Soros Calls The G20 A Success

Geore Soros, for one, is happy with how the G20 turned out. The hedge fund manager spoke to Maria Bartiromo at the conclusion, lauding the news that the IMF would create $750 billion in special drawing rights. He says this will save countries on their own.

Full transcript:

MARIA BARTIROMO: THE G-20 SUMMIT WINDING DOWN AND NEW PROMISES HAVE BEEN MADE TO DRAMATICALLY INCREASE SPENDING IN EMERGING ECONOMIES. IT IS ONE OF THE TOP CONCERNS OF BILLIONAIRE INVESTOR GEORGE SOROS. HE'S JUST RELEASED HIS BOOK "THE CRASH OF 2008 AND WHAT IT MEANS." IN A FIRST ON CNBC INTERVIEW TODAY I SPOKE WITH HIM ABOUT THE IMF'S ROLE IN HELPING THE POOREST COUNTRIES. [to Soros] YOU'VE SEEN THE COMMUNIQUÉ. YOU'VE BEEN IN SOME OF THESE MEETINGS. WHAT'S YOUR REACTION? WHAT DID YOU THINK ABOUT THE COMMUNIQUÉ?

GEORGE SOROS: THEY MANAGED TO GET MORE THAN I EXPECTED. THEY REALLY PULLED A FEW RABBITS OUT OF THE HAT, AND I THINK IT WAS A VERY IMPRESSIVE COMMUNIQUÉ, AND I THINK GORDON BROWN, IT'S REALLY PROBABLY HIS FINEST HOUR.

BARTIROMO: WHY?

SOROS: BECAUSE HE REALLY DID SEE THE NEED FOR ADDRESSING THIS GLOBAL PROBLEM. BECAUSE YOU HAVE THE LESS DEVELOPED WORLD FACING A POTENTIAL COLLAPSE AS THE BANKS DON'T ROLL OVER THEIR LOANS. SO SOMETHING HAD TO BE DONE. AND HE DID MANAGE TO BRING IT TOGETHER. AND I WOULD SAY THAT IT'S PROBABLY THE FIRST TIME THAT THE AUTHORITIES ARE ACTUALLY AHEAD OF THE CURVE.

BARTIROMO: LET'S TALK ABOUT THE MONEY FOR THE IMF. IT COULD RISE TO $750 BILLION. IS THAT ENOUGH? AND MORE IMPORTANTLY, WHO SHOULD GET THE MONEY?

SOROS: WELL, THEY MANAGED TO PUT TOGETHER A BIGGER PACKAGE THAN ANYBODY EXPECTED. AND VERY IMPORTANT IS THE ISSUE OF SPECIAL DRAWING RIGHTS. $250 BILLION. THAT IS EFFECTIVELY CREATING - INTERNATIONALLY CREATING - NEW MONEY. AND THAT WILL HELP TO ALLOW THE COUNTRIES THAT ARE NOT ABLE TO PRINT THEIR OWN MONEY THE WAY WE CAN, ACTUALLY TO STIMULATE THEIR ECONOMIES. AND I THINK THE WAY FOR THE RICH COUNTRIES TO TRANSFER THE ALLOCATIONS TO THE MOST NEEDY COUNTRIES CAN BE WORKED OUT.

BARTIROMO: SO ARE YOU SAYING THE EFFORTS AS FAR AS THE IMF AND THE COMMUNIQUÉ OVERALL HAVE COMPLETELY CHANGED YOUR MIND? A WEEK AND A HALF AGO YOU WERE OUT VERY VOCAL SAYING LOOK, THE IMF IS GOING TO HAVE TO BASICALLY BAIL OUT THE UK, HERE WE ARE SITTING IN ONE OF THE GREATEST CITIES IN THE WORLD -

SOROS: NO. THAT WAS A MISLEADING HEADLINE GIVEN TO AN INTERVIEW WHERE I SAID IT'S MOST UNLIKELY THAT BRITAIN WOULD NEED TO GO TO THE IMF. HOWEVER, THE FACT THAT WE CREATED SUCH AN OUTCRY SHOWS WHAT A STIGMA THERE IS ATTACHED TO HAVING TO GO TO THE IMF.

