04/03/2008 04:27 pm ET Updated May 25, 2011

George Soros: "We Are in the Midst Of The Worst Financial Crisis Since the 1930s."

George Soros, who is famously known for "breaking the Bank of England" by shorting the British Pound on Black Wednesday in 1992, and earning $2 billion for himself, now says that "We are in the midst of the worst financial crisis since the 1930s."

Soros knows about declining societies. He also predicted, and helped bring about, the collapse of Communism in Eastern Europe in the 1990s.

With an estimated current net worth of more than $8.5 billion, Soros is ranked by Forbes as the 80th-richest person in the world. He has given away more than $4 billion dollars to various political causes.

His new book was released today exclusively as an e-Book (the hardcover will be available mid-May). The book is called The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means.

"The United States is facing both a recession and a flight from the dollar. The decline in housing prices, the weight of accumulated household debt, and the losses and uncertainties in the banking system threaten to push the economy into a self-reinforcing decline.

"Measures to combat this threat increase the supply of dollars. At the same time, the flight from the dollar has set up inflationary pressures through higher energy, commodity, and food prices.

"The European Central Bank, whose mission is to maintain price stability, is reluctant to lower interest rates. This has created a discord between U.S. and E.U. monetary policy and put upward pressure on the euro. The euro has appreciated more than the renminbi, creating trade tension between Europe and China.

"The renminbi can be expected to catch up with the euro both to avoid protectionism in the United States and increasingly in Europe, and to contain imported price inflation in China. This will, in turn, increase prices at Wal-Mart and put additional pressure on the already beleaguered U.S. consumer."

Soros, who spent $26 million trying to beat Bush four years ago, is a key supporter of Barack Obama. But he also says he will back Hillary Clinton as well.

Of George Bush, Soros says, "Unfortunately this administration shows no understanding of the predicament in which it finds itself."

If Soros is right and foreigners lose confidence in the U.S. economy, they will want their money back, the dollar will fall, and foreign investments will tumble. To an amazing extent, the U.S. economy has relied "on the kindness of strangers" to fuel its domestic and international investments and the recent real estate boom.

The consequences for our American Empire may be disastrous and swift, if the kindness and confidence of global investors is shaken. Will America succumb to the same imperial overstretch as the Roman, Dutch, Spanish, Soviet, and British? Hubris does not allow us to see much in the future. Every empire thinks that it is different, but....?

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