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The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means

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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 bus 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.


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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 bus 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.

30 review for The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means

  1. 5 out of 5

    Chris

    The other reviews for this book mostly get it right, so I will not rehash what they have written. I have read the last few books by Soros, and his philosophy takes a while to sink in, but I did not find this book to be overly complex or confusing. Rather, I feel that in explaining the current crisis, Soros's theories on reflexivity, fertile fallacies and his attacks on market fundamentalism are perfectly timed - and if people are serious about a more sophisticated and subtle understanding of the The other reviews for this book mostly get it right, so I will not rehash what they have written. I have read the last few books by Soros, and his philosophy takes a while to sink in, but I did not find this book to be overly complex or confusing. Rather, I feel that in explaining the current crisis, Soros's theories on reflexivity, fertile fallacies and his attacks on market fundamentalism are perfectly timed - and if people are serious about a more sophisticated and subtle understanding of the markets, about economics as a social science (which does not conform to immutable rules) and perhaps about man's understanding of reality itself, then Soros's thought will help us toward a new paradigm. I am especially attracted to Soros's thought because it combines two seemingly disparate disciplines (finance and philosophy) and emerges with a novel meta-perspective - drawing from each, yet a discrete and separate entity or pursuit.

  2. 4 out of 5

    Bruce Caithness

    Let me start my review of George Soros’s “The New Paradigm for Financial Markets” by stating that there is much I like in this book, however there is also much that I don’t like. I can only marvel at his skill as a fund manager and his rebuttal of the foolishness of efficient market assumptions. I also applaud his evangelising the philosophy of Karl Popper. If Karl Popper is not the greatest 20th century philosopher I don’t know who else could possibly take the mantle. It is precisely over Karl Let me start my review of George Soros’s “The New Paradigm for Financial Markets” by stating that there is much I like in this book, however there is also much that I don’t like. I can only marvel at his skill as a fund manager and his rebuttal of the foolishness of efficient market assumptions. I also applaud his evangelising the philosophy of Karl Popper. If Karl Popper is not the greatest 20th century philosopher I don’t know who else could possibly take the mantle. It is precisely over Karl Popper however that my following of George Soros’s line of argument unravels. Karl Popper stated that the great mistake of Western philosophy is to conflate truth with justification. In other words we should try to make our knowledge claims objective, rather than trying to justify them as probably or conclusively true. We never experience uninterpreted data. Even sensations are soaked by presuppositions in our neural networks.Empiricists wrongly believe in absolutely given perceptions or facts or data that justify our knowledge. There can be no way to verify our beliefs or perceptions, all we can do is make them open to testing, to being proven wrong. If they pass the test it only means they have been corroborated for now. Strangely, George Soros, as an avowed follower of Karl Popper, seems to misinterpret or ignore the above core Popperian tenet.His error is to define a “cognitive function” that is somehow able to know with certainty as opposed to “a manipulative function”. This cognitive knowledge says Soros is represented by true statements as opposed to the guesswork of the manipulative function. Soros makes the mistake of interpreting Tarski’s correspondence theory of truth ( a statement is true if and only if it corresponds to the facts) as a concrete achievable goal rather than a regulatory concept. Karl Popper would have been aghast. One of Popper’s core dictums was that the answer to the question: “How do we know?” is “We don’t!”. Rationality requires no foundation, no grounding on expert opinion or consensus. It needs only critical dialogue. Once Soros makes the claim for justified knowledge via the cognitive function he than needs to find a separate source for biases, reflexivity. He has the cart before the horse. All our knowledge starts with biases, even the cognitive function. There is no possibility of pure knowing, all our knowledge is guesswork. Far from being meaningless, biases and myths and thence critical metaphysics provides the background for the growth of science. The job of reason is to seek evidence not to support our biases but rather to see if they can be refuted. Nassim Taleb in “The Black Swan” covers similar ground to Soros without the logical inconsistencies. I think there is much of value in Soros’ demolition of the academic hubris that contributed to the 2008 credit crisis but his misreading of Popper could severely confuse readers who have an interest in exploring Popper’s legacy. George Soros is right, the world needs more exposure to Popper’s critical rationalism.

