Soros Says U.S. Shouldn’t Cut Stimulus, Inflation Contained

Posted By on July 19, 2010

July 19 (Bloomberg) — Billionaire investor George Soros said U.S. lawmakers should refrain from withdrawing stimulus measures because the economy hasn’t strengthened enough.“I think the timing is wrong with withdrawing the stimulus,” Soros said at the Hamptons Institute in East Hampton, New York on July 16. “Cutting employment benefits, cutting aid to states that are losing tax revenue, these are counterproductive because you can only grow your way out” of the financial crisis, said Soros, who turns 80 next month.

Soros, who spoke on a panel with Elizabeth Warren, chairwoman of the Congressional Oversight Panel for the Troubled Asset Relief Program, and Michael Greenberger, professor at the Maryland School of Law, said the bond markets would tell the U.S. government when it is safe to cut spending.

“When the demand comes back, you will see it in interest rates beginning to move out,” he said. “That’s the time to cut back, not now.”

In speaking about the European debt crisis, Soros said that Greek debt would eventually have to be restructured “in an orderly manner.”

Banks in Europe are undercapitalized and the stress tests, the results of which will be published later this month, won’t reflect how serious the situation is because the tests are based on old and inadequate capitalization rules, Soros said.

More at:http://www.businessweek.com/news/2010-07-19/soros-says-u-s-shouldn-t-cut-stimulus-as-inflation-contained.html

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