Poll: Do You Agree With George Soros and His 'Super-Bubble' Theory?

If you aren’t familiar with George Soros, he is one of the greatest financial speculators, and one of the richest men in the world. He amassed a fortune with his hedge fund that began in the 1970s. Since, he has gone on to become a very controversial, yet respected individual in the financial world. He has also written a number of books, and his latest was just released. In the book The New Paradigm for Financial Markets, he talks about a new economy and the major changes that have been, and are currently taking place.

The book argues the subprime crisis has triggered the bursting of a “super-bubble” that has been building for 25 years. Prior crises, from the 1987 stock market crash to the emerging markets crisis of 1997 were merely “testing events.” Of course, in 1998 he also predicted a global market collapse that never happened, but what about this super-bubble that he’s talking about now?

In recent remarks to the Council on Foreign Relations, Mr. Soros said:

I personally think we have the acute phase of the financial crisis largely behind us. The authorities have as their mission to stop the system from falling apart and providing liquidity at all costs. They’ve done it and have passed several thresholds. That is a source of reassurance that the system is not going to fall apart. But the damage that has been done to the financial system has to affect the real economy, and that is only starting to be felt.

What do you think? Is George Soros right, and are we just now beginning to feel the effects of a looming long-term financial meltdown? Or is this all just hogwash?

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Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

7 comments
Mirage
Mirage

The reason why there seems to be so many problems is because things have been PLANNED a long time ago. Just think, with all the new environmental/energy saving technologies only 5 yrs away, wouldn't it be nice if the housing boom happened after the introduction of these money saving technologies? By "first strike" at the gullible Americans, the powers to be eliminated one major potential obstacle to world domination. Remember, you can't control what is "FREE". They were careless and the internet web slipped by, no second chance will be permitted. Prepare yourselves, there will be much pain ahead for all..

Ryuko098
Ryuko098

I'm not sure how accurately the Kondratieff Cycle can be applied to modern life - our innovations are changing so quickly, and such a huge part of the world is rapidly catching up to the traditional economic powerhouses of the last few centuries (namely, US & Europe).

It seems nearly impossible to predict how the world economy will be going. One thing is for sure - without serious innovation (something we are absolutely capable of doing), no matter what it goes, America will be hurt seriously in the coming decades.

I'd like to see some more research about this issue.

David
David

I'm in the smaller bubble camp. But fuel and food prices are enough to keep us from expanding rapidly for now.

rstlne
rstlne

Read up about the Kondratieff Cycle. It may not always hold perfectly but there are long waves of economic expansion and contraction. You'd do well to observe and adapt.

Ryuko
Ryuko

Webomatica stated my thoughts exactly. Since at least the 80's, we've become a nation of debt. I wonder if our true (non-credit) purchasing power is really that much higher than that of other developed nations.

The last 2 generations have been building up an immense debt bubble, and eventually it's gotta get paid. I've noticed since the dot-com bust, that it seems like no matter how great our economy was, it was built on the stilts of credit -- often with a service industry as our primary source of income. When people start having to pay down their debts instead of buying that new car or going out to eat all the time (or worse, go bankrupt), the services and retail industries in America will begin to collapse. It wont be a grinding halt, and it may even be a relatively smooth transition to Europe, China etc. But that doesn't mean it wont seriously injure America. Our problem is that the average person is no longer innovating -- we still have a few who are, but most of our large corporations have been singing the same song until just recently (too little, too late?). Not to mention the dubming-down of America. We're a nation whose high school graduates can't fill out a college entrance exam. What other nations can you think of who have a generally uneducated population yet still flourish? The people of China & India (1/3 of the world) all have centuries-long traditions of education.

Granted, these two mega-population centers still have plenty of their own problems, and I doubt that even their burgeoning middle-class will be able to afford to replace us as the world's major consumers any time soon -- not without going into the same kind of debt we're in.

It's time for us X-ers to start thinking smart again -- and stop spoiling our kids. Instead we should be focusing on preparing them to retake the global economy.

Adam
Adam

I find it hard to believe. I wish there was more data to support his idea.

@Webomatica: I agree that American consumerism is slowing down, but is it going to come to a grinding halt? I really don't see that happening. Besides the fact that there are billions of foreigners that are just now entering the post-Industrial phase that created a consumerist America. I think China/Brazil/etc.. will take over for America, if America does halt on consumerism.

Webomatica
Webomatica

I have a feeling Soros is right because ever since 2001, the "american consumer" has been the one that has kept the economy churning - it was always amazing how much people were still willing to stimulate the economy with their own hard earned money - spending everything they had and even going into debt to do that.

So now that the consumer is slowing down, what exactly is going to take up the slack? Foriegn spending? And will that be enough to let the American citizens pay back all they owe and then some? I don't know.

Seems the more likely outcome is business retrench to a populace that spends much less money than years previous. And that adjustment will likely be painful.