Aftermath News

MSNBC | May 8, 2008

Slumping economy: It’s a guy thing

By Peter Coy

They eat from the same dishes and sleep in the same beds, but they seem to be operating in two different economies. From last November through this April, American women aged 20 and up gained nearly 300,000 jobs, according to the household survey of the Bureau of Labor Statistics. At the same time, American men lost nearly 700,000 jobs. You might even say American men are in recession, and American women are not.

What’s going on? Simply put, men have the misfortune of being concentrated in the two sectors that are doing the worst — manufacturing and construction. Women are concentrated in sectors that are still growing, such as education and health care.

This situation is hardly good news for women, though. While they’re getting more jobs, their pay is stagnant. Also, most share households—and bills—with the men who are losing jobs. And the “female” economy can’t stay strong for long if the “male” economy weakens too much.

The troubles for the American male worker, while exacerbated by the current slump, are hardly new. The manufacturing sector is in long-term decline, and construction goes through repeated booms and busts. Meanwhile women are graduating from college at higher rates than men. Some analysts even argue that men are less suited than women to the knowledge economy, which rewards supposedly female traits such as sensitivity, intuition, and a willingness to collaborate. “Men have tended to do better in the hierarchies, following orders and relying on positional power,” says Andy Hines, a futurist at the Washington, D.C. consulting firm Social Technologies, who previously worked for Kellogg and Dow Chemical.

Problem industries

Whether you buy that argument or not, it’s clear that right now men are in a bad spot. The share of all men aged 20 and over with jobs has fallen since last November, when private-sector employment peaked, going from 72.9% to 72.2% in April. For women the ratio rose, from 58.1% to 58.3%. The adult male unemployment rate has risen twice as much as the female jobless rate since November. Those figures from the BLS’ household survey are echoed in its separate survey of employers.

To see why, go sector by sector. Manufacturing is over 70% male and construction is about 88% male. Meanwhile the growing education and health services sector is 77% female. The government sector, which has remained strong, is 57% female. The securities business, which is filled with high-paying jobs, is likely to be the next sector to get whacked — and more than 60% of its workers are men.

Men are having a harder time than women getting back on track after losing a job. “For a man to move from a $20- or $30-an-hour union job to being a Wal-Mart greeter is devastating,” says Claudia Goldin, a Harvard University labor historian. Men also shy away from some of the growing fields, such as nursing. Only about 10% of nursing students nationwide are male, notes Harriet R. Feldman, dean of the Pace University School of Nursing. Some retired nurses are actually going back to work because their husbands have lost jobs, says Lois Cooper, vice-president for employee relations and diversity at staffing firm Adecco Group North America in Melville, N.Y.

The weakness of the male economy is squeezing people such as Brian Day, 45, a union carpenter in Ossian, Ind., who made about $35,000 in construction last year but only $1,500 so far in 2008. The family of five is living off his jobless benefits and the $35,000 salary of his wife, a supermarket supervisor. Says Day: “I feel guilty about it.” Jeff Bainter, 53, a railroad worker in Muncie, Ind., has enough seniority to keep his job but sees younger men getting the ax. He says there’s more security but lower pay in what his wife, Cynthiana, does for a living: medical billing.

CONTINUED

Telegraph | May 8, 2008

By Adrian Blomfield in Moscow

Vladimir Putin has boasted that Russia’s economy will overtake Britain’s this year as he was formally declared Russia’s prime minister.

The ballot represented the culmination of a three-year strategy to allow Mr Putin essentially to succeed himself.

Constitutionally banned from serving a third consecutive four-year term as president, the former KGB spy appears to have found the next best way of remaining Russia’s most powerful man.

In a sign of how the relationship could unfold, Mr Medvedev suggested that his new prime minister was, at the very least, his equal.

“I think nobody doubts that our tandem, our co-operation, will only strengthen,” he told parliament.

