

George Soros on the global economic crisis and the Euro - jacobolus
http://www.nybooks.com/articles/archives/2010/aug/19/crisis-euro/?pagination=false#

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po
"Keynes taught us that budget deficits are essential for countercyclical
policies in times of deflation, yet governments everywhere feel compelled to
reduce them under pressure from the financial markets."

While, I think he is right, I find this statement a little like a pulled-
punch. Are the markets applying pressure or is it politics and hot air from
financial pundits? If the markets were applying pressure, wouldn't long term
interest rates be higher? I see this more as a perception problem than
anything else: people don't want any more stimulus, everything is fine now,
let's get some government belt-tightening going.

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jacobolus
The markets (which is to say banks and financial institutions) are applying
lots of political pressure. They are heavily involved (like any powerful
industry) in the political machinery in every mainstream party in the main
European countries (and obviously in the US as well).

I haven’t seen any evidence that pundits are driving any of these policy
decisions.

I don’t know what you mean by “perception problem” – there is a real economic
crisis.

~~~
po
When I said perception problem, I don't mean to say that there there isn't a
problem. I totally agree about that. I think everyone who is watching is in
agreement on that. I was speaking more about the debate between inflation vs.
deflation. Soros is warning about deflation here but my perception of the
political pressure has been that governments need to tighten in and spend
less. Unemployment is on the rise but the idea that government can come in and
be counter-cyclical is politically taboo.

Overall, I think this whole topic is crazy complex and one where your
instincts are probably wrong. I was simply picking on a small point that I
don't think the evidence shows markets are warning about inflation, it's
pundits and politics that are doing that.

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mark_l_watson
Good read. I recently added <http://feeds.feedburner.com/GeorgeSorosBlog> to
my reading list. I first became interested in Soros because my very
conservative son in law hates him - so Soros immediately looked good :-)

Here is an interesting interview with Eric Schmidt:
[http://georgesorosblog.blogspot.com/2010/06/george-soros-
wit...](http://georgesorosblog.blogspot.com/2010/06/george-soros-with-google-
ceo-eric.html)

