"Collapsing as Fast as the Soviet Union Did"

These are the words today from eminent financier George Soros. Soros' observations on the current world economic situation are particularly grim, even more so as compared to the views held by Nouriel Roubini and Paul Krugman. It is quite the evident fact that most of the major banks in the US and across Europe are effectively insolvent and should either be seized by national government banking regulators of their respective nations or be allowed to go into default, insolvency, and bankruptcy. Former Federal Reserve Chairman Paul Volcker echoed much of Soros' analysis.

...From the Reuters News Service on Friday 20 February '09...

Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker said.

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The major stock indices continue to careen downward after a brief respite in December '09. The Dow Jones is now at 7365.67, down over 48 % from a peak 16 1/2 months earlier on 9 October at 14,164.53. Other indices have fallen precipitously over same general time period:

-S & P 500: down over 51 % from peak of 1555.10 on 7/21/7 to current level of 770.05

-Nasdaq: down over 49 % from peak of 2861.51 on 10/31/7 to current level of 1441.23

http://seattletimes.nwsource.com/html/businesstechnology/2008765951_apwallstreet.html

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