Sky News business editor Michael Wilson

When the man who almost single-handedly drove the pound out of the European exchange rate mechanism on Black Wednesday in 1992, it pays the global financial markets to listen.

George Soros, the global finance guru and investor, is in town, and this time he on crisis call again. His new book – ‘The credit crisis of 2008 and what it means’ is a worrying take on where we are in these deeply disturbing times.

Simply put, while the first part of the credit crunch may be over, the usual checks and balances which tend to level the market off, and absorb shocks, like the recent credit crisis are now out of date.

‘We are in a period of forced deleveraging and the destruction of financial wealth’, he says – which means that the edifice built on complicated, highly borrowed financial structures, complex hedge funds and so on, is disintegrating. Well I think we knew that, with all respect to the great man, already – but Soros’s point is that it’s got a long way to go. As he puts it, a ‘bigger bubble’ has yet to burst.

He thinks that the UK will feel the effects for some time, especially in the housing market, because the Bank of England is in a straitjacket, unable to lower rates because of all the inflation worries.

In other words, his take is extremely pessimistic.

And because what Soros says tends to become a self-fulfilling prophecy, I did ask him whether or not he had his sights set once again on the weakness of the UK economy. He said ‘No, I’m not an active investor any more.’

Just the same, I think we’ve been warned.

Comments

[Robert, Scotland 1 Jun 2008 18:40:23]

Michael just a line to update you on "in-active" investor George Soros. His fingerprints are noticed on bio-fuels, you know that thing so beloved of the greeen lobby.
That is until the "unintended consequence(s)" surfaced; like farmers switching from wheat to maize (corn) and soybean, to get the ethanol subsidies, leading to worldwide food shortages.
and
De-forestation to grow ever more of the ethanol subsidised crops. In some projects where wetlands and forest have been removed for these crops, the timescale to equalize the balance is 137 years.
Now, if I was invested in this and knowing the cover must be blown soon, I would be praying (scheming) to get a return on my investment "aka I am not an investor" before public awareness decides peoples bellies must be filled before SUV fuel tanks.

[Robert, Scotland 22 May 2008 13:09:23]

There are some people in the United Kingdom, outwith the oil companies who do not want to see the price of oil drop anytime soon. They are Gordon Brown, Alistair Darling and his Treasury team and those others in the know. Which probably means all of the Stepford Children: "so what" Balls, Yvette Cooper, Ed & David Miliband, Douglas Alexander and James Parnell.
Whyever not? Because without the 20% tax on the price of a barrel of oil, currently at circa $129, this Country would quickly go bankrupt.
As Michael Caine would put it: Not a lot of people know this.

[Khalid 22 May 2008 11:10:58]

Sir
Thus far as the euro then I'm sure we will open a can of worms as I amongst others remain proud of the pound, notwithstanding the many a figure protrayed within the watermark.
Recent events and comments have put the blame of this credit crunch much upon the press-media, who for all intents and purposes report on what they perceive to be factual, however, fail in their knowledge that [Sky] provides impartial, practical and above all informative channels surrounding such concerns, thereby eleminating the many a unfounded claims within.
What is to balme is refelcted in the good old saying, that "too many cooks spoil the broth" and in this case by cooks we can safely refer to FSA, FOS, Ombudsman, Courts, OFT, and above all the source of all greed whether they be oil barorns or other such utility providers.
The EU has long given the UK much to laugh and cry about, leaving the UK to be nothing more than a poodle thus far as matters of legislative housekeeping otherwise who in their right mind would colect circa 17% VAT and still claim to be broke?
Nonetheless, as the future is bright and inner strengh drives us towards a sustained econimical future, one thing that keeps coming from many a lip is [Son-I-Que]

[Robert, Scotland 21 May 2008 18:50:17]

Soros, like any still active speculator is being economical with the truth in this interview. Whatever bubble is about to burst is as always the child of the Market. As there are a few around at present his profit is in guessing which one goes first. Take your pick from these high fliers, artificially created by the Market; The price of oil or the price of cereals. There is no shortage of either yet buy and store merchants have pushed prices to unseen highs. You could of course double your bets on the Gas and Electricity prices which have piggy-backed on the price of oil.
Soros makes his games sound like the machinations of an intelligent mind. It is not,it is a cunning mind, well in tune with the dirty world of "High Fliers" hell bent on wealth at everyone else's expense.

[Elizabeth Davies Cape Town 21 May 2008 15:00:26]

My take on this situation is that the previous chancellor Prudence knew zip about economics...the cupboard is bear, and the current chancellor Darling has now aquired a bank, what does that tell you! Disaster I'm afraid.

[Michael Cornwall 21 May 2008 13:31:29]

I think that the Gov. of the BOE had the most accurate view last week when he said things were difficult one can't manipulate the market forces, but interest rates and unemployment are not as bad as last time,He felt our economy was strong underneath. I am very quick to criticise him for not lowering rates,People get his job because they tend to be cool,and unflapperble.Having said that, go on lower the interest rate just a bit!