BARTIROMO: A LOT OF PEOPLE WHEN YOU WERE TALKING ABOUT THE UK AND THE NEED FOR HELP AND REALLY A BAILOUT, PEOPLE WERE SAYING, WELL, WAIT A SECOND, GEORGE SOROS YEARS AGO SHORTED THE POUND AND MADE MONEY ON THIS AND MAYBE HE'S PLAYING HIS BOOK. IN FACT, LORD MANDELSON SAID THAT. ARE YOU SHORTING THE POUND RIGHT NOW?

SOROS: NO, I'M NOT. FIRST OF ALL, AGAIN, I'VE WITHDRAWN NOW FROM ACTUALLY RUNNING THE FUND. I DID IT LAST YEAR. WE CAME THROUGH IT. NOW I'VE HANDED IT BACK TO THE PEOPLE WHO CAN DO IT. SO I'M OUT OF THE MARKETS, AS I WAS BEFORE I CAME OUT OF RETIREMENT. SO I'M BACK IN RETIREMENT.

BARTIROMO: I DON'T KNOW IF YOU'RE GOING TO BE ABLE TO STAY IN RETIREMENT VERY LONG, FRANKLY. BUT LET ME ASK YOU ABOUT THE OPERATIONS IN TERMS OF HEDGE FUNDS OVERSIGHT. BECAUSE THIS IS ANOTHER THING THE GROUP SAID, THAT THEY WANT MORE REGULATION ON HEDGE FUNDS. DID YOU AGREE WITH WHAT THEY SAID AND WHERE THEY'RE GOING IN TERMS OF MORE OVERSIGHT?

SOROS: WELL, I THINK YOU ABSOLUTELY WILL NEED MORE REGULATION. BUT YOU REALLY NEED TO HAVE BETTER REGULATION. AND YES, WE HAVE ALLOWED THE MARKETS A FREE HAND, AND OF COURSE THAT WAS VERY UNSOUND. BUT WE DON'T WANT TO GO OVERBOARD NOW WITH REGULATIONS BECAUSE THE FACT THAT MARKETS ARE IMPERFECT, THAT THEY DON'T ANTICIPATE THE FUTURE CORRECTLY, REGULATORS ARE JUST AS IMPERFECT.

BARTIROMO: CAN YOU CHARACTERIZE THE SITUATION FOR US IN EASTERN EUROPE RIGHT NOW?

SOROS: WHAT HAPPENED WHEN THE WESTERN EUROPE AND AMERICA GUARANTEED THE BANKING SYSTEM THE OTHER COUNTRIES IN EASTERN EUROPE COULDN'T PROVIDE SIMILARLY CONVINCING GUARANTEES, AND THE BANKS IN THE WEST STARTED PULLING THEIR CAPITAL OUT OF THERE AND PULLING THEM BACK. AND THE NATIONAL REGULATORS ALSO ENCOURAGED THE BANKS TO LEND AT HOME AND NOT ABROAD. AND SO THAT CREATED A CRISIS FOR EASTERN EUROPE.

BARTIROMO: WHAT ARE YOUR THOUGHTS ON THE DEVELOPMENTS SURROUNDING MARK TO MARKET? FASBY COMING OUT AND SAYING THAT THEY DO WANT TO MAKE IT EASIER, A LITTLE MORE LAX IN TERMS OF THE REGULATION FOR MARK TO MARKET. WHAT ARE YOUR THOUGHTS ON THAT?

