Billionaire financier George Soros has often been looked as an authority on where global market stands. Soros sat down with Bartiromo for a look at the U.S. economy, China and more importantly, where investors can find opportunities.
BARTIROMO: How do you see things right now, in terms of the environment globally speaking and in the U.S. right now. Where are we in the cycle?
GEORGE SOROS: The markets are now stabilized. The premiums have shrunk back to normal levels. So that's fine. And the economy has begun to move forward. But it's only moving forward because it's pushed by the stimulus. And that's particularly true in the United States. At the same time now, there's increasing concern about the budget deficit and the growing national debt. And that will stand in the way of additional stimulus. And that creates-- I think a real threat-- of a double dip.
BARTIROMO: What are your thoughts on the President's proposals in the banking industry?
GEORGE SOROS: Well, I'm very supportive. I think it’s a step in the right direction because the banking system has to be changed. This idea of allowing total freedom has turned extremely sour. So we do need to do it. And separating investment banking from commercial banking and prohibiting commercial banks from engaging in trading for their own account, using deposits which have the implicit guarantee from the government.
We have this too big to fail problem which we have to solve either by breaking them up or by imposing other strict rules on capital requirements. So if they speculate for their own account, then they need to have appropriate capital to back it.
BARTIROMO: What about China, George? What can you tell us there? Is this an investment opportunity for you? People talk about growth of some 11% there. What are you seeing in China?
GEORGE SOROS: I think that China is the great winner of the whole situation. Right now, it's overheating. And they are moving to cut back. They have inflation. And they are now actively increasing capital reserve requirements. And until they finish the job, I think the markets are likely to be under pressure. But I think once they've succeeded, I think China will remain a very attractive area for investments.
BARTIROMO: And-- and given the economic story there, is it fair to say that the currency eventually does go higher?
GEORGE SOROS: Well-- it would be in China's own interest now to allow the renminbi to appreciate. And, of course, it would be of great benefit to the rest of the world. And see, if China is dependent on the rest of the world for its exports, it would, again, benefit China.
So it really now cries out as the most efficient way of bringing inflation under control.
BARTIROMO: When you look at the deficit, the debt in the U.S., is there any reason to believe that the U.S. dollar goes higher any time soon?
GEORGE SOROS: Well, actually it's acting rather well right now. But the U.S. would actually also benefit from-- a higher renminbi. It would help both by making exports more competitive to China. But also, it would help to actually introduce an element of inflation in the United States. Which, in the current circumstances, would be very helpful.
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