  3. 4 out of 5

    Richard Budge

    This book was painful to read because of it's all-too-frequent idiocy. He obviously has figured out how to recognize when markets are vulnerable and can be manipulated to the downside, but he isn't a thinker, no matter how much he tries to imitate one. His constant insistence that markets operate according to phenomenon only seen in quantum mechanics at a sub-atomic level is beyond ludicrous. Even if you ignore those theories, he still contradicts himself regularly and his logic is tortured. I o This book was painful to read because of it's all-too-frequent idiocy. He obviously has figured out how to recognize when markets are vulnerable and can be manipulated to the downside, but he isn't a thinker, no matter how much he tries to imitate one. His constant insistence that markets operate according to phenomenon only seen in quantum mechanics at a sub-atomic level is beyond ludicrous. Even if you ignore those theories, he still contradicts himself regularly and his logic is tortured. I only finished reading it because my mother had asked me to discuss it with her afterwards. There are a few insights into the markets that are valuable, but I would recommend getting them from a much better source.

  4. 5 out of 5

    Bart

    This book marks what George Soros promises is his final treatment of the invaluable theory of reflexivity. The New Financial Paradigm is too long by half, yes, and Soros occasionally tries to cram reflexivity into his explanations of unrelated phenomena. But for all that, reflexivity is a wonderful tool that has been both undeservedly dismissed and undeservedly unremarked upon. The term reflexivity is derived from Romance languages’ transitive and self-referential verbs. Effectively it is derived This book marks what George Soros promises is his final treatment of the invaluable theory of reflexivity. The New Financial Paradigm is too long by half, yes, and Soros occasionally tries to cram reflexivity into his explanations of unrelated phenomena. But for all that, reflexivity is a wonderful tool that has been both undeservedly dismissed and undeservedly unremarked upon. The term reflexivity is derived from Romance languages’ transitive and self-referential verbs. Effectively it is derived from, say, Spanish’s ability to express an object taking an act upon itself. Soros said as much in an interview sometime just after his seminal – and this time too long by 2/3 - The Alchemy of Finance, 22 years ago. Soros’ own attempt at redefining reflexivity in pseudo-epistemological terms in his latest book only confuses thing, unfortunately: “Reflexivity is a two-way feedback mechanism that affects not only statements (by rendering their truth value indeterminate) but also facts (by introducing an element of in determinacy into the course of events).” For now, just think, An object taking an act upon itself. This idea is a really big deal, but it has an (admittedly) imperfect messenger in Soros. He desperately wants to cause a dialogue about his idea and has been fruitlessly trying to do so for a quarter-century at least. Market traders have mostly dismissed it as common sense. Academics have mostly dismissed it as unscientific. Both groups have dismissed it for lacking a predictive value. Both camps are right, to some extent. Soros would agree that his billions of dollars of success in the markets has made reflexivity somewhat ubiquitous for market participants. He would also agree that it is unscientific. Soros has always seen himself as a philosopher, not a scientist. But what he does with explaining the real-estate bubble that has now dragged the world into a historic financial crisis, the way he uses reflexivity to explain it, is really something to behold: “The willingness to lend influences the value of the collateral.” That is exactly inverted. It is a seminal treatment of this crisis. As money becomes cheaper – through a sustained policy of low interest rates – synthetic tools, like mortgages, are promoted to lend the money as rapidly as possible. Once the availability of mortgages outpaces the demand for houses, the demand for houses grows to meet the availability of mortgages; supply begets demand. These two objects act on one another until the demand for houses far outpaces the supply of houses. And home prices spiral upwards. Soon – in a phenomenon like the re-finance boom of years past – the upwards-spiraling value of the collateral (home) takes an affect on the lender’s willingness to do further lending. More lending, then, takes its effect on the supply/demand balance of homes, driving the value of homes (collateral) still higher. And so on. Reflexivity, in other words, is a thought from bygone days – those which preceded the belief that economics is a science. It has a wonderful descriptive value. But much to Soros’ dismay, it has almost no predictive value. That is, one must already be entrenched in the reflexive scenario before s/he can predict the next event. Reflexivity, in other words, is incapable of predicting starting points. But only a fool dismisses it for that reason. How well, after all, did our litany of “scientific” economics models predict the nationalization of our banking system on September 18, 2008? In the penultimate chapter of The New Financial Paradigm, Soros returns to the same sort of real-time-trading experiment he used in The Alchemy of Finance (in every way, actually, this book is a return to his first book – and a blessed departure from his loopy political ideas). And this is where the old master fails. Those who like symmetricality aren’t going to like this. But then, those who like symmetricality were scared away from the markets at least eight years ago. How does he fail? He fails in his bias against the dollar. Soros is long emerging markets – always a dicey proposition – and short U.S. securities and the U.S. currency. Despite aptly predicting a violent credit contraction, Soros has a blind spot for the deflation this must cause. He correctly imagines the deleveraging of the U.S finance sector but somehow misses the consequence that a sudden absence of dollars will have on the value of the dollar. He is too certain that crises always manifest themselves as inflation. He writes: “The invasion of Iraq has much to do with the rise in the price of oil and the unwillingness of the rest of the world to hold dollars. A recession in the United States and the resilience of China, India, and the oil-producing countries will reinforce the decline in the power and influence of the United States.” But there he is blinded by his own loopy political ideology and misses the trade perfectly. The credit contraction, as we now know, led to a sudden scarcity of dollars. The value of the dollar raced upwards. The price of a barrel of oil dropped from $143 to 62 in a month. This brought Soros’ oil-producing countries to the precipice of insolvency (1/3 of Venezuela has not had electricity for 50 days). What comes next? Once Soros realizes how wrong he was and adjusts his model – and he probably has already (this book was published in July) – he will be able to use reflexivity to tell us what will come of the U.S. and emerging-markets countries. We can look forward to his afterword.

