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Soros, the Man Who Cries Wolf, Now Is Warning of a ‘Superbubble’

He has cried wolf many times, but this time George Soros says the beast is really upon us.

Mr. Soros, the chairman of Soros Fund Management, is best-known as a speculator, philanthropist and political activist. He made a fortune by doing things such as betting against Britain’s currency in 1992 and Thailand’s in 1997. 

But Mr. Soros, 77 years old, wants to be remembered most as a philosopher. Since he was a student in 1952, he has been promoting his economic theory, which he calls “reflexivity.”

In essence, he argues that markets don’t simply reflect fundamental determinants but can change those determinants in a way that causes asset prices to go to extremes. In his latest book, “The New Paradigm for Financial Markets,” he argues a “superbubble” has developed in the past 25 years and it is now collapsing.

WSJ: You’ve said this is the worst financial crisis since the Great Depression. Yet at its worst, the stock market was only down 18%. That doesn’t seem Depression-like. Is this as bad as it gets?

Mr. Soros: I think that the decline in housing prices is going to be more precipitous and go further than people currently expect. To expect [to come] out of the recession by the end of the year, I find that inconceivable.

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http://online.wsj.com/article/SB121400427331093457.html