Fareed Zakaria interviews Quantum Fund manager George Soros on CNN to hear his take on the ongoing financial crisis.
Soros, promoted the term “Reflexivity” especially as it applies to economics: which describes the tendency for market trends to become self-fulfilling and propagate itself until it eventually becomes unstable and collapses on itself. He is also a staunch critic of “Market Fundamentalism” which is the belief that markets self-regulate and tend to equilibrium, which is far from what is observed in real life: markets bubble and crash. In this interview he shares some of his insight regarding bubbles and crashes, and how the present political and financial system allows these phenomena to occur with regularity.
He describes bubbles as resulting from misconceptions, which can continue longer than people expect, but eventually misconceptions are reversed dramatically. The misconception in today’s crisis is over-leverage of the housing bubble which eventually gave way to the present economic crisis.
Unlike other critics such as Peter Schiff and Jim Rogers, Soros supports government intervention to regulate markets, since he believes that the notion that markets “self-regulate to equilibrium” is a fallacy. However, similar to skeptics like Nassim Taleb, Soros rejects any notion that markets and the future can be predicted with any accuracy since the future is always in flux depending on the actions of the present.
Soros’ distinguished track record in his successful Quantum Fund has been largely due to his uncanny ability to anticipate market bubbles and resulting panics.
My dear friend, Soros plan is the same with NWO.
They want to control ALL the assets of the world.
The recent economic crisis, was created by Leehman Brothers when they send all the money to Israeli banks. Everything collapsed artificially, then they found the money to give to banks SO THEY CAN OWN THE BANKS. Now, Soros and his “friends” all they have to do is acquire the governments….bit by bit. He is trying his best here in Greece to overthrow our government, has already bought Skopjia, Tirana, Kossovo, Ukraine, Georgia etc.
He established “Helsinki Watch” to protect non existent ethnic minorities, gay people, and all kind of weird people. That is to destabilize everything and control everything.
^ There’s a phrase in the first clip which resonates with your comment, when Soros mentions that the U.S. government has the ability to “infinitely print money”. Scary.
You have an excellent blog Mark, really great and insightful pieces.
I completely agree with the skepticism and fallacy of predicting the future based on historical data. History is a tool and a useful indicator at least in the realms of finance i.e. the US has never defaulted on their t-bonds.. but doesn’t mean they will not (see Black Swan). Just as trading on technical indicators can lead to profitable trades, doesn’t mean you know what you are doing… you are relying on history alone. This sort of thinking is useful for but for most of the financial valuations I see today, history is playing too large of a factor and people really need to heed more effort for proper valuations based on present climate.
When we reach the critical mass at which most begin to rely on history alone, we are well and truly screwed. This brings the sort of thinking – “oh house prices will never go down”, “Oh the banks will bail us out”, “Oh the US will never default on their bonds”. This is the same sort of thinking as somebody with symptoms of a major illness but figures if he exercises someday soon he’ll get better, so he continues a terrible lifestyle whilst he’s just digging his own grave. Government intervention just helps fuel this terrible lifestyle and our continued reliance on what the past has proven true when it’s becoming more and more likely that the past is no longer an indicator of the present, let alone the future.
^ Thank you for dropping by drunklemur and agree 100% on your insights.
Adopting the fallible approach of Soros and Taleb is definitely pragmatic, especially in investments–but it is very disconcerting I realize… that anything you have confidence in at present could be overturned tomorrow.
The opposite extreme as you mentioned: being to complacent and comfortable with the past, is evidently a fatalistic (albeit blissfully fatalistic) mindset.
I can agree on the point you are making as far as the roole history plays and the role history should play. As far as Peter Schiff goes, I was unaware that he was solely relying on history. I thought it was more of a We borrowed this much money, we printed this much money, we shipped our jobs offshore, etc. Soros is a very smart man and even though I lean conservative, I like Soros. Are you saying you Peter Schiff got lucky ? I’m not sure what point you were trying to make when you left a comment on my blog.
^ Just hightlighting that Schiff and Soros have common grounds in criticizing the cause of the crisis, but differ in their stand on the corrective measures.
Both Schiff and Soros use the events of the Great Depression and similar events to explain the situation, and they both blame excessive leverage for the creation of the bubble.
Where they differ fundamentally is their stand on what government should do. Schiff would rather have government have less interference at this point and allow free unregulated markets and a recession to correct the excesses, while Soros advocates a more prominent role to regulate markets.
I find their difference of opinion on the finer points on the cause of the crisis interesting since they are both based on historical precedent.
Soros blames free market fundamentalism for contributing to the excess because in his view markets don’t self-regulate but actually get carried away by self-fulfilling and later self-negating tendencies.
Schiff on the other hand says that government intervening in the markets is what has caused the market to lose its ability to self-regulate and which created the excesses.
Schiff as a market purist might harp at the government, but Soros might contend that the government cannot avoid intervening in the market since it is also a participant.
Both points of view are in fact tenable based on history–which brings me to Taleb who says that observations based on historical precedent are imperfect, and one must allow a very wide room for error.
The funny thing is that Soros uses “the past” selectively. He has foundations in the Balkans that want to change the history in the school books. That way, nations, will not know what really happened but kids will believe that we always were one big happy family. Are you of Japanese origin Brian? What would you think if they started teaching your kid that Hiroshima never happened, that Japan and China were always good friends, that you have no previous dissagreement with Russia? Soros is also funding ALL THE MUSLIM STATES AROUND GREECE. Is that “kosher”.
His real name is Schwartz, Hungarian Jew. Need I say more??
I have been trying to tell you but you do not listen to me. Your “Critical Thinking” must have more common sense and investigative urge. Look who is Jew Soros:
Col. Helvey’s long experience in Myanmar in training insurgent ethnic minorities in a region that is the center of world opium production raises another question of great bearing on “post modern coups.” That is: what is the role of narcotic mafias in facilitating “regime change?” Law enforcement agencies from many nations, including the United States, have long reported that the Balkans is the major narcotics pipeline into Western Europe. Ukraine is said to be a top conduit, as is Georgia. Kyrghyzstan, now at the top of the hit list, is another opium conduit. And George Soros “the Daddy Warbucks of drug legalization,” has been the top “private” funder of all the Eastern European and Central Asian insurgent groups, as well as those in Myamar. The spread of such mafias, is, of course, one of the most efficient ways of infiltrating and corrupting government agencies of targeted states.
Col. Helvey is not the only operator with such a background. The head of the OSCE’s vote monitoring operation in Ukraine, for example, Geert-Hinrich Ahrens, was German Ambassador to Colombia in the late 1990s, when German secret agent Werner Mauss was arrested for working closely with the narco-terrorist ELN, whose bombings are financed by the cocaine trade. Ahrens was also on the scene in Albania and Macedonia, when the narcotics smuggling Kosovo Liberation Army (KLA) was created with US and German patronage. And Michael Kozak, the US ambassador whose 2001 effort to overthrow Belarus’ Lukachenko failed, had been a top handler of the cocaine-smuggling Contras.
http://onlinejournal.org/Special_Reports/031905Mowat-1/031905mowat-1.html
Do not be fooled so easily….
The things are not as you think. And please before talking about something look deeply into it.
^ Greece, your info is much appreciated.