11/24/2008 :
SPIEGEL INTERVIEW WITH GEORGE SOROS
'The Economy Fell off the Cliff'George Soros, 78, has made billions as a hedge-fund manager and investor. SPIEGEL spoke with him about the current financial crisis, how he expects President-elect Barack Obama to respond to the economic disaster and the responsibilities borne by speculators.
SPIEGEL: Mr. Soros, in spite of massive interventions by governments and federal banks the financial crisis is getting worse. The stock markets are in free fall, millions of people could lose their jobs. More and more companies are in trouble, from General Motors in Detroit to BASF in Ludwigshafen. Have you ever seen anything like it?
Soros: Never. I find the present situation dramatic and overwhelming. In my latest book “The New Paradigm for Financial Markets: The Credit Crisis of 2008” I predicted the worst financial crisis since the 1930s. But to tell you the truth: I did not actually anticipate that it would get as bad as it did. It has gone beyond my wildest imagination.
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Soros: I have great hopes for Barack Obama. But at the time of the election the financial community had not yet fully grasped the magnitude of the economic decline. They did not anticipate that the default of Lehman Brothers would cause cardiac arrest in the markets. The economy fell off the cliff, you begin to see mangled bodies lying at the bottom.
SPIEGEL:
Was it a policy mistake to let Lehman Brothers go bankrupt?
Soros: It was a fatal mistake. I would have never expected that the authorities let such a big investment bank go.
SPIEGEL: Will there be more victims?
Soros: Possibly. CitiBank, one of the world’s largest banks, is currently at the center of attention (eds. note: The $300 billion US government plan to stabilize CitiBank had not been approved by the time of this interview). There are some other bodies lined up for potential trouble. The situation is very similar to the 1930s -- but it is going to unfold differently. We have learned not to allow the financial market to collapse. We will spend all the money in the world to prevent that from happening.
SPIEGEL: Obama is supposed to save the banks, bail out the auto industry and boost the economy in general. Can a single person ever live up to such high expectations?
Soros: Perhaps not, but the problems can be handled much better than they have been by the current administration.
Source: Der Spiegel International
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http://www.spiegel.de/international/business/0,1518,592268,00.htmlhttp://www.spiegel.de/international/business/0,1518,592268-2,00.htmlMy comment: I was also quite disturbed how the Yankees treated The Lehman affair. Even if the situation has some basic differences compared with traditional banks, they had almost acted like criminals in their boost, but to let them go bankrupt was nevertheless irresponible, especialy toward the International market, and as Soros says: It was a fatal mistake.