I think that he does believe banks are over-leveraged, and such a system is inherently unstable. Buffett called derivatives "financial weapons of mass destruction." In Soros's mind, credit default swaps (CDS), of which there are some $45,000bn, would also fall into that category. Ratios of leverage, as high as 32:1 in the case of Bear Stearns, are not sustainable in a market downturn. Re: the decoupling question, you have asked the question of the hour in my mind. To what extent will the most populous country in the world be able to continue to invest and stimulate domestic demand? Without rising demand in developing countries, like China, there is little chance that the world economy will escape a serious downturn. To what extent is China decoupled? Like all of us, you'll have to wait and see. I would say the present crisis will force the Chinese to reorient their economy to stimulate domestic demand and that they have the corporate profit, and currency reserves to do so.