George Soros spoke to Bloomberg Television from Bretton Woods yesterday on a variety of topics including his opposition to the recent ECB rate hike. He also discussed the current situation in China and his worries over inflation and the banking system there.
- 0:20 It’s a one-sided directive in Europe. The ECB’s only job is to control inflation.
- 0:55 The big question is whether the U.S. dollar should be the reserve currency; it no longer is, it shares that role with the euro, other currencies, and commodities. But it’s not just gold being used as a substitute, but oil too, which is putting upward pressure on the market.
- 1:55 The euro is under “some cloud.” It is “quite inappropriate” for the ECB to raise rates right now.
- 2:30 China, and its inflation problem, is a serious concern. It stimulated its economy, but is now trying to reign in its rate of growth. It is putting restraints on the banking system, but now a shadow banking system is rising. Big banks may not be willing to lend, but the shadow banking system is growing out of control. Real risk of wage and price inflation. Real estate price spike has led to a wage price spike. The Chinese government should have let its currency inflate, but because they didn’t, they now face wage inflation.
- 4:40 China was the main beneficiary of globalization, and the big winner in the financial crisis.
- 6:00 State capitalism may have worked better in China lately, but it’s a mistake for others, like Brazil, to follow suit now.