MercoPress. South Atlantic News Agency

Soros: market fundamentalism out, serious recession in

George Soros: 'The crisis of a lifetime'

British-Hungarian financier and philanthropist George Soros warned in an interview with Budapest's Nepszabadsag newspaper that it is too early to say if markets will stabilize after last week's panic and described the current situation as the crisis of a lifetime.

The turmoil is not only a real estate market crisis but a "super bubble" which is based on the false supposition that the market will correct its own extremities without the need for intervention Soros told the paper in Washington this weekend. He said market fundamentalism, which has been the main belief since Reagan and Thatcher, has now "stumbled". The crisis requires a new way of thinking -- a paradigm shift -- he said. This is an endogenous crisis which has been created by the financial system itself, he added. "This is the crisis of my lifetime", said Soros, who earned world renown in 1992 for making one billion US dollars breaking the Bank of England's defense of the pound. Soros also warned that "quite a serious recession is on the way". The real economy is going to enter into quite serious recession, "but if you do the right things, then you could see how you could come out of that recession". He forecasted that as a consequence of the financial meltdown United States would have less power in the world and perhaps US citizens would have less money in the pocket as a result of the crisis. In the last 25 years, Soros said US citizens have basically consumed six to seven per cent a year more than they have produced. As a result "other people, the Chinese, the oil producing countries have built up a dollar reserve which they are now going to covert in real assets. So they become wealthier and we will have more debt," he added. Soros pointed out that since the US consumer would ease to be the motor for world economy, "we will need another motor. And I think that problems that confront with regard to energy, global warming and energy dependence will require very large investments. Those will replace the consumer as the driving force for the economy in the next few years" he insisted. "If these problems are not confronted, there would be large unemployment" he said, adding that human resources can be put to good use if the United States now confronts these pressing problems. "I believe that globalization with the US as the center of the globalized financial markets, sucking savings of the world is over. The game is out. And this means a very serious adjustment for the US", predicted Soros. However he said he was pleased to see a Japanese proposal to form a 200 billion dollar "safety net" to help countries on the periphery of the financial crisis to combat trouble caused in the centre.