks being seen as a free passport to ever greater borrowings. There is no sign of this happening whatsoever.

Hence Mr Soros is right to warn that Greece is the next Lehman in so many words. We are back to 2008 and on the brink of disaster.

Will the Fed come over the hill as the seventh cavalry with a QE3 program? That is what optimistic goldbugs led by Jim Sinclair seem to think will happen.

But the Fed would be taking a big risk in using its firepower in this way. For if it failed to work then its weapon cupboard would be empty.

2008 precedent

Financial crises are by their very nature unpredictable beasts but if we follow the 2008 pattern then the markets would be allowed their collapse first and then an effort be made to pick up the pieces later on.

For adventurous investors this is a time to short stocks, other should sit on the sidelines in cash and bonds. Even gold and silver went down in 2008. Soros dumped them earlier this year but they may still be a better safe haven than most other assets.

World on the verge of economic collapse says Sorros

I know a lot of people don’t like Soros, but let’s not throw the baby out with the bathwater. I think he has valid points about the Greek debt crisis. The situation isn’t likely viable whether further austerity is implemented or not. The question is contagion and the effects any Greek default will have on other European countries and their debt dilemmas, and further impacts on other countries around the world and the broader global economy. If there is a repeat of a 2008 like crisis, can only imagine central banks and governments scrambling to attempt to rescue the banking sector and financial markets from a massive collapse.

"Will the Fed come over the hill as the seventh cavalry with a QE3 program?"

Soros calls for help and the Fed responds like the 7th cavalry?

If so may this 7th Cavalry once more wear Arrow shirts. I don't see Bernanke cast as Custer, perhaps this hints at the 7th and the "Wounded Knee Massacre"?.

No offense to any 7th Cav Vets, I just wonder why the 7th is mentioned here..."responds like the cavalry" is how it should have read.

Of course Soros is saying this, can't create a Global Currency until the current one has collapsed.

You know what the world really needs is a good plague. Make those that survive MUCH more valuable, redistribute the existing wealth to fewer people. It would force those that survive in to a sustained period of high productivity because of fear of ... well ....it happening again. War may work but, it would too haphazard and destructive - plus, unless it went nuclear or biological, it wouldn't kill enough people. Nuclear is not a good idea because it lays waste to otherwise fertile and productive land. Much better to have a plague.

Our technology and Society as a whole are coming along nicely, the problem is piss poor management. I mean that "Governmentally" speaking. I think we (and I mean first world countries by and large) have cornered ourselves in to some pretty hard choices and those that have power simply will not face them. They cannot face them because it means they have failed. SO, what's better than admitting failure? Why we could blame something else Push the whole damn apple cart to the edge of the cliff and then blame Mother Nature for the storm that blew it off the precipice.

V

Greece is done. Ireland's banking system is done. The piigs are gonna start falling like dominoes sooner or later ... think along the lines of who the strongest trading partners are with the first countries that fall. That's how the Asian financials were attacked one after the other.

Plus, the tug of war for oil is starting. This latest thing ... the release of strategic reserves is going to get some of those countries in Europe addicted to quick cash to pay debts. And once they sell off their reserves they're really gonna get hit with so called "supply brownouts".

I wouldn't put money on Greece being first, but I am on the likelihood of a massive crash before the end of 2013

reply to post by FrenchOsage

Those wanting a QE3 to buoy the economy should realize the Fed is still going to rotate the $1.2 trillion they’ve already printed over the last two years back into the market. Plenty of additional dollars will still be in the system.
Personally, I think the big hedge funds with the large market-moving positions all had the same trades on during the span of QE, going long on commodities and gold while shorting the dollar. Now that a new QE has not been explicitly announced, they are reversing these trades, leading to this dip.
However, I like to look at the glass in this case as half full. It just gives all of us yet another chance to buy a number of our Gold investments at near historically low valuations,

reply to post by enament

I don't like Soros either he cost me money when he dumped his paper silver and gold on the market.

That's your fault for being in the paper market lolz

If Soros is hellbent on pushing financial collapse, as I often read, why would he warn about it?

Could this be why he sold gold and silver, to slow collapse?

