George Soros: The engine of growth in the super bubble was the American consumer that consumed more than it produced.
For various reasons, we were able to build up a current account deficit that amounted eventually to 6.5 or 7% of the GNP. And also the consumers/householders were withdrawing from their equity from their mortgages, which was actually about the same at the end. It’s slightly larger, about $900 billion annualized.
That was the engine of growth for the world, and that engine is now switched off. It’s been knocked out. So, we need another engine. And in my opinion, in the end, it will be the problem connected with energy.
Global warming, which is threatening to our civilization and is not actually addressed, needs to be addressed. At the same time, we are also concerned about the ever rising cost of exploring for fossil fuels, particularly oil, and of course energy independence. And all those three factors required to develop alternate source of energy and invest in energy saving investments. And that ought to be the motor of the economy that is going to take us out of the recession, where you’re going to have unemployed resources, and those resources are better employed, rather than paying unemployment benefits, better employed or put to use in that direction.
That is where I see the way out of the global recession or depression that we are currently heading into.
Recorded on Oct 23, 2008.