In the two days he has been in office, Mr Medvedev has been consistently outshone by his new prime minister, who has dominated television airtime and delivered longer speeches.

At both the presidential inauguration and during yesterday’s nomination vote, the 42-year-old former lawyer seemed more a compere than president, his role reduced to introducing Mr Putin and then thanking him effusively once he finished speaking.

While Mr Medvedev has restricted his public comments since becoming president to brief but vague promises, Mr Putin laid out a concrete agenda for the Russian economy.

In a welcome development for his allies in the energy sector, large swathes of which Mr Putin re-nationalised as president, the prime minister said tax cuts for oil and gas companies would be introduced by August.

In a populist move, he also proposed large increases in government spending to fund pay rises in the military and the near doubling of the minimum wage.

Attacking the West for allegedly restricting Russian foreign investment, he said that the country’s economy would overtake Britain’s this year.

“Russia is currently standing in seventh place in the world,” he said.

“According to international experts, it can climb another step as early as this year and overtake Britain.”

Britain has the fifth largest economy in the world, while Russia is in 10th place, although its ranking climbs if judged by purchasing power parity.

Mr Putin is expected to name his cabinet within a week.

As president, he always took charge of ministerial appointments, but few expect him to defer to Mr Medvedev.

One school of thought predicted that he would mount a bid for the presidency in 2012.

The United States yesterday disclosed that two military attachés at its embassy in Moscow were expelled at the end of last month.

The absence of an official explanation suggested that espionage was at the root of the row.

Washington Post | May 1, 2008

By Joby Warrick

Swelling populations and a global tide of immigration will present new security challenges for the United States by straining resources and stoking extremism and civil unrest in distant corners of the globe, CIA Director Michael V. Hayden said in a speech yesterday.

The population surge could undermine the stability of some of the world’s most fragile states, especially in Africa, while in the West, governments will be forced to grapple with ever larger immigrant communities and deepening divisions over ethnicity and race, Hayden said.

Hayden, speaking at Kansas State University, described the projected 33 percent growth in global population over the next 40 years as one of three significant trends that will alter the security landscape in the current century. By 2050, the number of humans on Earth is expected to rise from 6.7 billion to more than 9 billion, he said.

“Most of that growth will occur in countries least able to sustain it, a situation that will likely fuel instability and extremism, both in those countries and beyond,” Hayden said.

With the population of countries such as Niger and Liberia projected to triple in size in 40 years, regional governments will be forced to rapidly find food, shelter and jobs for millions, or deal with restive populations that “could be easily attracted to violence, civil unrest, or extremism,” he said.

European countries, many of which already have large immigrant communities, will see particular growth in their Muslim populations while the number of non-Muslims will shrink as birthrates fall. “Social integration of immigrants will pose a significant challenge to many host nations — again boosting the potential for unrest and extremism,” Hayden said.

The CIA director also predicted a widening gulf between Europe and North America on how to deal with security threats, including terrorism. While U.S. and European officials agree on the urgency of the terrorism threat, there is a fundamental difference — a “transatlantic divide” — over the solution, he said.

While the United States sees the fight against terrorism as a global war, European nations perceive the terrorist threat as a law enforcement problem, he said.

“They tend not to view terrorism as we do, as an overwhelming international challenge. Or if they do, we often differ on what would be effective and appropriate to counter it,” Hayden said. He added that he could not predict “when or if” the two sides could forge a common approach to security.

A third security trend highlighted by Hayden was the emergence of China as a global economic and military powerhouse, pursuing its narrow strategic and political interests. But Hayden said China’s increasing prominence need not be perceived as a direct challenge to the United States.

“If Beijing begins to accept greater responsibility for the health of the international system, as all global powers should, we will remain on a constructive, even if competitive, path,” he said. “If not, the rise of China begins to look more adversarial.”

Related

Revolution, flashmobs, and brain chips. A grim vision of the future

ABC Australia | Apr 28, 2008

By Michael Rowland

Billionaire investor Warren Buffett has repeated his view that the US is in recession and the slowdown will be more severe than most people expect.

