The Unites States has a reputation for being somewhat of an isolationist. A large number of American pay attention to what’s happening in the country not what is happening to neighboring countries or the rest of the world. Those people leave that stuff up to elected officials that get paid to follow world events and economic changes. It’s their job, according to those short sighted folks. But George Soros is not one of those folks. Soros is a hands-on hedge fund manager that pays attention to world events. And he is good at it. Soros is able to see things in other countries that most people don’t see. He recently told Bloomberg.com that what he sees coming to the United States is not very pretty.
In that Bloomberg.com interview, Soros said the world is on the verge of a recession that could be worse than the Great Recession of 2008. Many countries that have offered Soros investment opportunities in the past are now investment nightmares. Instead of foreign investors supporting BRICS countries, they are running away from them. Most of the BRICS countries are in a deep recession, and if there aren’t now, they will be in the second half of 2016. Mr. Soros said all countries will experience this new recession because the catalyst for it is a big one. That catalyst is China.
China is certainly the instigator of this new economic contraction, but the European Union seems to be adding more drama to the event. Soros said the EU is on the verge of a collapse. That collapse could happen in 2016 unless the EU stimulates economic growth, solves the euro debt crisis and gets a handle on the migration issue. Soros believes the European Union is not capable of solving any of those issues right now.
When the economic disasters that are playing out in emerging markets is added to the European Union problem and the Chinese issue, there’s little doubt that the United States will avoid becoming part of that messed up situation. In other words, the U.S. economy could begin to contract by the end of 2016, and that contraction will stay around for a couple of years.
The United States is still enjoying GDP growth, but that won’t last long, according to Soros. There are signs that growth is slowing down. It just hasn’t been reported yet. If the United States continues to ignore what’s happening in the rest of the world, the impact of the recession could be worse than it has to be in the past. The Feds should be taking step now to stimulate the economy, but all the news coming from the Feds is another rate hike, and that will be very counterproductive.