Depression? That’s not even the half of it, according to billionaire George Soros.
"The size of the problem is even larger than it was in the 1930s," writes Soros on the Huffington Post Web site.
"Total credit outstanding was 160 percent of GDP in 1929, and it rose to 260 percent in 1932 due to the accumulation of debt and the decline of GDP.”
Comparatively, “We entered into the Crash of 2008 at 365 percent, which is bound to rise to 500 percent or more by the time the full effect is felt."
Soros, however, has proposed a comprehensive policy package for President Obama to save the economy from collapsing into the depression, the problems of which he says are already upon us.
The program has five major components, some of which have been enacted into law, and others which have been discussed in Congress and may soon also become law.
These include a fiscal stimulus package; a thorough overhaul of the mortgage system; recapitalization of the banking system; an innovative energy policy; and reform of the international financial system
Despite Soros's pessimism, and his prediction that the next two quarters will show rapid deterioration in the economy, some economists are forecasting a second-half recovery.
"Once we get clarity on the fiscal and financial packages those two things together could end up jump-starting the economy," says Joseph Carson with AllianceBernstein, quoted in the Wall Street Journal.
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