[THS] Soros: We Have Just Entered Act II of Crisis

[The Harder Stuff in news and commentary]

http://www.bloomberg.com/apps/news?pid=20601010&sid=aY_SHqr1LQhk


Soros Says ‘We Have Just Entered Act II’ of Crisis (Update2)


By Zoe Schneeweiss and Andrew MacAskill

June 10 (Bloomberg) -- Billionaire investor George Soros said “we have just entered
Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to
curb budget deficits that may push the global economy back into recession.

“The collapse of the financial system as we know it is real, and the crisis is far from
over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act
II of the drama.”

Soros, 79, said the current situation in the world economy is “eerily” reminiscent of
the 1930s with governments under pressure to narrow their budget deficits at a time
when the economic recovery is weak.

Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year
low against the dollar on June 7 and has wiped out more than $4 trillion from global
stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion
euros ($2.4 trillion) within the next three years to refinance, according to Bank of
America Corp.

“When the financial markets started losing confidence in the credibility of sovereign
debt, Greece and the euro have taken center stage, but the effects are liable to be
felt worldwide,” Soros said.

Soros gained fame in the 1990s when he reportedly made $1 billion correctly betting
against the British pound. He also wagered that Germany’s mark would appreciate
after the collapse of the Berlin Wall in 1989 and that Japanese stocks would start to
fall in the same year. His firm, Soros Fund Management LLC, manages about $25
billion.

Credit default swaps, which aim to protect bondholders against the risk of a default,
are dangerous and a “license to kill,” Soros said today. CDSs should only be allowed if
there is an insurable interest, he said.

To contact the reporters responsible for this story: Zoe Schneeweiss at
zschneeweiss at bloomberg.net; Andrew MacAskill in London at
amacaskill at bloomberg.net
~~~~~~~~~~~~~~~~~~

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===