George Soros Talks Finance: Facing The China Crisis

 

History is cyclical, and these days society is facing many of the same problems seen in the past. The finance world in particular is volatile and facing a serious crisis that one expert, George Soros, says is very similar to situations seen in 2008.

George Soros is a worldly and well known fund manager born in Budapest in 1930. Having survived the Nazis and the turmoil of World War II, he was educated at the London School of Economics and later moved to the United States. He founded Soros Fund Management and has authored dozens of books on finance and management, such as The Tragedy of the European Union. Soros is also a generous philanthropist, and internationally respected for his economic savvy and charitable actions.

Lately, Soros has examined the financial crisis facing China and the rest of the world. As reported by Bloomberg, China has been moving away from its previous investing and manufacturing model and towards consumption and services. This move has had catastrophic consequences, as the value of China’s currency – the yuan – has dropped significantly. The rest of the world is reeling from this drop, as all financial markets are connected. For example, the DOW dropped around 200 point after the first effects were felt from the Chinese fall.

Soros has continally observed and warned against similar situations throughout the year. When the European crisis, born from the failure of Greece, occurred in 2011, Soros again pointed to 2008 as a prior incarnation of this struggle. Soros states that China has an adjustment problem, and needs to restabilize its new model.

China is not ignorant to the problems it is facing. The government is taking steps to fix the market. First, the People’s Bank of China cut interest rates and funneled billions of dollars into the economy, which remains the second largest economy in the world. This did not have the desired effect, and reports of stagnant manufacturing sectors and a weak overall economy. Nevertheless, the Communist Party has pledged to boost the yuan by 2020 and add strength to the financial market. Soros and others hope desperately that this will be a solution to the growing crisis. Otherwise, there is no telling how quickly and harshly the rest of the world will be affected.

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