Billionaire George Soros have warned that the debt-fueled economy growth of China resembles the conditions that resulted to the 2008 financial crisis in the United States. The economy also fueled by credit growth bears the eerie resemblance of what happened in US and will eventually result to extension of credit, whether it feed on itself or is doing a lot in real estate.
According to Soros, the economy will reach a turning point sooner than anybody expects. This happened in the United States where a number of people including former chairman of the Federal Reserve, Paul Volcker anticipated the boom sooner, but extended to 2007/2008 financial year.
China has been the second largest economy in the world over the last 30 years, but in the eyes of analyst, it is the brink of a financial fallout on http://www.georgesoros.com/the-life-of-george-soros/. Since its stock market crash earlier during the summer, the country’s officials have had numerous difficulties to deal with. CNN reports that a raft of data in the last 6 months have been disappointing and the country’s leaders have felt the impact, trying the refocus the economy from being a manufacturing to a consumption state.
Soros have explained that damages to the economy will most be expected in the final year of the credit cycle. This is because more credit will be required to sustain growth. According to George Soros, all the country has done is to buy time. China had earlier introduced a real estate and a construction boom. This was just a bubble that it can grow and feed itself.
George Soros pointed out that gone are the days when China had a double-digit economic growth. The country has posted the slowest pace of expansion in the first quarter of this year; a GDP of 6.7 since 2008. Credit in the country continue to bulge with Chinese Bank owing 1.37 trillion in local currency loans according to Reuters. Social financing has gone up 2.34 trillion Yuan from approximately 780 billion three months ago. This is a warning sign implying how much credit is needed to a stop a decline.
Read full article on Billionaire Soros Cuts U.S. Stocks by 37%, Buys Gold Miner
Soros expects the price of Gold to double if not triple as people are likely to be afraid. The billionaire who had earlier acquired a stake at Barrick Gold, the world largest gold producer and SPDR Gold ETF, which mirrors the price of gold expects higher returns from these financial bets.
About George Soros
Soros is a Hungarian-American billionaire businessman, investor and philanthropist. He was born in 1930 and the chairman of Soros Fund Management. George Soros is referred to as the “The Man Who Broke the Bank of England” after making a profit of $1 billion during the 1992 Black Wednesday UK currency crisis. He is also one of the 30 richest people in the world. This is detailed at Wikipedia.