The stimulus plan the U.S. government is currently considering is necessary to help American citizens, but it will likely not reverse the country's economic decline, hedge fund manager and billionaire philanthropist George Soros said on Monday."
It is not enough to turn the situation around," Soros told the U.S.Conference of Mayors about the $850 billion proposal to increase spendingand cut taxes.
The plan, which was introduced in the U.S. House of Representatives lastweek and will likely be passed by next month, will help state and local governments balance their budgets and preserve important social services,Soros said.
At the same time, the $700 billion financial bailout known as TARP for Troubled Assets Relief Program had been carried out in a "haphazard andcapricious way" and "without proper planning," he said.
"Unfortunately it was misused and the way it was done has poisoned thewell. It has created tremendous ill will toward putting up more money,"Soros said.
For more than a year, the United States has been crippled by a recessionthat was triggered by a housing market downturn. Last summer, financial institutions with exposures to securities backed by bad mortgages began tobuckle.
The government stepped in with the TARP to inject liquidity into struggling firms. Last week, President-elect Barack Obama requested Congress releasethe second half of the funds.Soros advocated using bailout money to recapitalize banks, but said the$350 billion would not be enough. He said such a move would take more thanthe entire $700 billion.
The bursting housing bubble "acted like a detonator that exploded a much larger bubble," he said."The economies of the world are falling off a cliff. This is a situation that is comparable to the 1930s. And once you recognize it, you have to recognize the size of the problem is much bigger," he said.
Soros said the United States needed "radical and unorthodox policy measures" to prevent a repeat of the Great Depression of the early 20th century that include recapitalizing banks and writing down the country's accumulated debt.Also, he said, it should create more money to offset the collapse of credit and then rapidly pull that cash out of the system when inflation emerges.
The government would have to be very nimble in the timing of such moves, hesaid."If they are successful...the deflationary pressures will be replaced bythe specter of inflation and the authorities will have to drain the excess money from the economy almost as quickly as they pumped it in. Of the two operations the second one is going to be, politically, even more difficult than the first," he said.
Jim Rogers? He told Bloomberg that UK is dead and heis still a China Bull - The global financial crisis has only strengthened reknowned international investor Jim Rogers' acerbic criticisms about the U.S. economy and his resoundingly optimistic view on China's future.
Rogers, co-founder along George Soros of the Quantum Fund, railed at the Federal Reserve and incoming U.S. Treasury Secretary Timothy Geithner,while also saying the high saving rate and solid fundamentals in China makeit a powerful force to be reckoned with."
This is going to be the new center of the world, not just the financialbut the political world," he said at the Asian Financial Forum in HongKong.
Rogers, who is now an independent investor living in Singapore, said he wasgoing to use the U.S. dollar rally in the last six months to get out of all his investments in dollar-denominated assets and keep buying Chinese equities, the Japanese yen and commodities.
He said his bets against U.S. investment banks, the two largest U.S.mortgage providers Fannie Mae and Freddie Mac and the yen kept hisportfolio in the positive last year, but the rest of his investments suffered.
He accused U.S. authorities of consciously trying to devalue the U.S.dollar by flooding the market with liquidity -- or in his words, "turning on the printing presses" -- and said anyone chasing the rally in government bonds is making a "terrible mistake."
"The idea that you can fix a period of excess borrowing and excessconsumption by more borrowing and more consumption to me is just ludicrous," he said.
Underscoring his convictions, Rogers began his speech by showing picturesof his two young children, both of whom he said have Swiss bank accountsand speak Mandarin.
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