George Soros Featured Guest at TIGER 21 Headliner Luncheon
World Renowned Investor and philanthropist interviewed by Institute for New Economic Thinking
Executive Director Robert Johnson; Comments on members’ 2012 predictions
New York, NY (February 8, 2012) – Members of TIGER 21, the leading peer-to-peer learning network for high
net worth investors in North America, had a treat recently when renowned investor and philanthropist George Soros
was the featured presenter at the group’s December all-member luncheon.
Soros was interviewed by Robert Johnson, executive director of the Institute for New Economic Thinking, of
which Soros is a founding sponsor. The wide-ranging discussion focused largely on the economy and responses to the
past and current financial crisis both in the US and in Europe, but also touched upon the needs of developing nations;
the political divide in the US; and China’s influence on the world economy. The session ended with Soros commenting
on some members’ predictions for what is in store for 2012.
TIGER 21 founder and chairman Michael Sonnenfeldt introduced Soros by saying, “Since TIGER 21’s inception
in 1999, we have strived to create an intellectually stimulating environment. One component of this is our Headliner
Luncheons at which we’ve had many world-class investors join us. George’s reputation and investment acumen are
unrivaled in the world and we are pleased that he agreed to appear at TIGER 21.”
Johnson began the discussion by noting that wealth preservation is a formidable task, especially at this time when
anxiety and uncertainly underpins the economic environment. He referenced Soros’ often used phrase “Far from
equilibrium conditions” as it pertains to current economic situation:
“After crisis of 2008, many people thought we were going back to business as usual. But at this junction it does not
appear that we are going back to equilibrium and the state of disequilibrium has many facets.”
Soros responded that he was not going to cheer anyone up with what he had to say. “The way I see it, this is about as
serious and difficult an environment as I have experienced in my career,” he cautioned.
Soros explained that the current financial crisis is a direct outgrowth of the financial crisis of 2008. “In 2008, when
Lehman went bankrupt, the financial system did collapse. The week between Lehman filing and the announcement of
TARP were memorable days where one market after another ceased to function. “
Now the viability of sovereign debt is in question. This came to a head in Europe because the Euro has some flaws in its
construction that are being exposed. However, he pointed out that the Euro crisis is not a currency crisis, but rather a
Soros underscored that he sees the current crisis as more severe and more lasting than the crisis in 2008.
Differences between 2008 and now
In 2008, we had the institutions that were needed to bring the situation under control, Soros said. In the case of Europe today – there is a central bank but no treasury. It needs to be created to address the current crisis.
“When the Euro was introduced everyone knew that the treasury was missing, but there was no political will to have
a fiscal union – the leaders thought that when the time came they would have the political will to put it in place.
However, there is less political will today than there was in the 1990s,” Soros said.
“Therefore the authorities have no solution and they are trying to buy time. Buying time usually works -- because
you calm markets and money that you put to work to save the market actually turns a profit. But in this case it is not
working because the crisis is getting bigger and bigger, and the authorities are doing what it takes to keep things
together, but never more. So you actually need a continuing crisis to make what is politically impossible, possible.”
Is it inflation or deflation?
Soros explained that there is a fear of inflation because of the tremendous amounts of currency being printed. But
in reality we have deflation, although people are acting on the basis of inflation. This is particularly strong in Europe
and especially Germany – which had very traumatic experiences of runaway inflation in the ‘20s and at end of World
War II. Because Germany is spooked by a fear of inflation, the Bundesbank has an asymmetric view that the central
bank should only guard against inflation. And this is reflected in the statutes that established the European Central
Bank. So it is not acting on deflation, which is why the current crisis is so unsolvable.
On the possibility of Chinese rescue of Europe:
China might not rescue Europe but it has an interest in keeping the Euro alive so that there is an alternative to the US
He also commented that by controlling their own currency, China is controlling the exchange rates of all currencies.
Where the Euro is versus the dollar is up to the Chinese.
Advice for Prudent Investor
On what investments the prudent investor should be considering over the next twelve months, Soros did not hesitate
to suggest cash, agreeing with a sentiment felt by many investors in the room that while the “risk-free “ rate used to
be 2 percent, it is now -2 percent. Soros attributed this to the phenomenon of fiscal repression.
Mistake to reduce entitlements
Commenting on a report that the US budget deficit is driven by 80% excess entitlements and 20% under-taxation,
Soros agreed in the general idea of the make-up of the deficit, but said that reducing entitlements in the current
environment would be a mistake. “The desire to eliminate budget deficits at a time of insufficient demand and
deflation is absolutely the wrong policy to follow,” argued Soros.
Ahead for 2012
In a round of “Agree or Disagree,” Sonnenfeldt asked Soros to react to several predictions for 2012 that individual
TIGER 21 members forecast. Soros was asked to indicate whether he agreed with the predictions or might reject them
outright. Among the predictions:
Soros’s parting comments echoed an investing philosophy that most TIGER 21 members subscribe to. He said, “At times like this is it more important to survive than to get rich.” This parallels many members’ goals of wealth preservation. Soros continued, “Since there are not many productive uses of money right now, it is time to take the long-view.” Two potential plays Soros suggested: Think of undervalued stocks that will survive over long-term, and put the rest in cash.
Please contact Harley Frank, Director of Membership at firstname.lastname@example.org or call 212-584-0222 for further
About TIGER 21:
TIGER 21 (The Investment Group for Enhanced Results in the 21st Century) is North America’s premier peer-to-peer
learning network for high net worth investors. TIGER 21 has 193 Members who collectively manage over $18 billion
in investable assets and have been entrepreneurs, inventors and top executives. TIGER 21 focuses on improving
investment acumen as well as exploring common issues of wealth preservation, estate planning and family dynamics
beyond finance. Founded in 1999, TIGER 21 is headquartered in New York City and has groups in New York, Los
Angeles, San Francisco, San Diego, Miami, Washington, DC, and Dallas, as well as Canadian groups in Vancouver,
Toronto, Calgary and Montreal. More information can be found at www.tiger21.com.