Billionaire investor George Soros said today at a conference in Vienna that “we have only just entered Act II” of the global financial crisis as Europe’s fiscal problems worsen by worries about the ability of Greece and several other European countries to pay their huge debts and reduce their budget deficits at a time when the economic recovery is weak.
Bloomberg: “The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said. “Indeed, we have just entered Act II of the drama.”
Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped out more than $4 trillion from global stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance maturing bonds and fund deficits, according to Bank of America Corp.
“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.”
Soros also said that the current situation in the world economy is “eerily” reminiscent of the 1930s with governments under pressure to curb budget deficits. He suggested that under the current market conditions this may push the world economy back into recession.