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George Soros lays out his solution the eurozone crisis at Davos
Posted on 28 January 2012 with 2 comments from readers
Legendary investor George Soros arrived in Davos with his own comprehensive solution to the European debt crisis. He spoke with Erik Schatzker on Bloomberg Television’s ‘InsideTrack’ and spent the whole conference lobbying for his plan.
It will be interesting to see in hindsight whether any of his ideas are later adopted. This is a classic case of one man having the vision while committees of bureaucrats are in charge and cannot see the wood for the trees…
Posted on 28 January 2012
Categories: Banking & Finance, Bond Markets, Hedge Funds, Investment Gurus, Video Channel
2 Comments posted by readers:
Who died and made George Soros the King of the World?
His ideas are in his own self-interest, and the only good thing about his plan is the fact that he “has a plan”, while the unelected EU bureaucrats don’t have any plan, never had one, and likely never will. These bureaucrats simply want to perpetuate the status quo, so that they can keep their high salary jobs and ridiculous benefits.
David McCormick, of Bridgewater, a former US Treasury official, gave a rather downbeat interview on CNBC TV from Davos on ‘SquawkBox’ on Friday. What follows in this paragraph is basically what he said. He was speaking about Europe. The European deleveraging will take 10 to 15 years to finish. We have an indebtedness that sovereigns can’t service. The size of the funding gap is ‘enormous’. We are in a ‘very dire’ situation. “Unfortunately, we are in the early innings” of the deleveraging process. The LTRO created some time for policy makers to ultimately make other choices. ‘The level of indebtedness has to be reduced in a significant way.’ There are 4 ways that can happen. 1.) Austerity, but it doesn’t get far enough because too much of it will curtail growth. 2.) You can print money, “and ultimately PRINTING MONEY IS a solution to getting out of here.” 3.) Defaults, and, 4.) Wealth transfers from the richer nations to the poorer ones. A combination of ALL 4 WILL BE NEEDED while trying to not cause excess inflation or deflation. It WILL be painful. Greek debt will be SIGNIFICANTLY written down, BUT it is only one page in the overall deleveraging story that IS going to take place in Europe.
He advised investors to diversify over MANY different asset classes.
Whew! I’m glad I’m not living over there. It sounds like they are in for a rough ride, except for the wealthy. They will be forced into shorter range private jets.
Ed Note: Yes Spanair went bankrupt on Friday so a private jet is the only way to fly some routes now!