SOROS: THERE I REMAIN REALLY CRITICAL BECAUSE I THINK MUCH MORE EFFECTIVE WOULD HAVE BEEN TO RECAPITALIZE THE BANKS. AND BECAUSE OF THE HISTORY OF THE WAY THE TARP MONEY WAS SPENT, IT WAS REALLY VERY MESSY AND VERY BADLY DONE. AND BECAUSE OF THAT THERE'S INCREASING RELUCTANCE BY CONGRESS TO MAKE NEW MONEY AVAILABLE. AND YET IT WOULD BE MUCH MUCH BETTER TO CREATE CLEAN BANKS. BANKS THAT ARE ABLE TO LEND. AND I THINK WE MISSED THE BOAT ON THAT. AND THAT MEANS THAT WE WILL BE SPENDING A LONG TIME ALLOWING THE BANKS TO DIG THEMSELVES OUT OF A HOLE. AND WHILE THEY ARE DOING THAT, THEY WILL NOT BE REALLY PROVIDING SUFFICIENT CREDIT TO CARRY ON BUSINESS. THEY WILL BE CHARGING A LOT AND GENERALLY IT'S GOING TO WEIGH ON OUR ECONOMY FOR A PERIOD OF TIME.

BARTIROMO: I KNOW YOU SAW THE STORY ABOUT SOME HEDGE FUNDS SAYING, "LOOK, WE'RE GOING TO LEAVE LONDON. THE TAX SITUATION IS NOT FAVORABLE. WE DON'T LIKE THE BUSINESS CONDITIONS HERE. WHAT DO YOU THINK ABOUT THAT?

SOROS: WHERE ARE THEY GOING TO GO? ANOTHER PLANET? I MEAN, YOU KNOW, THIS IS - THERE IS NO ALTERNATIVE BECAUSE NOW WITH THE TAX HAVENS BEING BROUGHT UNDER CONTROL I THINK HEDGE FUNDS WILL HAVE TO GET USED TO BEING REGULATED.

BARTIROMO: GEORGE IS THERE ANYWHERE IN THE WORLD DOING WELL RIGHT NOW? I MEAN ANYWHERE THAT YOU WOULD SAY, LOOK, THIS IS SAFETY, THIS IS WHERE I WANT TO BE?

SOROS: I THINK THAT ACTUALLY CHINA STANDS TO EMERGE FASTER AND BETTER THAN MOST OTHER COUNTRIES. I THINK, ACTUALLY, BRAZIL THAT HAS BEEN HURT BY THIS FINANCIAL CRISIS AFTER LEHMAN IS ALSO BASICALLY QUITE WELL SITUATED. SO I THINK INDIA, BECAUSE IT IS LESS TIED IN WITH THE REST OF THE WORLD. SO I THINK THAT THE GLOBAL ECONOMY WILL PROBABLY START GROWING NEXT YEAR.

BARTIROMO: GEORGE, THE CHINESE SAID THAT THERE SHOULD BE ANOTHER OPTION AWAY FROM THE U.S. DOLLAR AS THE RESERVE CURRENCY. DO YOU AGREE WITH THAT?

SOROS: IN THE LONG RUN THAT MAY BE APPROPRIATE. IT'S NOT IN THE CARDS NOW. THE SPECIAL DRAWING RIGHTS THAT ARE NOW BEING ISSUED, THOSE ARE NOT CURRENCY. THEY'RE IN A BOOKKEEPING ENTRY AT THE IMF. YOU HAVE TO CONVERT THEM INTO A CONVERTIBLE CURRENCY BEFORE YOU CAN USE THEM. I THINK PROBABLY THE CHINESE YUAN WILL ALSO BE MADE ONE OF THE CURRENCIES INTO WHICH YOU CAN CONVERT IT. WHICH IS APPROPRIATE BECAUSE CHINA IS NOW VERY IMPORTANT COUNTRY. BUT WE ARE NOWHERE NEAR THE SDRs BECOMING AN INTERNATIONAL CURRENCY.

BARTIROMO: LONG TERM WHAT WOULD THE CURRENCY BE? WOULD IT BE THE CHINESE YUAN?

SOROS: NO. I THINK THE DOLLAR IS THE DOMINANT CURRENCY FOR A WHILE TO COME. BUT IN THE LONG RUN I THINK IT WOULD BE IMPORTANT THAT THE U.S. SHOULD BE SUBJECT TO THE SAME DISCIPLINE AS THE REST OF THE WORLD.

BARTIROMO: MY THANKS TO GEORGE SOROS.