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George Soros compares the current financial crisis to the 2008 recession


Staff member
Is this really 2008 all over again?

GEORGE Soros's record is sufficiently impressive, particularly on macro-economic calls, that it is worth taking notice when he sounds the alarm. His latest suggestion is that the current environment reminds him of 2008, the prelude to one of the worst bear markets in history. The reputation of George Osborne, Britain's finance minister, is nothing like as elevated but he is also set to warn today that the current year may be the toughest for the global economy since the financial crisis.

Stockmarkets certainly seem to be acting as if Mr Soros might be right. China has suspended its share trading for the second day this week (as our correspondent argues, this looks like a counter-productive tactic). The sell-off has rippled through Asia and Europe, with London's FTSE 100 back below 6000 (it closed the last century at 6930; so much for the argument that stocks always pay off over the long term).  As yesterday's post pointed out, the sell-off is down to a combination of worries about a slowing global economy and geopolitics.

So is it 2008? Mainstream forecasters aren't predicting recession (but they never do). The World Bank has cut its forecast for global growth in 2016 from 3.3% to 2.9% (although that would be better than 2015's outturn). Perhaps one should look at the trend in forecasts, rather than the outright level; back in January 2008, Federal Reserve governors were looking for 1.3-2% growth that year. That was way too optimistic, but the direction of travel was right; the previous range of forecasts (in October 2007) had been 1.7% to 2.5%. Falling commodity prices and (in the first few days of the trading year) falling bond yields are an indication that investors are worried about growth.

Read it fully here: http://www.economist.com/blogs/buttonwood/2016/01/markets