George Soros a renowned author, philanthropist and owner of a vast business empire on bloomberg.com, has predicted the global economic crisis. Soros addressed his worries in Sri Lanka’s capital.
These predictions come from China, which is the second largest economy in the world faces a major recession in its economy. The Yuan, which is the official Chinese currency, has lost considerably in the global markets with this loss affecting the economy of developing countries.
The opening week of January has been bad for business, with the global currency, stock and commodity markets taking a nose dive. The devaluation of the Yuan has caused further concerns amongst players in the global market raising eyebrows to potential investors with regards to China’s economic strength and the overall effect of the drop in other economies of the world.
China has taken considerable efforts in a bid to save the country’s economy from self-destruction. China has opted to make a change from investment and manufacturing replacing it with consumption and services as their preferred growth model.
George Soros is of the opinion that the looming global economic situation is similar to that in 2008. The year 2008 will be remembered in his history as one of the worst economic years in the United States History. The country’s economy was hit by a major economic crunch that saw Banks close and many citizens lose their homes to foreclosure.
China is headed for hard times with global equities on marketwatch.com recording a loss of almost $2.5trillion, with Asia recording a plunge in Chinese equities which halted trade before the closing of business on Thursday. This was as a result of panic amongst global economy players who are yet to figure out an effective way that guarantees profits in these hard economic times.
George Soros feels that the current situation is very similar to the one that led up to the economic crunch in 2008. Based on History, George feels that the global economies will be hit harder by the economic crisis as compared to the economic crunch in 2008.
George Soros does not shy away from airing his opinion while addressing an open panel in Washington George Soros sighted the Greece-born European debt as a major threat to global economic sustainability.
Soros is an authority in Global economies with his hedge fund recording a profit margin of about 20% from 1969 up to 2011. The career of Soros began in 1950’s. In 1992, George Soros made $1 billion from a bet that the U.K would be forced to devalue the pound. It is, therefore, safe to conclude that the predictions by Soros are not misplaced.
The measures of Volatility Index have continued to struggle; the Chicago Board Options Exchange Volatility Index is up by 13 %.
In an attempt to save the struggling Chinese economy, the communist party has pledged to increase the Yuan’s Convertibility by 2020. Previous attempts have failed to save the economy by reducing loan rates offered by the Peoples Bank of China. It remains to be seen if the looming global economic crisis will take effect.