George Soros considers himself to be a serious man. As a hedge fund manager, Soros has to be honest and accurate in his assessment. Making outlandish predictions that are not rooted in reality would undermine his credibility. On financial matters, Soros does have a lot of credibility. This is why a recent prediction he made on Bloomberg news should be cause for alarm. Soros feels the global markets are on the edge of a major crisis.
The Bloomberg article reported on comments Soros made at an economic forum in Sri Lanka. To a large extent on politico.com, Soros noted that problems with China’s stock market and currency are likely to have a large ripple effect through the world.
In very early 2016, China’s yuan saw a major drop in value. The overall economy of China took a massive hit as well. The aforementioned ripple effect yielded losses in the neighborhood of $2.5 trillion. That is an enormous amount of wealth wiped out overnight.
Economies of the world are intertwined. When troubles arise in an economy as large as China, those problems are felt elsewhere. All major countries have significant investments in China. When the Chinese economy tumbles, all those components of the European Union and the United States are pulled in with it. Then again, they are not really pulled in. They are already there.
George Soros has issued serious warnings in the past. The near-catastrophe with the Greek exit from the EU was something he raised alarm bells about. Greece’s exit from the EU would have been very harmful economically since the exit was connected to a potential collapse of the Greek economy. As recent history shows, Greece did not suffer a meltdown. Soros does feel that more problems with Greece are likely to emerge in time. The country never truly addressed its dire situation.
Soros spends a lot of his time and effort in philanthropic causes these days, but he has not totally removed himself from discussions surrounding economic matters. His opinions on such things as China continue to carry weight.