Soros: World Financial System on Brink of Collapse

Date: Friday, December 2, 2011
Author: Brenda Cronin, The Wall Street Journal

The world financial system not only isn’t functioning, it’s on the brink of collapse, according to investor George Soros.

The Hungarian-born philanthropist, who recently spent time in areas where his charities are active, such as Africa, said he sees a growing bifurcation between emerging and developed countries – and he’s more confident about prospects for the emerging ones.

Despite their assorted problems, including corruption, weak infrastructure and shaky government, developing countries are relatively unscathed by the “deflationary debt trap that the developed world is falling into,” Mr. Soros said at a New York gathering to mark the 10th anniversary of the International Senior Lawyers Project, a group that provides pro bono legal services around the world. Mr. Soros was among those honored by ISLP, for his work as founder and chairman of the Open Society Foundations, which supports democracy and human rights.

The current global financial system is in a “self-reinforcing process of disintegration,” Mr. Soros warned, and “the consequences could be quite disastrous. You have to do what you can to stop it developing in that direction.”

While the economic and fiscal woes of the developed world remain critical, Mr. Soros said his recent travels gave him a sense of optimism about Africa and the Arab world.

“A lot of positive things are happening,” he said. “I see Africa together with the Arab Spring as areas of progress. The Arab Spring was a revolutionary development.”

However, he noted, Hungary’s 1956 revolution changed the political atmosphere but didn’t bear fruit until 1989.

“You can’t expect immediate success but what is happening will have a lasting impact,” he said.