Mr Buffett, the world’s richest man, says Americans are being hurt by rising food and petrol prices and the US recession will be longer and deeper than most people think.

“My feeling from what I see in the economy is this, it will not be short and shallow,” he said.

Economic growth figures due out in the US this week are expected to confirm the extent of the slowdown.

The US Federal Reserve is also poised to make another cut to official interest rates to help stimulate the flagging economy.

Overnight confectionery giant Mars said it was set to buy US chewing gum firm Wrigley’s for $24.5 billion, with Mr Buffet taking a minority share in Wrigley’s once the deal is completed.

Sunday Times Rich List defies credit crunch

Telegraph | Apr 28, 2008

By Rob Davies

Britain’s super-rich are getting even richer, adding nearly £53
billion to their collective wealth last year.

The collective worth of the 1,000 wealthiest people in the country stands at more than £412.8 billion, up 14.7 per cent on last year, at a time when the credit crunch is forcing families and people on low incomes to cut their spending.

At the top of the list for the fourth year is Lakshmi Mittal, the 57-year-old Indian steel magnate, whose wealth increased 44 per cent to £27.7 billion.

Foreign-born businessmen, including Mr Mittal and Roman Abramovich, the Russian owner of Chelsea Football Club, make up seven of the top 10.

The Russian oil and industry magnate saw his fortune increase from £10.8 billion to £11.7 billion this year.

Forty of Britain’s 75 billionaires come from countries such as Israel, Russia and India.

A brace of new entrants figure in this year’s top 10. Alisher Usmanov, a steel and mining magnate, comes in fifth place with £5.726 billion.

One place below are Ernesto and Kirsty Bertarelli. The former Miss UK winner and her husband sit on a fortune of £5.65 billion built on pharmaceuticals. Mrs Bertarelli is the highest placed of the 94 women in the list.

Overall, Britain’s wealthiest have prospered, continuing a trend which has seen the wealth of the richest 1,000 increase by 317 per cent since 1997.

It comes as the rest of Britain faces a worsening financial situation.

More than four out of 10 people believe they will be worse off this year as the credit crisis bites, according to a report from consumer group Which last week.

Groceries, council tax, utility bills and mortgage payments have increased by more than the rate of inflation.

But even some stalwarts of the Rich List have seen their fortunes diminish. The Duke of Westminster remained steady in third place with £7 billion but Sir Philip Green, the Top Shop boss, saw his worth sink to £4.33 billion, while Sir Richard Branson, the Virgin boss, is down £400 million on last year, leaving him with £2.7 billion.

It was also a difficult year for budget airlines, with Sir Stelios Haji-Ioannou and family down to £812 million from last year’s £1,290 million. Ryanair has also suffered. Declan and Shane Ryan, the heirs of co-founder Tony Ryan, have sustained losses of £83 million, leaving them with assets worth £827 million.

“Them belly full but we hungry,” sang Bob Marley, adding, “A hungry mob is an angry mob.”

New Scientist | Apr 24, 2008

The world is about to discover that the slum survivor from Kingston, Jamaica knew what he was talking about. Food prices worldwide have nearly doubled, and wheat prices have trebled in the past few years.

But the increase has accelerated in the past few months, and consumers have noticed. Last week food riots brought down the Haitian government; there have been demonstrations in more than a dozen countries; and in the US, rice and flour are being rationed.

The US? The world’s biggest grain exporter, whose patriotic songs speak fondly, and accurately, of amber waves of grain?

Yep. The whole thing is the result of rising demand, due to rising population and prosperity ??? and yes, to the US plan to limit greenhouse emissions, and benefit its corn farmers, by turning food into gasoline, although that is, so far, a small part of the problem. And behind it all is the rising price of oil, essential to growing, processing and shipping food.

