Date: Thu, 17 Sep 1998 21:18:16 -0500 (CDT)
Subject: AUT: Capitalism falling apart, says Soros (fwd)



---------- Forwarded message ----------
Date: Thu, 17 Sep 1998 21:00:16 -0500
From: Roger Baker <rcbaker-AT-mail.eden.com>
To: wall-talk-AT-envirolink.org, Stratfacts-AT-aol.com
Cc: hmcleave-AT-eco.utexas.edu, cedartex-AT-aol.com, j-AT-qmail.com
Subject: Capitalism falling apart, says Soros

Subject:   Capitalism falling apart, says Soros
Date:  16 Sep 1998 04:22:10 GMT
From:  MichaelP <papadop-AT-peak.org>
Newsgroups:   misc.activism.progressive
 

                   Capitalism falling apart, says Soros 

                     By Alex Brummer, Financial Editor
Guardian (london)                        Wednesday September 16, 1998

        The financier George Soros warned last night that the global
   capitalist system is in danger of imploding following the panic flight
   of capital from the emerging markets of Latin America, in the wake of
                            the Russian crisis.

   In testimony to the US Congress, Mr Soros said: "The global capitalist
     system that has been responsible for our remarkable prosperity is
                        coming apart at the seams."

   He said there was "general panic" in Latin American markets and that a
    financial collapse in Brazil could spread to Argentina. His remarks
    came amid reports that the Latin American countries are negotiating
    with international lenders to put together a $100 billion emergency
                         loan fund for the region.

   The latest Soros intervention, coming in the aftermath of this week's
       efforts by President Clinton and the Group of Seven industrial
   countries to restore confidence in the global economic system, appears
                    certain to shake financial markets.

    When Mr Soros called for a rouble devaluation in August he sparked a
   financial and political crisis in Russia which resulted in a collapse
     in the rouble, costing Mr Soros's investment funds an estimated $2
                                  billion.

         In his testimony, Mr Soros lends his weight to the Clinton
     adminstration's demand that Congress immediately authorise its $18
      billion contribution to a capital increase for the International
    Monetary Fund, which is rapidly running out of cash. He also revises
    his own idea of an international insurance fund to protect countries
                    against speculators such as himself.

      Mr Soros, the chairman of Soros Fund Management which invests on
     behalf of rich savers, said the default of Russian banks on their
      obligations and the subsequent shutdown of Malaysia's financial
      markets to foreigners has led to a "global credit crunch in the
                                  making".

    "The flight of capital has how spread to Brazil and put the rest of
                     Latin America at risk," he argued.

   His comments follow the decision of the Brazilian authorities to raise
       interest rates as high as 50 per cent to protect the country's
   currency - the real. Similar moves were attempted in Moscow before it
       succumbed to pressure to devalue with disastrous consequences.

    Mr Soros cautioned US policymakers against complacency just because
    most of the trouble is occurring outside the US. He said the global
       capitalist system involved not only free trade but, even more
    importantly, the free movement of capital in a "gigantic circulatory
      system" in which capital was sucked up by financial markets and
        institutions at the centre and pumped out to the periphery.

    The Asian crisis reversed the direction of that flow, Mr Soros said.
    Capital began to flee the periphery, at first to the benefit of the
                      financial markets at the centre.

    The US economy then enjoyed the best of all possible worlds as cheap
    imports helped to keep inflation in check and stock prices moved to
                                 new highs.

   But Soros said the crisis had reached the point where distress at the
                   periphery was not good for the centre.

      "The pain at the periphery has become so intense that individual
    countries have begun to opt out of the capitalist system, or simply
                       fall by the wayside," he said.

    He said the programmes of the international monetary authorities had
      not worked and those authorities had been unable to reassure the
                             financial markets.

** NOTICE: In accordance with Title 17 U.S.C. Section 107, this material
is distributed without profit to those who have expressed a prior interest
in receiving the included information for research and educational
purposes. **



-- Capitol Macintosh, Austin's Mac User Group
-- TCP Port 3000: online.capmac.org
-- or by modem +1.512.440.0025 (6 lines)



     --- from list aut-op-sy-AT-lists.village.virginia.edu ---