Archive for January, 2009

Credit levels dwarf 1929 says Soros

Posted by robin in Financial Articles Market Commentary Friday January 30, 2009 5:59 pm

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“Now that the bankruptcy of Lehman has had the same shock effect on the behaviour of consumers and businesses as the bank failures of the 1930s, the problems facing the administration of President Barack Obama are even greater than those that confronted Franklin D. Roosevelt.

“Total credit outstanding was 160 per cent of gross domestic product in 1929 and rose to 260 per cent in 1932; we entered the crash of 2008 at 365 per cent and the ratio is bound to rise to 500 per cent. This is without taking into account the pervasive use of derivatives, which was absent in the 1930s but immensely complicates the current situation.

“On the positive side, we have the experience of the 1930s and the prescriptions of John Maynard Keynes to draw on.”

George Soros

FT 29 January 2009.

 

 

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