Food is traded globally, so a rise in prices anywhere means rises everywhere. The US government says food prices rose 5% during all of 2007 ??? but by March this year they’d already risen another 5.3%, with grain-based food rising fastest. And yes, that includes beer.
Ah, I see some of you are now paying attention.

But why should this lead to rationing in the US? Surely Americans are not about to run out of food?

Maybe not everyone. But price rises will hit the urban poor ??? and the US, with a more limited social safety net than many other rich countries, has plenty of those. People who spend a substantial percentage of their income on food, in the US as anywhere else, will feel the pinch. Many report eating more frugally, and resorting to food banks.

But rationing? First, small grocers only budget for buying the amount of wholesale food they normally sell. If prices rise fast they may not be able to adapt their cashflow quickly enough; they will have to buy less and may run out of stock.

But second, consumers who have seen prices rise rapidly are stocking up before they rise further. That is apparently the basis for reports that US food stores, including some owned by Walmart, the world???s biggest food retailer, are limiting the number of large sacks of flour or rice customers can buy. Presumably this is to avoid shelves emptying, not because they don’t expect to be able, eventually, to buy enough for everyone.

But that prospect is not certain. There is a finite supply of basic foodstuffs, and increasing demand, the reason for the price rise, means that when one country ups its bid to buy more, someone else will go without. Unless, that is, food production can be ramped up in a hurry. We’re working on a report that will look at the prospects for that.

Meanwhile, you tell us what’s been happening where you live. We’ve heard reports that food shoplifting is up in neighborhoods where hard-up college students live. Is this true? Are food prices up? Have you had to cut back on meat, or, heaven forbid, beer? Have there been protests? Let us know.

Related

Revolution, flashmobs, and brain chips. A grim vision of the future

Britain is becoming a ‘why bother country’

Telegraph | Apr 21, 2008

By Paul Stokes

Britain is suffering from a “why bother” economy because its benefits culture, high taxes and poor education system leave many people lacking the motivation or capability to succeed, according to a report.

The cost to the economy of low social mobility is £32 billion a year, or £1,300 to the average family, claims Reform, the independent think tank.

This comes despite higher spending on benefits and public services that have served only to reinforce privilege, it says.

Child poverty has risen, with the number of children classified as low income rising from 2.4 million to three million.

State schools stand accused of a “dismal” record when it comes to educating the poorest in society, with school-leavers from poor backgrounds doing only half as well as average 16-year-olds.

There is also a geographical division, with three times the number of people in parts of northern England claiming disability benefits than in the South East.

Prof Nick Bosanquet, the report’s lead author, said: “We need an agenda to get the roadblocks to social mobility down… Every person failed by the education system and held back by the tax and benefits system means that the economy cannot fulfil its potential.”

The report concludes: “Public services are biased towards the affluent, and means-tested benefits and higher tax have reduced individuals’ incentives to increase their incomes. The unintended consequence has been a ‘why bother’ economy in which a significant minority do not have the capability or motivation to succeed.”

Reform is asking for a co-ordinated approach to policy that would encourage individuals, with less government intervention and lower taxation.

Bloomberg | Apr 21, 2008

By Jim Kennett

April 21 (Bloomberg) — Halliburton Co., the world’s second-largest oilfield contractor, said profit rose 5.8 percent after crude topped $100 a barrel, prompting producers to increase spending on Middle East and Latin American projects.

The number of drilling rigs active outside North America rose 6.5 percent as New York oil futures traded 68 percent higher than a year earlier. Revenue jumped 18 percent to $4.03 billion as sales gains outside North America made up for pricing pressures in the U.S., Halliburton said.

“The story with Halliburton is international, and the international story is supported by sharply higher oil prices,” said Gene Pisasale, who helps oversee $25 billion in assets, including about 682,000 Halliburton shares, at PNC Capital Advisors in Baltimore. “That bodes well for international exploration, much of which is oil-oriented.”

