The housing bubble collapsed in 2008. It happened because of thousands of bad investments made by banks. Hundreds of banks loaned money to people using the adjustable rate mortgage model. Thousands of people defaulted on these loans when the interest rates went up and the borrowers could no longer make their monthly payments. This series of bad investments led to an event called the Great Recession. Some economists believed that an anemic economy followed the event, although not all of them have agreed that it ended.
George Soros believes that current conditions, caused in part by China’s aggressive economic policies, will lead to a collapse of the global economy. Home owners will not lose their homes this time. It will be corporations and governments in the developing world who cannot pay back their loans creating the toxic debt.
The liberal billionaire has good reason to believe this. China continues to devalue its currency to keep selling inexpensive goods worldwide. The country’s communist government continues to invest in building projects even though no one occupies these structures after they are built. Many ghost towns have sprung up around the nation.
George Soros believes that the world’s second largest economy would collapse if conditions remain unchanged. Many of the world’s larger economies have still not fully recovered from the housing bubble. A global economic catastrophe would plunge the world back into another recession or worse.
Wealthy Americans can do little about the laws and conditions in China, but they can help steer this country in the right direction to mitigate the effects of such a catastrophe. Soros hopes that by donating $6 million dollars to the Hillary Clinton campaign he can stave off the worst effects.
Clinton has announced her plans to expand national service to provide additional college opportunities, although like almost all of the other presidential candidates, she has yet to reveal the details of her economic plans. The debates have focused on immigration policy, gun violence and speculation about the size of the candidates’ genitalia on the Republican side. Believing one candidate has more advanced plans may be premature, but Clinton and Sanders have released more details of their plans than their Republican rivals.