This is an interview done with world famous investor, George Soros, during May 2008. Below is an extract of the interview:
Question: In your 50 years in finance you've seen any number of crises. Why is this so bad?
Answer: Because two bubbles are deflating at once. There's the
collapse of housing prices, of course. On top of that there's the end of what I call the super boom of credit expansion that has been going on for 25 years. That was made possible by a stable global financial system in which the dollar was the world's primary currency. Now, for many reasons, the system is in question and nothing has taken its place. That has created great uncertainty.
Q. And for us regular people it means...?
A. The days of rapid financial wealth creation are over. We're now in a period of wealth destruction. It is going to be very hard to preserve your wealth in these circumstances.
Q. Where is your money now?
A. Mostly in my endowment fund, a good portion of which I had farmed out to other money managers. When I saw what I considered the most serious financial crisis of my lifetime, I came out of retirement and set up an account to hedge their positions.
Q. How?
A. I went short [bet against] the dollar, U.S. and European stocks and Treasury bonds. I went long [invested in] emerging markets. That worked last year, but this year bonds kept going up and emerging markets down. So I'm about even.
Interview by Eric Schurenberg, Money Magazine managing editor
Question: In your 50 years in finance you've seen any number of crises. Why is this so bad?
Answer: Because two bubbles are deflating at once. There's the
collapse of housing prices, of course. On top of that there's the end of what I call the super boom of credit expansion that has been going on for 25 years. That was made possible by a stable global financial system in which the dollar was the world's primary currency. Now, for many reasons, the system is in question and nothing has taken its place. That has created great uncertainty.
Q. And for us regular people it means...?
A. The days of rapid financial wealth creation are over. We're now in a period of wealth destruction. It is going to be very hard to preserve your wealth in these circumstances.
Q. Where is your money now?
A. Mostly in my endowment fund, a good portion of which I had farmed out to other money managers. When I saw what I considered the most serious financial crisis of my lifetime, I came out of retirement and set up an account to hedge their positions.
Q. How?
A. I went short [bet against] the dollar, U.S. and European stocks and Treasury bonds. I went long [invested in] emerging markets. That worked last year, but this year bonds kept going up and emerging markets down. So I'm about even.
Interview by Eric Schurenberg, Money Magazine managing editor
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