Soros: Financial crisis "just entered Act II"

Billionaire investor George Soros, the man who broke the Bank of England, says the financial crisis has "just entered Act II" as Europe’s fiscal woes worsen.

Soros says due to the debt problems engulfing most of the developed world, the global economy could be dragged back into recession as governments are pressured to curb budget deficits.

"The collapse of the financial system as we know it is real, and the crisis is far from over. Indeed, we have just entered Act II of the drama," Soros says.

"When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken centre stage, but the effects are liable to be felt worldwide."

Soros says the current plight of the global economy is "eerily" reminiscent of the 1930s, with governments under pressure to narrow deficits at a time of weak recovery.

The billionaire investor made his name after making $1bn betting against sterling in the 1992 Black Wednesday currency crisis.

Soros also joined fellow esteemed investor Warren Buffett in hitting out at the derivatives, saying credit default swaps are dangerous and give a "license to kill".