Seems to me something is definitely amiss since now the SILVER-buying-commercials are on the glass tit. Silver should be about 1/14th the price of gold and it appears is being held artificially low by Wall Street et al.

What I find absolutely ridiculous is that all these financial problems can be fixed very easily. It's called debt forgiveness. If every country, business and person in the world could forgive the debts they are owed, it would be like pressing a big@ss RESET button and the system could then equalize or go crazy again in 10 to 100 years (if the same system of debt based fiat currency and fractional reserve banking wasn't criminalized for the ponzi scheme that it is).

One thing you have to remember is that the people who started this mess back in 1912/13 have a 100 year plan. It would be nice if the politicians would grow some balls and do what is right for their so called electorate rather than their pimps and handlers in the corporate world and banking sector and beat them to the "punch."

Cheers - Dave

reply to post by surrealist


I absolutely agree with him that we are headed for a global economic meltdown. I disagree with whomever that was in your quoted text that says economic melt downs are "unpredictable beasts." The global economic meltdown was totally predictable. Just not to the decade, year, month or day.

But anyone with half a brain and the desire to sit down and think, really long and hard, could see that what we are doing, economically, is absolutely unsustainable long term. I have been arguing this since my freshman economics class. The system is a pyramid scheme, and its in a closed system, (the Earth) a growth based economy cannot grow indefinitely.

Not to mention that any pyramid shaped economy needs a strong base, and the wealthy have been greedily pulling more and more away from the base into their own coffers. It was and always has been a doomed system. The only reason it has lasted as long as it has was there were vast untapped continents to exploit, which by now, we have exploited pretty thoroughly.

Its not just a Euro problem. Its a problem with the whole economic structure. It simply cannot continue indefinitely, and China is not going to save the world, because the resources that made America possible, (cheap oil) are no longer available. China and India and their increased demand for resources are simply accelerating our inevitable global collapse.

reply to post by Illusionsaregrander


Totally agree and can see where Celante was headed with what he has been saying it's a big jenga tower what piece is going to send it down we are teatering with as Ireland and Greece are on the verge. But what about Portugal and the 2 other countries that are near a collapse as well? There is even the possibility of America being the downside as well if their debts can't be paid when due.

This is a major drama we are seeing before our eyes as every country invests so much into another that when that country fails so does the investor. You have Australia and America keeping China afloat and the UK with their needless buying of cheap crap. America is invested in Greece as well then you have where the countries that have the Euro have their money and they look like they are failed investments aswell. These banks saw the $$$$ signs of what they could make and not worry about the risk they were investing into all i can say is let these banks fail we in every country need it because I'm sick of seeing our tax dollars being spent by these greedy bastards.

If the banks fail so what we start again no big deal if we prop up every business that needs help we mearly delay the inevitable. As they raise taxes to pay for the handouts they have given and for the debts they owe we the people are slowly being drained of every dollar we have left and if we have no money no businesses will have money and will fail. If they fail unemployment goes up and less and less people are there to keep a welfare system turning when those wheels eventually stop what are we going to do anyway.

LET THE BANKS FAIL LET THE COUNTRIES FAIL IF WE REMAIN CALM (WHICH I DOUBT) THERE WILL BE NO NEED TO BRING ORDER WITH A ONE WORLD CURRENCY BECAUSE THEN WE ARE SCREWED ONE STEP CLOSER TO ONE GOVERNMENT.

Anyone wonder why someone would sell all their silver and gold? I have a possible reason with silver going up and gold and the silver certs are due for payment on August 15th why would you not do this to save a bank or 2 from collapse? I think once this date passes expect silver and gold to go on the rise and no certs will be available due to price increases. Let's see how this goes might have 30 OZ of silver by them hopefully

Like Goldman Sachs betting against the customers that they were selling toxic junk to..
You can bet that these clowns are betting that the system will collapse
and so
they are going to make it collapse...

Like betting there will be a shortage of corn...coming next year...

This is a guy with a sense of humour obviously. On the one hand he tell us we have economic doom on our hands whilst on the other hand this is the guy buying up flooded farm land...profiteering from the very same doom he's predicting.