Competition from rival oilfield contractors is affecting the prices Halliburton can charge on long-term projects in such markets as the Middle East and West Africa, Chief Executive Officer David Lesar told investors on a conference call. Losing a bid can mean the company is out of business in that region for a number of years, he said.

Margin Concerns

Those comments and concern over rising diesel costs, which are narrowing profit margins on some well services, held back Halliburton’s shares today, said Mark Urness, an analyst at Calyon Securities USA Inc. in New York.

Halliburton rose 3 cents to $47.46 in New York Stock Exchange composite trading. All but five companies in the 15- member Philadelphia Oil Service Sector Index had bigger gains. Schlumberger Ltd., the biggest oilfield contractor, climbed 5 percent.

Halliburton’s per-share profit matched the average of 10 analyst estimates compiled by Bloomberg. Earnings from the company’s largest division, which helps clients maximize production from established fields, rose 11 percent.

Demand strength in the Middle East and Latin America made up for a 2 percent decline in North American business and a “relatively flat” environment in Europe, Africa and the former Soviet Union, Halliburton said.

`Next Leg Up’

Lesar, 54, said more demand growth is coming. “The fundamentals of the world oil and gas market are projecting that the next leg up in the extended cycle is near,” he said in the statement.

Schlumberger, based in Houston and Paris, on April 18 reported a 13 percent gain in first-quarter net income. Baker Hughes Inc., the No. 3 oilfield-services company, is scheduled to report its results tomorrow.

Halliburton’s profit from drilling and evaluation services climbed 6.1 percent. The segment includes drill-bits, drilling fluids and directional drilling, which allows a customer to change the direction of a well to target a reservoir.

Worldwide, the number of active rigs rose 2.4 percent from a year earlier, with most of the gains occurring in South America and the Eastern Hemisphere, according to a count by Baker Hughes. North American drilling activity climbed 1.4 percent, driven by a 2.1 percent increase in the U.S.

International Expansion

Halliburton is adding research and training centers from Russia to Singapore as it diversifies away from North America, which accounted for 47 percent of revenue last year. U.S. and Canadian business is dominated by regional natural-gas markets, where weather can cause prices to surge or plummet.

Lesar splits his time between the U.S. and Halliburton’s regional corporate headquarters in Dubai. The Eastern Hemisphere accounted for 41 percent of Halliburton’s first-quarter revenue. Lesar has said he’d like the region ultimately to account for half of sales.

Halliburton derived 54 percent of its profit from North America in the first quarter, down from 58 percent a year earlier. Latin American operations had a 45 percent increase in earnings. Brazil’s recent deepwater discoveries, fields called Tupi and Carioca, will fuel increased spending by oil companies, PNC’s Pisasale said.

“With the recent developments in Brazil, you’re going to see a lot more activity down there,” he said. “The Tupi and the Carioca discoveries, which are particularly huge, multibillion-barrel fields, bode well for service companies like Halliburton and Schlumberger.”

State Oil Companies

Overseas work is being driven by government-owned oil companies that increasingly hire Halliburton and other services providers to do work previously done by international oil companies like Exxon Mobil Corp. Service companies work under contracts, while oil companies take a stake in the field being developed.

Halliburton’s work with state oil companies includes a three-year contract to drill wells at Saudi Arabia’s massive Khurais project and a three-year deal with Mexico awarded in January. Today, the company announced a contract for the offshore portion of Saudi Arabia’s Manifa oil project.

Halliburton is the largest oilfield contractor in North America and the largest provider of so-called pressure pumping, which injects water or sand into rock formations to make gas flow more easily.

Increased competition cut into pricing for pressure pumping, or fracturing as it is sometimes called, in the past two quarters, according to Halliburton.

McClatchy | Apr 18, 2008

By Franco Ordonez

TEZIUTLAN, Mexico — As the U.S. economy heads south, Mexicans may have to head north.

That’s the fear of many workers here, where the slowdown in the United States already has cut production at manufacturing plants whose output is largely sold in the United States .

