‘”There is a general concern with sovereign debt,’ Soros said. ‘It is coming under suspicion and it has a political momentum because there is increasing political resistance to allowing national debt to rise.
“‘Some countries like Greece do have deficits of 12.5% of GDP [gross domestic product], which is intolerable and has to be reduced. Other countries like the United States and the main European nations have plenty of room to increase their deficits.’”
Great news! Obama’s boss thinks the United States can easily handle even more debt!
“Governments around the world have allowed their budget deficits to balloon since the financial crisis broke in 2007, but Soros said more spending was needed.
“‘I think that since the adjustment process to the recession is incomplete, there is a need for additional stimulus. The political resistance to it increases the chances of a double dip in the economy in 2011 and after that.’”
“The dispute between Gordon Brown and David Cameron over when and how to reduce Britain’s budget deficit – forecast by the Treasury to hit £178bn this year – is likely to dominate the political debate in the run-up to the election.”
“Labour has argued, like Soros, that it would be dangerous to tighten policy too soon. The Conservatives believe failure to tackle the deficit swiftly will spook the financial markets and lead to higher long-term interest rates.”
“With the first day of the World Economic Forum dominated by the debate over re-regulation of the banks, Soros said he was supportive of Barack Obama’s plan to limit the size and scope of Wall Street institutions, but said that it ‘did not go far enough’”.
“He said that even if the reforms were agreed, the problem of banks considered ‘too big to fail’ would remain. ‘Institutions have to be controlled so that they don’t fail. They have to be kept under much closer regulatory supervision.’”
“Soros said the globalisation of finance should be matched by global supervision. Leverage limits and tougher capital regulations would help to reverse the trend of the past few decades. ‘Deregulation became contagious,’ Soros said.”