13 years ago people who talked about the end of the world usually consisted of Doomsday cults, people on the corners of Manhattan, conspiracy theorists like Alex Jones. Five years ago people who warned of a huge housing bubble, even some well-respected investors and economists, were laughed at. Now even mainstream investors, politicians and economists, are warning of a very uncertain and scary future. The first mainstream person was Michael Bloomberg, who warned last year of possible civil unrest. However, other people are joining the choros.
George Soros is not one known to be a big conspiracy theorist. He has focused his life on making money and supporting charities and liberal causes. However, in a recent interview with Newsweek, Soros sounds more like a crazy person yelling things on a Manhattan sidewalk.
In the interview, Soros who is currently 81 years old, stated for the first time in his life ““It’s very hard to know how you can be right, given the damage that was done during the boom years.”
Soros also stated:
“We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”
That is quite scary. The best case scenario sounds like the awful economy of the 1970s. Inflation was rampant, the stock market tanked, and there were gas lines at gas stations. Many people credited then Federal Reserve Chairman, Paul Volcker of fixing the problems, which led to the nearly uninterrupted 1982-1999 economic and stock market boom. However this time the Fed is under tremendous political pressure and has run out of bullets.
Although Soros does not expand, the second situation sounds like the Mayan calendar prediction. A total collapse of banking system, a run on banks, gas stations out of supplies and/or looted. Police do not have resources to protect people and are worried first and foremost about their family and friends. Basically survival of the fittest. We do not mean to sound like conspiracy theorists, but this sounds a lot like what Soros is describing.
After Lehman Brothers collapsed, Mohamed El-Erian, CEO of PIMCO stated:
On the Wednesday and Thursday after Lehman filed for Chapter 11, I asked my wife to please go to the ATM and take as much cash as she could. When she asked why, I said it was because I didn’t know whether there was a chance that banks might not open. I remember my wife sort of pausing and saying, “Are you serious?” And I said, “Yes, I am.”
Soros stated further in the newsweek interview:
As anger rises, riots on the streets of American cities are inevitable. “Yes, yes, yes,” he says, almost gleefully. The response to the unrest could be more damaging than the violence itself. “It will be an excuse for cracking down and using strong-arm tactics to maintain law and order, which, carried to an extreme, could bring about a repressive political system, a society where individual liberty is much more constrained, which would be a break with the tradition of the United States.”
However if scenario two plays out, we doubt there will be anyone to stop them. In that case listen to Kyle Bass and buy guns, gold, and canned food.