US faces lasting slowdown: Soros

8220;I don8217;t expect the US economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown,8221; Soros said,adding that in 2010 there might be 8220;something8221; in terms of US growth.

Most economists expect the US economy to stop contracting in the third quarter and resume growing in the fourth quarter,according to a latest monthly poll of forecasts by Reuters.

The recovery will look like 8220;an inverted square root sign,8221; Soros said: 8220;You hit bottom and you automatically rebound some,but then you don8217;t come out of it in a V-shape recovery or anything like that. You settle down 8212; step down.8221;

In the fourth quarter,the US economy contracted at a 6.3 per cent annualized rate,and economists think the first quarter8217;s slide will be at least as severe,if not worse.

Healing the banking system,which is 8220;basically insolvent,8221; and housing markets is crucial to recovery,Soros said.

The public-private investment funds 8212; unveiled by the Treasury last month to get bad debts off bank balance sheets 8212; are going to work but won8217;t be enough to recapitalize the banks so they are able to or willing to provide credit,he said.

Even a steep yield curve won8217;t generate enough profits to keep the banks out of their vulnerable situation.

8220;What we have created now is a situation where the banks who will be able to earn their way out of a hole,but by doing that,they are going to weigh on the economy.

8220;Instead of stimulating the economy,they will draw the lifeblood,so to speak,of profits away from the real economy in order to keep themselves alive.8221;

Soros,whose latest book,8221;The Crash of 2008 and What it Means,8221; has made prescient calls during the credit crisis.

A year ago,he said that global losses were likely to top 1 trillion. US and European banks have recorded more than 700 billion in losses and write-downs,as of February 5,2009,according to Reuters data.