Hedge fund icon George Soros says the dollar will remain the world’s reserve currency for some time, despite China’s recent call for a new reserve unit.
“I think the dollar is the dominant currency for a while to come,” Soros told CNBC.
“But in the long run I think it’s important that the U.S. should be subject to the same discipline as the rest of the world.”
The toxic assets weighing down bank balance sheets aren’t going anywhere anytime soon, despite the Obama administration’s plan to purge them, Soros says. And that will be a continuing negative factor for the global economy, he points out.
Similarly, new accounting rules allowing banks liberal choice on valuing their damaged assets won’t make it any easier for them to acquire the additional capital they so dearly need, Soros says.
“I think what would have been much more effective would have been to recapitalize the banks,” he says.
“Because of the history of the way the TARP money was spent, it was really very messy and very badly done. Because of that, there's increasing reluctance by Congress to make new money available.”
Soros says, “It would be much better to create clean banks, banks that are able to lend. I think we missed the boat on that.”
Others are skeptical of Obama’s bank plan too.
“It is a win-win-lose proposal: the banks win, investors win — and taxpayers lose,” economist Joseph Stiglitz told The New York Times.
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