George Soros: Zombie Banks Are Drawing The Lifeblood Of Economic Activity

George Soros, legendary currency trader and chairman of Soros Fund Management, talks about the U.S. financial crisis and actions taken by the global governing authorities in response to the crisis. He also shares his perspectives on the dire state of "zombie banks" and on the unsustainability of the current bear market rally.

"We did not succeed in recapitalizing the banks, to the point where they can lend freely to business[es]. They still have to earn their way out of the hole. And that is going to last a long time," says Soros, referring to the root cause of the current crisis which U.S. policymakers have failed to fix. When asked to clarify if he is saying that the steps taken by policymakers so far have not been the right ones to fix the banking system, Soros responds, "That's right. It (The banking crisis) will linger, because we're keeping the banks alive. This talk of 'zombie banks'. Unfortunately, that is where we are now. The banks are alive, but they know that they've got assets which are depreciating and they have to charge extra. So actually, instead of providing lifeblood of credit, they're effectively drawing the lifeblood of [economic] activity, of profit, to themselves, to dig themselves out of the hole and that is the current situation."