International financier George Soros said in Singapore Monday that he expects a global recession in 2007 if the U.S. housing market continues to cool after the Fed funds rate stops to rise.
According to Channel NewsAsia report, Soros, who is in Singapore for a visit, predicted that the U.S. Federal Reserve will raise the Fed funds rate by another 50 basis points before putting a stop to this round of rate hikes.
He added that the housing bubble in the United States, where double-digit rise in house value is being recorded, has come to its maximum extent and is in the process of being deflated.
As the huge American consumption has been an irreplaceable engine of world economy, according to Soros, a global slowdown would be on the way if American consumers were forced to consume less by the bubble burst.
He said that a hard landing of the American economy will probably be associated with a decline in the U.S. dollar, and European economies, which do not have the potential to counterbalance such a hard landing, will be hurt.
To Soros, the U.S. large and growing current account deficit is financed by Asian countries, especially China, which are buying the U.S. Treasury bills and bonds.