Soros Warns of Dollar Plunge

George Soros: 'market fundamentalism' a danger George Soros, the billionaire financier, has warned that the US dollar could lose one-third of its value over the next few years.

On the currency markets, meanwhile, allegations of yet another accounting scandal - this time at office equipment firm Xerox - made investors dump the US dollar and push it within a quarter of a cent of parity with the euro.

Mr Soros also warned stock markets could fall "much lower" if consumer confidence and growth faltered in the United States.

The financier made his fortune running a hedge fund which speculated against weak currencies, including the British pound, reportedly making a £1bn profit by forcing it to leave out of the European Exchange Rate Mechanism in 1992.

Speaking to BBC business correspondent Rory Cellan-Jones, Mr Soros warned the Bush administration against its "market fundamentalism", the belief that markets are self-correcting and best left alone.

Mr Soros said: "When markets are going down, then all the weaknesses come to the fore, and they need to be dealt with.

"There is basically an attitude of market fundamentalism: leave the markets alone and they will take care of themselves.

"That is a false idea. Markets do not tend to equilibrium, but tend to excesses, and you need intervention at the right time to stop these excesses going overboard."

In recent years, Mr Soros has been an increasingly vocal critic of global capitalism, calling for more regulation and warning that the greatest dangers now came from the United States.

In the last few weeks, the value of the dollar has weakened substantially on international currency markets, by around 10% against the euro, nearly reaching parity of one euro to one dollar.

The US Treasury Secretary, Paul O'Neill, is generally believed to think it would be impossible to try and stabilise the currency markets.

But Mr Soros says that further falls in the dollar could have "negative implications" for the whole world economy, making the recession deeper in Japan for example, or exacerbating a currency crisis in Brazil.

Fears about further acounting scandals and further falls in American stock markets have made international investors wary of buying US shares or dollars.

Mr Soros said that the "cult of success at any price" was partly to blame for the accounting problems in the US "where anything goes as long as you can get away with it".

He said the UK system, which held the professionals liable for giving a "fair and accurate" picture of a firm's financial position, was better than the US approach, which allowed accounting firms leeway to bend the rules.

He welcomed moves by the US regulator, the SEC, to require directors to ensure that their accounts gave an accurate picture.

But he warned that markets were now exagerating the scale of the accounting problems at US firms.

"Clearly you had an excess of optimism and overstatement, and now you are plunging into an excess of doom and gloom," he told the BBC.

"soros is a "scumbag" thief, who cares what that piece of sh!t says?"

I made my comment about Soros above. But here's what I've noted about him and other major manipulators over the years ; they announce their 'intentions' as a sort of ego play. Doesn't mean it's certain, just what's being Worked On at various times. Soros has had much to do with various currency collapses in the past. That's what he does.

Here's some later indicators -------

The BBC News -----Friday, 5 July, 2002, 10:04 GMT 11:04 UK

IMF warns over dollar collapse

The head of the International Monetary Fund, Horst Koehler, has warned that central banks worldwide might need to work together to prop up the US dollar.

In an interview in the Financial Times newspaper, Mr Koehler said that "no intervention at all is not the right answer" should the dollar continue to decline in a "disorderly fashion".

The dollar has fallen by around 10% in the last few months, nearly reaching parity with the euro.

But the US administration is opposed to intervention in currency markets.

In September 2000, during the presidential term of Bill Clinton, the US Treasury did agree to joint action to boost the value of the euro, which had reached a record low of around $0.84.

Alan Greenspan, the influential head of the Federal Reserve, the US central bank, is expected to give his view on the dollar's weakness when he testifies to Congress on 16 July.

Danger of meltdown

The global fall in stock markets amid uncertainty over the strength of the US economic recovery has led to further doubts about the strength of the dollar.

The US is also facing the largest trade deficit in its history.

A weak dollar would hurt exporters in Europe and the Far East by making their goods more expensive in the US, while in turn increasing inflationary pressures there.

Mr Koehler said that there was a danger that financial markets could "exaggerate problems so that they become a self-fulfilling prophecy".

But he admitted that there was a one-in-five chance of a global financial meltdown.

That could happen if a further stock market collapse in developed nations happened at the same time as debt defaults by developing countries such as Brazil and Turkey - both receiving IMF help at the moment.

And he warned that the financial excesses of the past had created problems for governments and international institutions.

"We can't have a world where excessive profits are reaped, and then, all of a sudden, the IMF and governments have to repair the damage," Mr Koehler said.

Admitting mistakes

Mr Koehler has admitted that in the past the IMF - which provides short-term financial help to countries in trouble - had not paid enough attention to building a social security safety net for the poor.

The IMF has come under withering criticism - especially from the former chief economist of the World Bank, Joseph Stiglitz - for enforcing financial orthodoxy and deflationary policies on countries affected by the Asian crisis.

Mr Stiglitz has also criticised former IMF officials, such as former deputy director Stanley Fischer, for accepting jobs with large commercial banks after they retired from the fund.

In return, IMF chief economist Kenneth Rogoff said that Mr Stiglitz, who won this year's Nobel Prize in Economics, was "a towering genius as an academic... as a policymaker, however, you were just a little bit less impressive".

From Encarta:

The major portion of the gold produced is used in coinage and jewelry (see Metalwork). For these purposes it is alloyed with other metals to give it the necessary hardness. The gold content in alloys is expressed in carats (see Carat). Coinage gold is composed of 90 parts gold to 10 parts silver. Green gold used in jewelry contains copper and silver; white gold contains zinc and nickel, or platinum metals.

Gold is also used in the form of gold leaf in the arts of gilding and lettering. Purple of Cassius, a precipitate of finely divided gold and stannic hydroxide formed by the interaction of auric chloride and stannous chloride, is used in coloring ruby glass. Chlorauric acid is used in photography for toning silver images. Potassium gold cyanide is used in electrogilding. Gold is also used in dentistry. Radioisotopes of gold are used in biological research and in the treatment of cancer (see Isotopic Tracer).

There it is...you can use your gold for jewelry, occasionally filling teeth or for medical purposes. There has to be more gold in existence than is actually necessary for its non-frivolous purposes. Is its value a tulip kind of thing?...it's value is that lots of people say it's valuable.

If I were going to invest in a metal, it would be one that was necessary for technology, construction, manufacturing, or environmental improvement. It would be in short supply, so its mines would become a desirable investment. I got me a gold ring and necklace and bracelet, don't need any more.

Meanwhile, I went shopping last week...for stocks...spent about as much as I would've shopping at sales, for things I don't really need. .

Found some real fine bargains. And you know what? If they don't pan out, well, I haven't really lost anything...would've spent it somewhere else anyway...it's a gal thing.

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