George Soros: The Worst Is Behind Us But Globalisation Is At Threat From Recent Trade Protectionism Issues Worldwide

On Business Times.

• BILLIONAIRE hedge fund manager George Soros said the worst of the global financial crisis is over, and called for new international regulations to maintain open markets.
  
  “Definitely, the worst is behind us,” Hungarian-born Soros said in an interview yesterday with Polish television station TVN24.
  
  He called the crisis the most serious in his lifetime, adding, “This is the end of an era. The question is what’s going to come out of it in the future.”
  
  Without new international regulations, “globalisation will fall apart,” possibly spawning a system of “state capitalism” like the one that exists in China, he said.
  
  Soros, who recently returned from China, said the world’s third-largest economy is “growing in strength” because the country was relatively unaffected by the crisis. -- Bloomberg

Ah.. globalisation will fall apart.

The Buy American policy which is causing much protest worldwide, which is not helped at all with the recent Buy Chinese Vs Buy American.

See also Would Current Trade Protectionism Issue Hinder Global Financial Recovery? and Canada Continues Its Protest Against 'Buy American' Policy

Some Comments ON US Financial Sector

Geroge Soros is saying that the new mark-to-market accounting stunt would keep the banking sector alive and return, it will eventually stalls the recovery in the US Economy!!

Yes, the new mark-to-accounting ruling is simply ludicrous for it allows the US Banks to hide their toxic waste!!!

Soros Says New Mark-to-Market Rules Keep ‘Zombie’ Banks Alive

• By Saijel Kishan and Kathleen Hays
  
  April 6 (Bloomberg) -- Billionaire George Soros said the change to fair-value accounting rules will keep troubled banks in business, stalling a recovery of the U.S. economy.
  
  “This is part of the muddling through scenario where we are going to keep zombie banks alive,” Soros, 78, said today in an interview with Bloomberg Television. “It’s going to sap the energies of the economy.”
  
  The Financial Accounting Standards Board last week relaxed so-called mark-to-market rules, allowing banks to use “significant” judgment in gauging prices of some investments on their books. While analysts said the measure may reduce writedowns and boost net income, investor advocates and accounting-industry groups said it will help financial institutions hide their true health.
  
  Soros said that banking system is “seriously under water” with banks on “life support.” U.S. stocks fell for the first time in five days today on concern that government measures to shore up banks may not help as much as expected and loan losses will exceed levels from the Great Depression.
  
  “They are weighed down by a lot of bad assets, which are still declining in value,” he said. “The amount is difficult to estimate, but I think it’s in the region of maybe a trillion- and-a-half dollars.”
  
  Soros said there is a risk the U.S. economy will fall into a depression if nations don’t act collectively to solve the economic crisis.
  
  Multilateral Response
  
  “As long as we deal with this in a multilateral and more or less coordinated way, I think we’ll get through,” he said.
  
  Hungarian-born Soros gained fame in the 1990s when he broke the Bank of England’s defense of the pound and drove the currency from Europe’s system of linked exchange rates. He also successfully bet that Germany’s mark would rise after the collapse of the Berlin Wall in 1989 and Japanese stocks would start to fall in the same year.
  
  Soros’s New York-based firm oversees $21 billion. Its Quantum Endowment Fund returned 8 percent in 2008. That compared with an average loss of 19 percent by hedge funds, according to data compiled by Hedge Fund Research Inc. of Chicago.
  
  Soros was ranked as last year’s fourth-highest paid hedge fund manager with about $1.1 billion, according to Institutional Investor’s Alpha magazine.

'Seriously under water'! Some would prefer the word insolvent!

On CNBC, Meredith made the following comments that Banks' 1st-Quarter Results May Show Improvement

• Bank earnings may show some improvement in the first quarter, though the sector still has far to go in recovering from the credit crisis, well-known analyst Meredith Whitney told CNBC.
  
  "I think you’ll see a directional turn," Whitney said in a live interview. "Banks will make a little money, as little as a penny a share, but they won’t lose money."
  
  For that reason, she said investors should be careful shorting—or betting on further declines—in bank stocks right now.
  
  "Lay off on shorts, and don’t buy into selloffs," Whitney said. "The fundamentals are not getting any better but capital ratios should get better."
  
  Whitney, a former analyst at Oppenheimer who has her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.
  
  Whitney said the banks should be seeing some benefits from the revised mark-to market rules in the first quarter.
  
  She also said she expected home prices to fall another 30 percent, contrary to some predictions that housing may have bottomed.
  
  "Home prices cannot bottom while liquidity is still contracting from the economy," she said. She did say that large banks should benefit from low mortgage rates and refinancing.
  
  Asked about comments from another well-known bank analyst, Michael Mayo, who said earlier Monday that banks' debt problems are far from over, Whitney said: "I think that’s out there. There’s nothing out there that would cause anyone to believe they’d be different ... but tangible ratios could be better."
  
  Mayo is former Deutsche Bank analyst who now works for CLSA's Calyon Securities, remains negative on the sector. His comments sent most bank stocks lower on Monday, which helped pull the overall market down.
  
  Whitney also said that JP Morgan Chase [JPM 28.20 -1.08 (-3.69%) ] booking a profit in the 4th quarter should not be viewed as a bottom for the financials.
  
  Whitney did say that she thought that the upcoming stress tests by the government for the banks could mean a grim time for the financials at the end of April, when the tests are concluded.
  
  "After stress tests come out, you’ll see some banks that didn’t pass," said Whitney. "I don’t think we get out of the woods until mid 2010, but that doesn’t mean you can’t find a trading opportunity."
  
