Posted on 01/28/2009 2:27:35 PM PST by CutePuppy
Billionaire financier George Soros told CNBC he disagrees with plans to create a new government entity to buy up troubled bank loans and believes former Treasury Secretary Henry Paulson mis-managed the first rescue attempt of financial institutions.
"That (the "bad bank" proposal) will help relieve the situation, but it will not be sufficient to turn it around," Soros said during a live interview at the Davos economic conference in Switzerland. Instead, Soros said he would create a "good bank" and re-capitalize the good assets.
He admitted his alternative plan is not likely to get support because it too closely approaches nationalization. "The political will to do that is not there," he said.
As to Paulson's handling of the first half of the $700 billion Wall Street bailout fund known as TARP, Soros said the money was used "capriciously and haphazardly." He said half of it has now been wasted, and the rest will need to be used to plug holes.
Although Soros saw trouble ahead, he stresses he did not foresee how bad it was going to get after the "life-changing event" of the Lehman Brothers bankruptcy.
"The storm that started in the financial system has now spread, in a very big way, to the real economy," he said. "It has fallen off the cliff following the Lehman thing."
He believes still more must be done to turn the slowing of decline into real economic growth, including the reorganization of the mortgage system, and skillful handling of the international repercussions.
Click here to read the full transcript [PDF]
© 2009 CNBC.com
That said, I do agree that 'bad bank' is a lousy idea (for one thing, you simply can't price the assets and/or liabilities properly or timely or to anyone's satisfaction) which is why Paulson didn't go with it after securing TARP funds - TARP does recapitalize and injects liquidity into the banks, without necessarily "nationalizing" them as Soros wants to do (GSEs are exception, but they were de facto nationalized by their very nature since the day of their creation). It would be too slow, too political, would balloon Fannie and Freddie even more, and would only cause more confusion and economic freeze - it would be entirely unworkable.
Actually, you don’t need socilism to implement his idea. Just stop bailing out the banks, and that’s what will happen.
I would like to know how much Soros lost on this collapse. His funds are all private, so he doesn’t have to disclose.
“....Soros: ‘Bad Bank’ for Troubled Assets Is Bad Idea...”
It’s official, I need medication. I actually agree with Soros.
Although Soros saw trouble ahead, he stresses he did not foresee how bad it was going to get ... which means, if he didn't actively participate, he certainly anticipated the problems with the banks, just not the extent and the consequences thereof (collapse of financial system and inevitable spillover into the rest of the economy)...
... so, the question I would like to pose is how much Soros gained on this collapse.
I wouldn’t be surprised to learn that Soros has already made big bucks from going short before the effluent hit the propeller. A lot of the bailout money will also flow into his vaults (and people of his ilk).
You don’t need medication... Soros and his ilk are evil and thrive on destruction, but they are not financially illiterate or idiots.
On rare occasions - when they don’t “talk their book”, financially or ideologically - they could make financial and economic sense.
I’ve got a better idea. Package the bad assets and sell them to SOROS.
Soros is delighted that his “man” in the Whitehouse, he paid for him and he orchestrated this financial meltdown. Now he is worried? Baloney, he is a crooked and evil as they come, he has said that his goal is the total destruction of the United States, looks like it is working -.
Probably mot for himself, but possibly for a couple of things:
1. While economic collapse created the conditions necessary for them to take political power, the problems are much bigger than he anticipated and Democrats may get the blame in short order if their "solutions" don't seem to work
2. As Madoff's and, since then, several other Ponzi schemes unraveled partly as the result of this collapse, a lot of high net worth Democrats and their "charities" and foundations lost much money and funding and/or have been exposed as crooks and liars (not that Republicans are capably taking advantage of this).
In other words, not everything went "according to plan" and, despite putting a good front, Democrats' financial and political fortunes are not as great as they might seem. Obviously, they will try to "recapitalize" themselves through porkulus and other programs and means, but they always do that anyway, and now it could all backfire in very near future.
I wish ex VIP Cheney (whom I will always love) would take Georgy Schwartz quail hunting.
VIP - VP...sorry.
Theres not enough will for a nationalization plan??? The media wouldnt dare call it nationalization and politicians will hide the full details of the plan much like they have done with the current “bailout”. And truthfully, enough Americans could care less what they do to keep them in office year after year.
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