George Soros Sees a Relationship between the Debt-Fueled Growth of China today and U.S. in 2007-08

The current founder and chair of Soros Fund Management and billionaire George Soros said the China’s debt-fueled economy resembles the U.S. in 2007-08 before it led to a financial crisis on that spurred a global recession. According to Soros, the credit growth figures in March should only be taken as a warning sign. He was taking to an Asia Society event in New York. According to him, the China’s economy was measuring a new credit of 2.34 trillion yuan last month exceeding the forecasted 1.4 trillion yuan by Bloomberg survey. The new figures show that the government of China is prioritizing growth over reining in debt.

George Soros resembles this moves like the one taken by the U.S. during the financial crisis of 2007-08, which also fueled the credit growth. According to Soros, the money being supplied is what should be used to keep the bad debts and enterprises making losses alive. George Soros is a successful business person who made his fortune currently standing at $24 billion through savvy wagers on markets. He was born in 1930 in Budapest, Hungary. He fled to England after surviving the World War II and communist dominated Hungary in 1947. There, he went to school and graduated in the School of Economics in London. He later settled in the U.S. where he finally made his fortune after investing in international investment fund on he founded.

George Soros is also an active contributor and the current founder and chairperson of Open Society Foundation (OSF). He started giving in 1979 in South Africa when helped the black students to join Cape Town University during the apartheid. Today so far, the OSF operates in more than 100 countries and expenditures annually reached about $835 million in 2011. The objectives of the OSF is to promote values of human rights, open society, and transparency.

However, it is not the first time Soros has resembled what is happening today in the financial markets on and what occurred during the crisis in 2007-08. Recently, he made a similar claim that global markets are facing a crisis and investors need to be careful. He associated the struggling China’s economy to find new growth models and currency devaluation as a problem that will be easily be transferred to the rest of the world economies. George Soros confirmed that emerging markets had a problem returning to positive interest rates adding that the current environment has similar characteristics to the crisis of 2008.

According to Soros, what is happening now in China is that there are more loans in the banks than deposits. The problem with that is that other banks will continue to lend to each other hence leading to additional instability and uncertainty. The Chinese government intervention has only deferred the problem to one or two years, but the problem remains in place and growing at an exponential rate.

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