George Soros Believes Downturn is Imminent
Billionaire financier George Soros believes the world may be nearing the brink of another 2008-style financial crisis. CNBC reports that Soros, speaking at an economic forum in Sri Lanka, argued that a confluence of factors may be leading to a financial crisis in the near future.
Soros, who became a billionaire by banking on the devaluation of the British pound, believes the economic changes occurring in China will have significant ramifications which may be contributing to an economic meltdown. Soros sees China’s transition to a more consumer-oriented and less export-oriented economy, in combination with its move to devalue its currency, may trigger a scenario like what happened in 2008.
The ongoing crisis in Chinese markets is spilling over to the rest of Asia, according to Bloomberg, with markets tanking across the globe, and the effects are already being felt stateside and in Europe, although 2016 is barely underway. China’s stock market woes began in 2015, and investors, by and large, have little faith that China’s regulators are capable of stopping the carnage.
The downward spiral in oil prices, likewise, is contributing to the market declines. Moreover, developing economies, including BRICS countries, may be hurt by the trend in rising interest rates, and the disparity between American monetary policy and the rest of the world may also be a contributing factor. Europe is still struggling with its debt crisis and a weak, though not recessionary, US economy, has contributed to overall anemic levels of demand around the world.
Soros sees a clear parallel with 2008, although others argue that the main cause of the 2008 downturn is missing. One analyst has criticized Soros’s comments, stating that Soros is talking down the markets. He believes that the comparison is fundamentally flawed since the dearth of regulation and the bad debts that defined 2008 are absent in 2016.