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Economic Notes from Davos

At the World Economic Forum in Davos, Switzerland, hedge-fund billionaire George Soros argued low interest rates are already causing bubbles. He says, "The ultimate asset bubble is gold." Soros also said we're in danger of a double-dip in the global economy as the government withdraws its support from the markets.
His recipe: more stimulus... "Some countries, like the U.S. and European countries, have plenty of room to increase their deficits. The political resistance to doing so increases the chances of a double dip in the economy in 2011 and after that."
Blackstone founder Steve Schwarzman, went a step further, saying the government should leave banks alone at this point: "They don't know their taxes, they don't know what amount of equity, they don't know what businesses they're going to be allowed to stay in. There is enormous uncertainty, not so much in the economic environment. We've now increased the uncertainty in the political environment." 
China’s economy can’t keep growing at its current pace using the same practices that made it the world’s biggest emitter of greenhouse gases, United Nations climate chief Yvo de Boer said. "I do not believe it is physically possible to continue to grow the Chinese economy at 8, 9 percent per year using the current economic model,” de Boer said today at the World Economic Forum in Davos, Switzerland. “It just can’t be done.”  

In a separate private gathering next door, Congressman Frank spoke to about 50 investors, including Henry Kravis from KKR, Carlyle Group Managing Director David Rubenstein and Third Point LLC CEO Daniel Loeb.  Frank said after the session that he was going to “crack down” on hedge funds.  But he didn’t elaborate. 

French Finance Minister Christine Lagarde said in Davos that there should be a “dialogue” between governments and banks on the technicalities and principals of regulation. “That’s the only way we’re going to get out of it,” she said.

Disclosure: no positions