American consumption is the root of the decline in
Soros was answering questions during a news conference at the World Bank and International Monetary Fund meetings in Washington, D.C., Oct. 12, that consumption would lead to a lessened role in global “power relations” for the United States.
“Look, the fact is for the last 25 years, the United States has consumed six to seven percent more every year than, than, than it produced,” Soros said. “And the other countries – the exporting countries and the oil-producing countries – have accumulated reserves and the
Soros also criticized Federal Reserve Chairman Ben Bernanke for not reacting earlier to the financial crisis by waiting to cut interest rates – an attitude some in the media, including CNBC ‘Mad Money’ host Jim Cramer, have shared.
“Unfortunately, the authorities have been reacting instead of being proactive,” Soros said. “They have been consistently behind the curve. But I would distinguish somewhat the Fed and the Treasury, because I think that Bernanke was perhaps a little slow when he came out of academia and confronted the real world to understand what is going on.”
Soros did credit Bernanke for acting aggressively once he did cut interest rates.
“But when he understood it, he acted very decisively and he lowered interest rates very aggressively in January, for which he deserves credit,” Soros said. “And he was also very sympathetic to various congressional proposals to deal with the mortgage situation.”
Soros also targeted Treasury Secretary Henry Paulson for having too much faith in the markets, despite Paulson’s vocal advocacy for the $700 billion government intervention bailout plan.
“On the other hand, the Secretary of the Treasury seems to have been too firmly grounded in his market fundamentalist beliefs and was very slow. And after bailing out Bear Stearns, or settling the Bear Stearns, six months later he thought, ‘Well, the markets will have done what was expected of them and adjusted to the new situation and therefore, Lehman can be allowed to go bust.’ And that was a horrendous mistake because it had horrendous consequences.”
Soros called the Sept. 16 rescue of American International Group, Inc. (AIG) (NYSE:AIG) orchestrated by Paulson “punitive,” despite its estimated $122.8 billion price tag.
“And since then, he [Paulson] has turned around at least twice,” Soros said. “First he bailed out AIG on rather very punitive terms, far too punitive terms. And then at the end of the week on Thursday, proposed this $700 billion bailout package which was originally designed to relieve the market of the toxic securities and hold them to maturity with taxpayers’ money.”
Soros is a prominent benefactor to various left-wing causes. According to a 2003 Cybercast News Service story, Soros has donated to America Coming Together, MoveOn.org and the Center for American Progress. According to Opensecrets.org, part of the Center for Responsive Politics, Soros has given $111,190 in political donations this election cycle, all to Democratic candidates.
Soros was promoting his new book at the press conference. “The New Paradigm for Financial Markets” touts Soros’ theory of reflexivity.
According to Business & Media Institute adviser Don Luskin, Soros’ “Theory of Reflexivity” could be better explained as an effort manipulate economic and political events. Luskin referred to Soros short-selling the British pound in 1992 after
“Simply, ‘reflexivity’ says that financial markets can have impacts on the real world,” Luskin wrote. “So if you want to move the world, just move the markets.”