  Among the other points Whitney made in the interview:
  
  1. Peak to trough levels for home prices will be over 50 percent
  2. Liquidity continues to be drained from the system
  3. More consumers become stressed and unable to service debt burdens.
  

Whitney: Banking Woes Likely to Get Worse in 2009

Comments from Whitney on banking sector.

Whitney: Banking Woes Likely to Get Worse in 2009

• A surge in borrower defaults and unemployment pressures will make 2009 an even uglier year for banks than last year, analyst Meredith Whitney said.
  
  She predicted "breakups and M&As on a grand scale" as the industry seeks to remake itself in the face of all its capital pressures.
  
  "I don't think this year is going to look any better than last year," Whitney said in an interview Tuesday on CNBC. "In fact it will look worse because there's so much credit coming out of the system."
  
  Whitney, a former analyst at Oppenheimer who recently opened her own firm, is renowned for calling out the problems with banks' toxic assets before the issue became widespread.
  
  As some have been predicting the worst may be over for the banking sector, Whitney countered that many of the statements about some of the big banks showing profits ignore the burden that additional writedowns will pose through the year.
  
  Consumers also will face pressure as unemployment grows and banks and credit card companies start calling in credit lines to avoid getting stuck with even more bad debt.
  
  "The probability of more people going into default is higher, so the banks are going to have a tough time," she said.
  
  As a solution to some of the banking system's woes, Whitney said the government should focus less on ever-changing rescue plans and instead start helping smaller institutions ramp up their community lending to local businesses and homeowners.
  
  "You can re-energize the local lending scene and then supercharge those banks," she said. "You supercharge those so they're able to gain critical mass and start getting loans on a super-regional basis to businesses, to homeowners that qualify. At least that mitigates some of the capital that's surely going to come out of the market."
  
  Whitney predicted that some of the largest institutions will be remade this year in a way not seen before. Those mergers and acquisitions will see companies come together to create unique syynergies--she used a blending of Citi and American Express [AXP 12.50 -0.16 (-1.26%) ] as a hypothetical case where one business' strength could compensate for another's weakness.
  
  "You're going to have some growth vehicles that come out of it but they're not going to look anything like today's version of these gobbledygook banks," she said.
  
  In addition to the natural activity that will take place, Whitney said banks also will need help from Washginton. She urged policy makers above all to be consistent.
  
  "Any game that you want to plan as a corporation, the rules are changing all the time," she said. "You can't function as a business operator if the rules are changing."
  
  Displaying leadership and managing expectations will be the key.
  
  "They need to show leadership by saying, 'OK, what's the world going to look like in five years?' and look backwards from that," Whitney said. "In five years you know that the big banks are going to have a lot less control and power than they have now. We have to disaggregate, dislodge that market share dominated by five main players."
  
  "Let's invigorate and supercharge some of the smaller players to get them to a medium-enough size so they can start making loans and they can start moving the needle."
  
  And she called on government leaders to harness the American spirit to rebuild the economy, similar to the way so many people come together to wear the color of the Irish on St. Patrick's Day.
  
  "There's a spirit that can't be dislodge by the economic turmoil," she said. "Now is a great opportunity to capture that spirit as opposed to set expectations too high which is what (Treasury Secretary Timothy) Geithner did with the original plan and then just disappoint. People will give you the benefit of the doubt until you keep disappointing them."
  
  

Collapse Of The Financial System

George Soros:

• 'We witnessed the collapse of the financial system. It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom.'

Paul Volker:

• "I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world,"

Source: http://www.businesstimes.com.sg/sub/latest/story/0,4574,320212,00.html?

See also? http://uk.reuters.com/article/businessNews/idUKTRE51K0AV20090221

George Soros Reckons Crisis Could Worsen!

And to make it complete Financier Soros warns crisis will only get worse

• LONDON (AFP) — US financier George Soros warned in a television interview Tuesday that the turmoil in the financial markets was far from over, with Britain likely to be the economy most badly hit by the crisis.
  
  As Wall Street braced for the potential collapse of insurance giant AIG, the hedge fund pioneer told the BBC that the wisdom of letting Lehman Brothers go to the wall at the weekend would only be revealed with hindsight.
  
  "I'm afraid we are not through it at all -- in some ways we are still heading into the storm rather than heading out of it," he said.
  
  Asked whether the US government should have rescued Lehman investment bank, he said: "If the financial system survives then it was the right thing to do to let them go bust. If there is a meltdown then obviously it wasn't."
  
  "Saving the system trumps moral hazard. In the end you do whatever it takes to save the system," he added.
  
  However, he said the way US Treasury Secretary Henry Paulson was handling the situation was "very reminiscent of the way the central bankers talked in the 1930s", the time of the Great Depression.
  
  Soros said Britain's reliance on the financial industry make it especially vulnerable.
  
  "The financial industry is a major segment of the British economy and that's why I think Britain is more heavily hit by this financial crisis than most other economies," he said.
  
  More generally, he warned finance had "grown too big, it has taken up too big a share of the world's resources. Now it is shaking and I think when it becomes once again regulated it will be less profitable".
  

Soros says Superbubble is now Collapsing!

Many thanks to The Wanderer for the heads up on the following article/interview on George Soros. ( Link: http://online.wsj.com/article/SB121400427331093457.html )

• In his latest book, "The New Paradigm for Financial Markets," he argues a "superbubble" has developed in the past 25 years and it is now collapsing.

And like The Wanderer, I liked the following part very much.

• WSJ: How is that you are rich despite your world view having been wrong so far?
  
  Mr. Soros: I'm only rich because I know when I'm wrong.