Billionaire financier George Soros warns that we are creating another environment which will inevitably lead to a crash, but this time, it won’t be just stock markets and it will be an even bigger boom and bust than the recent credit crisis.
â€œUnless we learn the lessons, that markets are inherently unstable and that stability needs to the objective of public policy, we are facing a yet larger bubble.
â€œWe have added to the leverage by replacing private credit with sovereign credit and increasing national debt by a significant amount.â€
Though many contrarian analysts and investors have suggested that a massive economic catastrophe will occur sometime in the next 0 to 3 years, Soros is a bit more optimistic on time frame, according to Reuter’s Funds Hub:
One crumb of comfort could be the 10-year period between the 1998 Asian crisis and the 2008 credit crisis. If the pattern is repeated, it should at least mean we have another 8 years to go before the next crashâ€¦
So much for trying to time when the next crash will hit.
*Note: A transcript of Mr. Soros’ speech has not been made available, thus the “8 year” time frame may simply be an interpretation of an unnamed Reuters reporter.
The Reuters report suggests that the credit crisis is behind us and a new boom cycle has begun, but it seems to us that we are still within the bust cycle at this time.
Our view is that Mr. Robert Prechter’s recent assessment of stock markets may be a little more accurate, as it is hard to imagine a scenario where we are approaching another “boom” cycle which will not bust for eight more years.