“If it’s bad there, it will be worse here,” said Bartolo Juarez , 35, who makes jeans for Levis and Guess at a Teziutlan factory and already has discussed moving to the United States if his job here vanishes. His 12-year-old daughter, Gabriela, has broken down in tears more than once after hearing her parents talk about her father leaving for the States, her mother said.

“It’s a sacrifice. I don’t want to go, but I know I can get a good-paying job in San Antonio ,” even in troubled economic times, Juarez said. It’s always easier to find work in the United States than in Mexico , he added, and for five times more money.

Economists say that U.S. recessions historically are tougher on Mexico than they are on the United States , and that while U.S. officials say that border security measures, such as building a wall along the Mexican border, have reduced illegal immigration in recent months, they won’t hold back the flood of workers that’s likely if Mexican factories close.

The majority of the 72,000 people who live in this rainy town tucked up in the cloud forests of the Sierra Norte mountains in central Mexico work in more than 30 factories that specialize in assembling pants for distribution in the United States .

Rodrigo Martinez , the coordinator of the National Job Service in Teziutlan , estimates that 10 percent of the community already has gone to the United States in search of work after losing jobs here or deciding to find better pay there.

As demand for Mexican-made pants declines in the United States , he expects more workers to go.

“This community is almost 100 percent maquiladora,” he said, using the Spanish word for factories that assemble goods for U.S. consumption. “Closing some of those shops would affect us greatly.”

Manufacturing is by far Mexico’s most vulnerable sector during a U.S. downturn, economists say. More than 80 percent of Mexican exports are destined to go north. A drop in U.S. demand would cut into Mexican production levels and employment.

As the old adage goes, “When Uncle Sam sneezes, Mexico catches a cold.”

Jaime Ros , an economics professor at the Kellogg Institute for International Studies at Notre Dame , said the Mexican manufacturing industry already was experiencing a pinch from the U.S. economic downturn. Those who lose their jobs will “certainly add to the supply of immigrants” heading north, he said.

Ros, who formerly taught at Mexico City’s Center of Investigation and Economic Studies , is skeptical that U.S. border-security measures will have a significant impact when so many desperate immigrants see the U.S. as their only option for work.

While the crash of the U.S. housing market has reduced demand for immigrant workers in construction, immigrants are likely to find jobs at hotels, restaurants and other services that won’t be as affected by a U.S. recession.

The U.S. learned how closely Mexico’s fate is tied to its economy in 2001. At the time, Mexico’s maquiladora industry was at its peak, with more than 3,000 companies employing about 1.2 million workers. Then the U.S. went into a recession after the dot-com crash. Hundreds of maquiladora plants closed as a result from 2001 to 2004 and more than 200,000 people lost their jobs.

Maquiladora workers who lose their jobs are more likely than other Mexicans to move north, said Kathy Kopinak , a senior fellow at the Center for Comparative Immigration Studies at University of California San Diego .

Because many maquiladoras have been set up in border towns, Kopinak said, workers have family members and friends on both sides of the border who can assist in labor migration.

Mexico hasn’t fallen into a recession, but several economists say that’s the direction the country is going if the U.S. recession is deeper than expected.

Mexico’s economy grew 3.3 percent last year. Wachovia Corp. forecasts this year’s growth to slow to 2.5 percent. Others are less optimistic: The Economist Intelligence Unit forecast that Mexico’s growth would be just 1.9 percent this year.

“The risk is that if we have a deeper, darker, longer recession than what we are expecting, then Mexico is going to catch a pretty bad cold and it could pull Mexico into a recession itself,” said Jay Bryson , a global economist at Wachovia Corp. in Charlotte .

Mexican officials say their economy is more resilient now than in it was in 2001. They say that a pickup in automobile exports to Europe and Asia will help offset decreased demand from the United States . Central bank Governor Guillermo Ortiz said last month that Mexican exports to countries other than the U.S were growing by 30 percent a year.

