In the past six months, hedge fund manager George Soros has been an outspoken critic of the economic recovery.
And as the U.S. digests the S&P downgrade, it's helpful to remember that as Barclays analysts Ajay Rajadhyaksha and Anshul Pradhan put it, The S&P's action is not a surprise.
So to gain a market expert's view, we've gone through many of Soros' recent interviews and selected his main points.
Soros describes the key arguments the market is dealing with right now and makes predictions on what will happen next.
His quotes are dated in chronological order.
February 20, 2011: The Republican party is going to force spending cuts and the extension of the Obama tax cuts and it will have a negative effect on the economy
"The Republican Party is going to pursue a very strong effort to cut services by refusing to have any tax increases, by forcing the extension of the Obama tax cuts also for the top one or two percent.
"You have built in a budget deficit, therefore, you've got to cut services, and they'll oppose any kind of additional new -- new taxes. I think this agenda will be successful, but it will be pursued, I think, to -- to an extent where it's more directed at cutting services and achieving the ideological purposes of the Republicans, rather than to get the economy going. So I -- I think this will have a negative effect on the economy."
Source: Fareed Zhakaria's interview with Soros
February 20, 2011: When QE expires, interest rates are going to go up, which will choke off the recovery
"When [quantitative easing] expires [which it did last month] they wouldn't give it any more, but it does create access, money supply, and -- and when you stop pushing money into the economy, interest rates are going to go up. And it will be the rise of interest rates that is going to choke off the economic recovery."
Source: Fareed Zhakaria's interview with Soros
February 20, 2011: Cutting spending before private demand is stronger will hurt employment
"[Spending cuts] at a time when private demand is not strong enough, when investment by businesses is not strong enough to take up the slack, it creates a slack. So unemployment, instead of coming down, is likely to remain pretty high. And to have these -- these resources permanently unemployed is basically very harmful to the economy."
Source: Fareed Zhakaria's interview with Soros
See the rest of the story at Business Insider
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Source: http://feedproxy.google.com/~r/businessinsider/~3/HmqzYVgO5KI/george-soros-economic-insights-2011-8
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