<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>And the billions that Ho Jinx and Old Fart poured into the bankrupt banks WITHOUT REGRET are GONE FOREVER woh!
Soros: US faces lasting slowdown
</TR><!-- headline one : end --><TR>He says US banks' recovery could draw profits away from real economy </TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->NEW YORK: - The US economy is in for a 'lasting slowdown' and could face a Japanese-style period of relatively low growth with the added problem of high inflation, billionaire investor George Soros said on Monday.
Mr Soros, 78, told Reuters Financial Television that rescuing United States banks could turn them into 'zombies' that suck the lifeblood of the economy, prolonging the economic slowdown.
'I don't expect the US economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown,' Mr Soros said, adding that next year there might be 'something' in terms of US growth.
The recovery will look like 'an inverted square root sign', Mr Soros said.
'You hit bottom and you automatically rebound some, but then you don't come out of it in a V-shape recovery or anything like that. You settle down - step down.'
In the fourth quarter of last year, the US economy contracted at a 6.3 per cent annualised rate, and economists think the slide in this year's first quarter will be at least as severe, if not worse.
Healing the banking system, which is 'basically insolvent', and housing markets is crucial to recovery, said the hedge fund manager who made money last year while most of his peers suffered losses.
The public-private investment funds - unveiled by the Treasury last month to get bad debts off bank balance sheets - are going to work but will not be enough to recapitalise the banks so they are able to or willing to provide credit, he said.
Even a steep yield curve will not generate enough profits to keep the banks out of their vulnerable situation.
'What we have created now is a situation where the banks which will be able to earn their way out of a hole, but by doing that, they are going to weigh on the economy.
'Instead of stimulating the economy, they will draw the lifeblood, so to speak, of profits away from the real economy in order to keep themselves alive.'
Mr Soros has made prescient calls during the credit crisis. A year ago, he told Reuters that global losses were likely to top US$1 trillion (S$1.5 trillion).
He said the US dollar is under selling pressure and one day could be replaced as a world reserve currency.
China will emerge first from recession, probably this year, and will lead global growth next year, Mr Soros added.
Separately, he said in an interview with Bloomberg Television that the four-week rally by US stocks was not the start of a bull market because the economy is still shrinking.
'It's a bear-market rally because we have not yet turned the economy around,' he said, referring to the recent rebound in stock prices. 'This is not a financial crisis like all the other financial crises that we have experienced in our lifetime.' REUTERS, BLOOMBERG
Soros: US faces lasting slowdown
</TR><!-- headline one : end --><TR>He says US banks' recovery could draw profits away from real economy </TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->NEW YORK: - The US economy is in for a 'lasting slowdown' and could face a Japanese-style period of relatively low growth with the added problem of high inflation, billionaire investor George Soros said on Monday.
Mr Soros, 78, told Reuters Financial Television that rescuing United States banks could turn them into 'zombies' that suck the lifeblood of the economy, prolonging the economic slowdown.
'I don't expect the US economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown,' Mr Soros said, adding that next year there might be 'something' in terms of US growth.
The recovery will look like 'an inverted square root sign', Mr Soros said.
'You hit bottom and you automatically rebound some, but then you don't come out of it in a V-shape recovery or anything like that. You settle down - step down.'
In the fourth quarter of last year, the US economy contracted at a 6.3 per cent annualised rate, and economists think the slide in this year's first quarter will be at least as severe, if not worse.
Healing the banking system, which is 'basically insolvent', and housing markets is crucial to recovery, said the hedge fund manager who made money last year while most of his peers suffered losses.
The public-private investment funds - unveiled by the Treasury last month to get bad debts off bank balance sheets - are going to work but will not be enough to recapitalise the banks so they are able to or willing to provide credit, he said.
Even a steep yield curve will not generate enough profits to keep the banks out of their vulnerable situation.
'What we have created now is a situation where the banks which will be able to earn their way out of a hole, but by doing that, they are going to weigh on the economy.
'Instead of stimulating the economy, they will draw the lifeblood, so to speak, of profits away from the real economy in order to keep themselves alive.'
Mr Soros has made prescient calls during the credit crisis. A year ago, he told Reuters that global losses were likely to top US$1 trillion (S$1.5 trillion).
He said the US dollar is under selling pressure and one day could be replaced as a world reserve currency.
China will emerge first from recession, probably this year, and will lead global growth next year, Mr Soros added.
Separately, he said in an interview with Bloomberg Television that the four-week rally by US stocks was not the start of a bull market because the economy is still shrinking.
'It's a bear-market rally because we have not yet turned the economy around,' he said, referring to the recent rebound in stock prices. 'This is not a financial crisis like all the other financial crises that we have experienced in our lifetime.' REUTERS, BLOOMBERG