President Felipe Calderon has announced several initiatives intended to weather a U.S. economic slowdown.

Last month, he announced a $5.6 billion stimulus package of tax breaks, discounts and bank loans. Last week, he called for sweeping changes in Pemex , Mexico’s ailing oil company and the country’s largest source of foreign exchange.

Calderon’s initiatives may never be approved, however. Opposition legislators have seized control of Mexico’s Congress , some spending the night in sleeping bags, to protest the bill, which they claim is an effort to privatize the state oil company.

Over drinks after their shift at an auto parts company that feeds the giant Volkswagen plant in Puebla, Mexico , Antonio Paredes , 24, and Jaime Galicia Alonso , 23, were discussing the likelihood of an economic downturn.

Paredes said he’d already talked to his wife about accompanying him to the United States . He’s also talked with a co-worker about getting in touch with his son in Chicago , where Paredes is considering moving.

Galicia said he’d do whatever he could to stay in Mexico , but he acknowledged that it will be tough. Many people from his village already have left for the United States .

“If you lose your job and you can find another job, you stay in Mexico ,” Galicia said. “Otherwise you’re almost obligated to go to the United States .”

“From now on, depressions will be scientifically created.”

The Austrailian | Apr 10, 2008

GEORGE Soros, billionaire, philanthropist and hedge fund legend, has characterised today’s situation in global markets as the most severe since the Great Depression.

“We are in a period of financial wealth destruction … and now we have de-leveraging,” he said.

At the same time, Mr Soros said “the acute phase” of the crisis in the US banking system was past, thanks to the US Federal Reserve’s actions to increase liquidity in financial markets.

He was less fearful about the potential crippling of the US banking system and credited the Fed’s actions to boost cash reserves in financial markets and its role in a deal for JPMorgan Chase to take over Bear Stearns.

“I think the acute phase of the crisis is behind us in the sense that (fears that) the financial system will be allowed to collapse are unfounded,” Mr Soros said.

Mr Soros made his comments while promoting his latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.

The billionaire blamed the lack of transparency in the credit default market, which he calculated at $US45 trillion, as the root of the curtailing of bank-lending, and hence the credit squeeze.

“That is an amazing figure,” Mr Soros said, noting that the size of the CDS (credit default swaps) market is equal to the total wealth of US households and five times the national debt level.

Mr Soros called credit default swaps - a sector in which he said hedge funds are particularly active - a “totally unregulated” market fraught with risks.

“You don’t know if their counterparties will meet their obligations,” he said.

Hedge funds have immense influence on the financial system, but they have used an enormous amount of leverage over the years, Mr Soros said, emphasising that their leverage has not been regulated.

“I have operated a hedge fund myself,” said Mr Soros, whose famous bet against the British pound earned his Quantum Fund $US1 billion in 1992.

“I have never used the kind of leverage others have employed and some of them have not proven to be sustainable.”

In that regard, Mr Soros said he believed the amount of leverage that hedge funds and other players are using needed to be regulated.

But, he said, that regulation should be done through the banks.

Mr Soros also agreed that the latest official forecast for $US1 trillion ($1.08 trillion) in global losses stemming from the US sub-prime crisis was a “fair estimate”.

When asked about the forecast for global losses by the International Monetary Fund, Mr Soros said: “I think that is a fair estimate, but that number is likely to still grow.”

He said house prices in the US and elsewhere would continue to come under severe pressure.

Even so, he noted, the financial crisis is beginning to have serious effects on the real economy, adding: “The extent of that is not, in my opinion, yet fully recognised.”

All told, investors are facing the “worst financial crisis of our lifetime”, Mr Soros said.

In mid-March, the Fed brokered JPMorgan’s takeover of Bear Stearns and also dusted off a Depression-era rule to let securities firms borrow directly through its discount window, which is usually reserved for commercial banks. That has significantly helped restore investor confidence.