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  • bushislunatic bushislunatic Jul 2, 2002 2:14 PM Flag

    NEWS-SOROS BLAMES BUSH FOR COLLAPSING

     

    Soros says Bush's policies caused dollar to fall
    By Tom Burroughes
    Tuesday July 2, 1:13 pm Eastern Time

    LONDON, (Reuters) - Billionaire financier George Soros repeated on Tuesday his charge that U.S. President George W. Bush's administration was to blame for the recent drop in the dollar's value.

    "There is no confidence in the Bush administration's management of the global economy. This is a vote of no-confidence by investors in the world," the 72-year-old Soros told a committee of lawmakers in the British parliament.

    Speaking to the House of Lords Economic Affairs Committee, Soros said, "The Bush administration is following a policy similar to the Reagan administration of the early 1980s, which is of an increasing budget deficit, expansion of defense spending and a financing of it from abroad."

    Late last week the hedge fund king-turned-philanthropist made the same criticism in a speech in London. He said the fall in the dollar's value had taken him by surprise, however.

    The European single currency, the euro, did not present an ideal alternative store of value to the dollar while the recent appreciation of the Japanese yen presented a threat to the fragile Japanese economic recovery, Soros said.

    "Earlier, the strengthening of the yen could be attributed to a possible cyclical recovery in Japan. But now the Japanese market is declining, which means people are going home (into the yen) out of fear," he said. Soros's comments come in the wake of the dollar's recent fall to a two-year low of $0.990 against the euro. The dollar's decline has coincided with falls in U.S. stock markets which have been hit by a number of high-profile U.S. corporate scandals, with the latest at telecoms firm WorldCom.

    Soros, whose assault on the British pound in 1992 resulted in the ejection of sterling from the European exchange rate mechanism, described the current bout of dollar weakness as the "Bush bear market".

    Elsewhere, in comments spanning issues such as globalisation and financial crises in Latin America, Soros urged the world's leading central banks such as the U.S. Federal Reserve to help holders of Brazilian debt cope with high interest rates.

    "It is an unsustainable situation. This would be an occasion where there would be a need for a lender of last resort," Soros said.

    Soros said he favoured some kind of tax on global financial transactions to raise revenues, although he doubted whether a suggested "Tobin Tax" on foreign exchange dealings, named after the late Nobel Prize-winning economist James Tobin, was a practical idea. Last year European Union finance ministers asked the bloc's Commission in September to evaluate the feasibility of the tax, but they viewed it with little enthusiasm.

    Soros said the Tobin Tax could cut liquidity in global foreign exchange markets, making price movements more, not less, volatile.

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