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Soros Channel - George Soros on Economy - Apr. 3 2008 - CNBC
Soros Channel - George Soros on Economy - Apr. 3 2008 - CNBC.
About George Soros
In a 2010 interview with Chrystia Freeland, George Soros discussed global disorder and the fragility of European institutions. He argued that the European Union, which he described as the embodiment of an "open society," had been transformed by the euro crisis from a voluntary association of equals into a hierarchical structure of creditors and debtors. Soros also characterized Russia under Vladimir Putin as resembling inter-war Germany, calling it "nationalistic and based on resentment," and said the Putin regime's primary interest was preserving itself in power and maximizing rents. Soros stated that sanctions alone were insufficient to address the situation in Ukraine, as they reinforced Putin's narrative of Western hostility. He advocated for a strategy combining sanctions with effective assistance to Ukraine, arguing that a flourishing Ukraine could serve as a role model for people under Putin's domination and eventually bring about change in Russia.
Transcript (15 segments)
✨ AI-enhanced transcript with speaker attribution
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Interviewer0:00
Welcome back. Optimism on Wall Street may be picking up steam, but at the Fed, concerns are also on the rise. Before Congress today, Fed Chairman Ben Bernanke acknowledged that for the first time, a recession is possible. In a CNBC exclusive, I talk with billionaire investor George Soros about his view of the economy and if we've finally hit a bottom for the markets.
It sounds like you do not think that the worst is over because we're entering a new phase of this, and that is the worsening of the housing portion of it specifically. Some people are out there saying, you know, the markets have been rallying, the worst is behind you. Don't think the worst is behind?
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George Soros0:35
No, I think that we've had a significant bottom when Bear Stearns was really scared the market. You had a significant bottom that's good for anywhere between six weeks and six months. But I don't think we are halfway through the fallout, because to think that what happens in the financial markets doesn't affect the real economy is nonsense. The real economy was stimulated by the housing boom, so how can it not be under pressure when you have a housing slump?
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Interviewer1:18
In the book you write, powerful expansionary forces are at work in other parts of the world that may well counterbalance the US recession. Talk to me about that. What kind of implications will this have for the rest of the world?
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George Soros1:31
Well, it means that you may not have a worldwide recession because you've got China, India, Africa, Latin America. There's actually a bit of a commodities bubble developing because there's a flight from currencies. Confidence in the dollar has been shaken, there isn't really a suitable alternative, so people have been moving into commodities. That has created demand and activity in other parts of the world.
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Interviewer2:10
Where is the bubble in commodities? Is it all commodities or specifically oil, metals, food?
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George Soros2:18
Well, there's a bit of a commodity bubble because a lot of people who don't normally invest in commodities now own commodities, so there is a general commodities bubble. It sounds like doom in 2000. It is that kind of thing. And you have it in food because of biofuels competing. You've got it in oil because you actually have some difficulties in finding new sources of oil, so there's a diminishing supply and considerable demand. You've got global warming, so you've got all various factors affecting various commodities.
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Interviewer3:08
How do you invest in this environment today, George? What are you doing?
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George Soros3:12
I think you have to be very cautious, and you have to be very balanced, and you also have to be nimble because I think we are in a period of increased uncertainty. This whole two-way connection that I call reflexivity creates uncertainty, and that is what has been left out of account in the various instruments that were developed. They took account of risk but not of the uncertainty that comes from this two-way interaction between biased and misconceived misconceptions that prevail and the real world.
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Interviewer4:03
Do you worry that when we see taxes go higher and a further strain on people, that the real economy part of this story worsens?
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George Soros4:16
We may not yet be in a recession, but I think a recession of some magnitude is inevitable.
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Interviewer4:27
We had Barack Obama on the other day. Let me get your reaction to something that Senator Obama said. Listen to this: 'We can't go back to some of the confiscatory rates that existed in the past that distorted sound economics, and I certainly would not go above what existed under Bill Clinton, which was the 28%. And my guess would be it would be significantly lower than that. I think that we can have a capital gains rate that is higher than 15% if it's... when I talk to people like Warren Buffett or others and I ask them, how much of a difference is it going to be if it's 20 or 25%, they say if it's within that range, then it's not going to distort economic decision-making.' How much would higher capital gains taxes impact investors' appetite today?
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George Soros5:23
I think what he says makes sense to me.
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Interviewer5:29
Some people feel that if the dividend tax goes higher, the capital gains tax higher, ordinary income goes higher, this is at a time that this economy is very strained already and it will stretch people further. You don't believe so?
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George Soros5:40
No, I do. But I think paying taxes is a high-class problem because first you have to have a profit. So can you make a profit? That is more important. How does the economy really function and how do you manage your financial affairs? I tend to treat taxes as a high-class problem.