Soros: "Banks Are Basically Insolvent"

**bigfootedfred** · April 06, 2009, 12:18 PM

The U.S. economy is in for "a lasting slowdown" and won't recover this year, while "the banking system as a whole is basically insolvent," billionaire investor George Soros told Reuters Financial Television Monday.

..

he warned about the danger of watering down mark-to-market accounting rules, saying this creates conditions for prolonging the life of U.S. 'zombie' banks.

Soros also said the U.S. dollar is under pressure and may eventually be replaced as a world reserve currency, possibly by the IMF's Special Drawing Rights,a synthetic currency basket comprising dollars, euros, yen and sterling.
China recently proposed greater use of Special Drawing Rights, possibly as an eventual global reserve currency.
"In the long run, having an international accounting unit other than the dollar may be to our advantage," Soros said.
..
The system was "fundamentally flawed, and there is no returning to where we came from," he said. In Europe, he said the crisis provides an incentive for countries that use the euro to remain inside the monetary union, though countries on the periphery still face serious problems.
Soros said the euro has been "a tremendous advantage" to countries that use it, adding there's "no question of a weaker country dropping out."
While additional resources for the International Monetary Fund will help it stabilize struggling Eastern Europe, he said the Baltic states still face "serious problems" and Ukraine is not far from default.

Widespread use of credit default swaps has worsened the risks for Europe, he said, though he added that Germany, the euro zone's biggest economy, is becoming more open to offering help.
"Germany, which has been the most reserved about being the deep pocket of the rest of Europe, has recognized that it too has a responsibility toward the new member states," he said.
Germany has been one of the most reluctant major economies to meet U.S. calls for more fiscal stimulus spending to boost the global economy and fight the financial crisis.

http://www.cnbc.com/id/30069223

**Chaigidel** · April 06, 2009, 12:20 PM

soros is simply afraid the new rules are going to stop his kind of manipulation.

**~~Scar Face~~** · April 06, 2009, 10:21 PM

Originally Posted by Chaigidel

soros is simply afraid the new rules are going to stop his kind of manipulation.

Jim Rogers is a billionaire and also thinks the economy is collapsing. He's not a manipulator of Stock markets, he invests long term. A good man.

**Chaigidel** · April 06, 2009, 11:11 PM

hmmmmmm you do know jim rogers is a partner of soros and has left the USA and relocated to singapore?

he has an interest in seeing the west fail.-- he doesnt think the economy is collapsing he thinks he is afraid that he wont be able to hide all those billions from the tax man.

**~~Scar Face~~** · April 06, 2009, 11:19 PM

Originally Posted by Chaigidel

hmmmmmm you do know jim rogers is a partner of soros and has left the USA and relocated to singapore?

he has an interest in seeing the west fail.-- he doesnt think the economy is collapsing he thinks he is afraid that he wont be able to hide all those billions from the tax man.

That doesn't mean Jim Rogers is a manipulator- hell knowing your track record, Soros is probably a perfect gentlemen. And Jim Rogers left the country quite a while ago, sometime in 2007, and is teaching his girls manderin...when your a billionaire you don't go to this extent to evade taxes, you just bribe.

**Zephyrus** · April 06, 2009, 11:54 PM

Originally Posted by Scar Face

That doesn't mean Jim Rogers is a manipulator- hell knowing your track record, Soros is probably a perfect gentlemen. And Jim Rogers left the country quite a while ago, sometime in 2007, and is teaching his girls manderin...when your a billionaire you don't go to this extent to evade taxes, you just bribe.

Which ony emphasizes that some bad

will occur to the US economy soon.

**Chaigidel** · April 06, 2009, 11:22 PM

well yeah thats why they are trying to get everyone afraid of the idea of global finance regulations, it would severely limit people from making illicit money--- but honestly yes the world needs billionares, im not sure about rogers and soros's uses of their money, but I definitely approve of gates and buffett.

**Admiral Piett** · April 06, 2009, 11:52 PM

Originally Posted by Chaigidel

well yeah thats why they are trying to get everyone afraid of the idea of global finance regulations.

Some are, yeah. But others see the possibility of overregulation stunting growth.

**Admiral Piett** · April 06, 2009, 11:52 PM

pd

**Chaigidel** · April 06, 2009, 11:52 PM

yeah but the east is going to be brought under the same regulation thanks to G20--- we need growth stunted we have limited resources, and we need to use what energy we have more responsibly until sustainable alternatives are developed to capacity.

**Admiral Piett** · April 07, 2009, 12:26 AM

Originally Posted by Chaigidel

yeah but the east is going to be brought under the same regulation thanks to G20--- we need growth stunted we have limited resources, and we need to use what energy we have more responsibly until sustainable alternatives are developed to capacity.

No I mean market growth.

Trust me, I'm with you on the whole energy thing. One of the things I agreed with Obama and McCain about.

**Chaigidel** · April 06, 2009, 11:55 PM

no just that he thinks he might have to pay more into the USA than he was robbing from it.

**Viking Prince** · April 07, 2009, 12:40 AM

Soros is a genius for being able to game the system, but I would never take is advice on anything where he has a stake in the outcome and I do not know the financial position that he has taken.

As for bank solvency issues -- banks are always at the edge of bankruptcy. Lending money to finance purchases of new merchandise that then becomes used merchandise is a risky operation. This is true for consumer finance as well as business loans. A loan portfolio will always contain a mix of risks as well as a mix of profitable and losing loans. This is why banks try to keep loans performing and do not attempt to revalue the underlying assets continuously.

As far as SDR's are concerned --they were originally designed to be a reserve currency. National bankers prefer to do their own balancing of reserves and the idea never caught on outside of the IMF. SDR's will never replace the US dollar. China can do the same on their own by keeping a wider portfolio. China is concerned about US policy and the stability of the currency -- this idea is just their way of complaining. Soros knows this, but no surprise he thinks SDR's would be nice. Another lever to wedge big bets against currency valuation. Soros does not have our best interests on this position.