In George Soros lectures, at the Central European University, he states that the US is headed toward a double dip recession in 2010 to 2011. He quantifies our need to be told only what we want to hear. This leads to our divergence between perceptions and reality thus ultimately leading to influences in the market. Soros believes this to be the root cause of the 2007-08 recession and the recent market correction.
Soros also elaborates on the need for an “open society” or “new world order”, in which the US is no longer the clear front runner in the world economy. Stating that “China is positioned to take on this role as the new world leader.”
Soros believes that the US should lead by example and push for a wider use of SDRs. This would in turn cause China to “stop pegging its currency against the US dollar and is the best way to reduce international imbalances,” since SDRs are denominated by multiple currencies giving no advantage to any single country. He goes on to explain that SDRs would allow international creation of credit and allow credit to be given to the country(s) that need it most.
The US could use Soros methodology to help shore up our status as a world leader by instilling the notion of the US as a world innovator while regaining international confidence in the US.
China must also be willing to give up some holding ground on individual freedoms in order to ease tensions, and give investors a better sentiment towards their economy.
Most importantly Soros believes that if the US and China are able to make headway with this methodology, it will make for a more stable world economy while ensuring both countries remain world leaders.
Whether you agree with his position for the future or not, he proposes intriguing questions into the way the market functions in today’s market.
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Also here is a link to Soros lectures: