The 2008 financial crisis has left a dent in the American psyche that has not healed and will probably not heal for a very long time. A lot of policies, laws, and loopholes that make up the American economy have been exposed. People lost their life-savings, homes, and jobs on nybooks.com due to one of the world’s worst financial crisis since the Depression. Many citizens still do not feel safe within the system, even though things have slightly improved.
One voice of reason and experience comes from George Soros who is a billionaire investor. Soros saw the financial collapse in the United States first-hand as well as some of the factors that led up to that failure. And it is he who is now attempting to warn China about their own economy.
Who is George Soros?
George Soros is a self-made man who was born in Budapest and made his way to the United States during the Nazi-era. Soros took a job at the Wall Street brokerage firm known as F.M. Mayer. He learned a lot, but George Soros wanted to do something on his own, which is how the Soros Fund was created in 1973. The hedge fund changed names throughout the years, ending up being the Quantum Fund Endowment with 12 million dollars from investors.
In March 2012, Soros was listed as the 22nd richest person in the world on Biography with a net worth of about 20 billion dollars.
What Is George Soros’ Message to China?
In simple terms, George Soros believes that China needs to learn from the mistakes made in the United States not too long ago. Soros believes that the debt-fueled economy that sustains China could ultimately be the reason that China’s economy falls. Soros is comparing this debt-fueled economy to the United States economy before the credit markets fell into a hole.
One thing that Soros is pointing out is an obvious problem with China’s banking system, where there are more loans than deposits. In fact, the situation on NY Times between banks is so out of control that they have been lending to each other. Soros knows that institutions like banks make their money through uncertain bets on the market. This means that the security of a bank that borrowed from another bank now sits on a very uncertain partner.
Soros wants the people of China to think about diversifying their investments and not to solely depend on the banking system of their country. Diversification allows a person to be a little safer, since their money will be in different locations. Soros also wants China to rethink their reliance on an economy that runs solely on debt.
Some critics say that Soros is wrong with his predictions, and he hopes that his predictions are wrong too. But the voice of a person who has made his fortune predicting the market should get China to pay attention.