“The real danger of collapse has passed,” says legendary financier George Soros. But the “fallout of the collapse” of the banking system “will linger."
In the wake of Lehman Brothers’ bankruptcy on Sept. 15, 2000, authorities were forced to put the financial system remains on “artificial life support, which is where it is now,” says Soros, the chairman of Soros Fund Management and author of several books, including most recently The Crash of 2008 and What It Means.
As a result, the billionaire speculator says the stock market’s recent rally is doomed to fail. “Now we will face reality,” he says, referring to a belief policymakers “did not succeed in recapitalizing the banks to point where they can lend freely." Unfortunately, “talk of zombie banks – that’s where we are now,” Soros says. “Instead of providing the lifeblood of credit, [banks] are effectively drawing it to themselves.”
That, in turn, will keep the economy from producing anything more than a fleeting bounce for the foreseeable future, says Soros