In the midst of the most serious financial upheaval since the Great Depression, legendary financier George Soros explores the origins of the crisis and its implications for the future. Soros, whose breadth of experience in financial markets is unrivaled, places the current crisis in the context of decades of study of how individuals and institutions handle the boom and bust cycles that now dominate global economic activity. “This is the worst financial crisis since the 1930s,” writes Soros in characterizing the scale of financial distress spreading across Wall Street and other financial centers around the world. In a concise essay that combines practical insight with philosophical depth, Soros makes an invaluable contribution to our understanding of the great credit crisis and its implications for our nation and the world.
Author: George Soros
Publisher: PublicAffairs
Customer Reviews
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More than worth it just for the philosophy
I just loved this book.
<br />This book is a must for people who blindly believe in market prediction, economists and fundamentalists. It argues that it is necessary to take into consideration the point of view of the "observer" who interacts and influences the outcome; thus rendering the prediction obsolete and indeterminate.
<br />Soros says that he has been a successful investor and a FAILED philosopher until this book. Now he believes (and I FULLY AGREE) that he has become a successful philosopher. The funny thing is that he FAILED as an investor because all his predictions in the book turned out to be wrong (at least in the short run). But I guess that drives his point home: the reflexivity makes it impossible to predict markets....
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The New Paradigm for Financial Markets
Book Review submitted by: Stephen J. Hage, SteveH9697@aol.com
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<br />Books about economics and finance, for most people, are as appealing as having a root canal done without anesthesia. This is not one of those books. The subtitle: The Credit Crisis of 2008 And What it Means succinctly explains what the book is about. And, surprisingly, it's in small format and has only 162 pages including acknowledgements.
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<br />It's impossible today to turn on the news without hearing something about the credit crisis and there's no shortage of individuals willing to tell anyone who'll listen what caused it and who's responsible. The problem is, there are lots of conflicting opinions and it's, at best, difficult to determine who actually knows.
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<br />To be sure, almost everyone has been touched in some way by the credit crisis and its impact will ripple through the global economy for years. In attempting to understand it, I believe it's important to choose carefully among those willing to offer an explanation.
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<br />I chose George Soros because: The Quantum Fund he co founded with Jim Rogers in 1970 returned 42.6% per year for 10 years and, in 2007 returned almost 32% netting Soros $2.9 billion.
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<br />Soros is a spectacularly successful hedge fund manager with an estimated current net worth of around $9 billion and ranked by Forbes as the 99th richest person in the world. Additionally he's an economist and philosopher. Nothing succeeds like success. Yowza!
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<br />There's nothing dry or tweedy about what he has to say. Soros disagrees with economists who believe economics is or ever can be a scientific pursuit like physics, chemistry or mathematics. And even though there are courses in mathematical economics and entire industries devoted to it Soros believes the "Quants" are wrong. The central theme of his conceptual framework is, economics is a social science. If you really want to understand it, you must focus on what people do and why.
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<br />The prime driver of economic dynamics is not money, or mathematics, or science, or technology it is rather what he calls Reflexivity which, more than anything else, is driven by human nature.
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<br />Current economic theory holds that markets naturally tend toward equilibrium. Soros believes that conviction is not only wrong but one of the central reasons we find ourselves in such dire economic straits. On the housing bubble he offers this:
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<br />"Taken on its own the United States housing bubble faithfully followed the course prescribed for it by my boom-bust model. There was a prevailing trend--ever more aggressive relaxation of lending standards and expansion of loan-to-value ratios--and it was supported by a prevailing misconception that the value of the collateral was not affected by the willingness to lend. That is the most common misconception that has fueled bubbles in the past, particularly in the real estate area. What is amazing is that the lesson has still not been learned." (Italics mine)
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<br />Soros credits Karl Popper with the underpinnings of his economic philosophy and his argument is clean and satisfying from a philosophical perspective.
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<br />I am not an economist but I'm certainly interested in gaining some understanding of what happened to our economy, how we got to where we are, and what we ought to do about it.
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<br />Lots of people think they know. Unfortunately many of those same people are the ones who brought us to where we are.
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<br />When it comes to gaining deep understanding of what our economy does, how it does it and why, I'm inclined to pay attention to someone who, by manipulating it to his advantage, is the 99th richest person in the world. I think anyone else interested in the economy should have the same inclination. YOWZA!
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<br />I strongly recommend you read this book.
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