George Soros Has Practical Reasons To Go Bearish

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George Soros gained international recognition in September 1992 when he placed a bet of $10 billion on a single currency. He was speculating that the Bank of England would have to devalue its currency, and he would make a profit after devaluation. Soros later turned out to be right, and he made more than $1 billion in profit from the bet. From that day, he was referred by many as “the man who broke the Bank of England.” He is well-known for his contribution to the growth of Quantum Fund, a firm that generated an average annual revenue of more than 30% when he was the president.

George Soros has yet again expressed doubts about the China’s debt-fueled economy that it resembles the U.S. in 2007-08. According to George Soros, the March credit growth should be viewed as a warning sign after the new credit in the second-biggest economy hit $362 billion in the month of February surpassing the predicted level of debt at 1.4 trillion yuan. Soros relates the rising level of debt to what happened to the U.S. before the crisis. The banks are supplying more credit to keep the bad debts at their books while the loss-making enterprise is still alive.

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George Soros Trading Again

Soros is the founder and chairman of the Soros Fund Management, which currently has over $24 billion in assets under management. He had recently engaged the Chinese government in a war of words when he said that a hard landing for China would be “practically unavoidable.” Soros noted that china’s banks have more loans than deposits which put problems to the assets side but also an increasing problem in the liability side. The problem could become even more complicated if the banks continue to lend to each other putting the economy into additional uncertainty and instability.

At the moment, the problem is deferred to a future date, but as long as the credit level continues to rise, the crisis is still pending. Recently, Brexit has presented an element of truth to the issues Soros pointed out earlier. Soros noted that the world faces challenges such as immigration problem due to rising geopolitical tension and rising levels of terrorism around the world, the Russian-Ukrainian crisis, China’s debt problem, Brexit, and the uncertainty in the U.S. dollar to remain stable.

Brexit caused the price of gold to rise sharply as investors anticipated hard economic times for Britain and the European Union. The Great Britain Pound has also lost more than 20% of its value now trading at 1.31 against the U.S. dollar from the previous 1.45 against the U.S. before the Brexit referendum. As Soros predicted that Britain leaving the European Union would have adverse consequences for its economy, the effects were felt in the whole world when stock markets lost over $2 trillion in stock market value.

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http://www.wsj.com/articles/a-bearish-george-soros-is-trading-again-1465429163