  5. 5 out of 5

    sleeps9hours

    The first Soros I've read. Very interesting. I like his philosophical take on the machinations of the financial markets. Very timely. Copious notes: p. 36 Scientific laws cannot be verified; they can only be falsified. That is the role of testing. Scientific laws can be tested by pairing off initial conditions with final conditions. If they fail to conform to the scientific law in question, that law has been falsified. Statements that are not subject to falsification do not qualify as scientific. The first Soros I've read. Very interesting. I like his philosophical take on the machinations of the financial markets. Very timely. Copious notes: p. 36 Scientific laws cannot be verified; they can only be falsified. That is the role of testing. Scientific laws can be tested by pairing off initial conditions with final conditions. If they fail to conform to the scientific law in question, that law has been falsified. Statements that are not subject to falsification do not qualify as scientific. One nonconforming instance may be sufficient to destroy the validity of the generalization, but no amount of conforming instances are sufficient to verify a generalization beyond any doubt. p. 37 Generally speaking, the more an investment thesis is at odds with the generally prevailing view, the greater the financial rewards one can reap if it turns out to be correct. I failed to recognize a flaw in Popper’s concept of open society: that political discourse is not necessarily directed at the pursuit of truth. I believe both Popper and I made these mistakes because of our preoccupation with the pursuit of truth. …we can introduce the pursuit of truth as a requirement for an open society. p. 39 What Popper took for granted needs to be introduced as an explicit requirement. Popper assumed that the purpose of critical thinking is to gain a better understanding of reality. That is true in science but not in politics. The primary purpose of political discourse is to gain power and to stay in power. Those who fail to recognize this are unlikely to be in power. The only way in which politicians can be persuaded to pay more respect to reality is by the electorate insisting on it, rewarding those whom it considers truthful and insightful, and punishing those who engage in deliberate deception. Without such a commitment, democratic politics will not produce the desired results. An open society can be only as virtuous as the people living in it. p. 40 The pursuit of truth is important exactly because misconceptions are liable to lead to unintended adverse consequences. The postmodern approach…treat[s] reality as a collection of often conflicting narratives, it fails to give sufficient weight to the objective aspect of reality. p. 43 Reality is a moving target, yet we need to pursue it. In short, understanding reality ought to take precedence over manipulating it. As it stands now, pursuit of power tends to take precedence over the pursuit of truth. p. 55 Buy and sell decisions are based on expectations about future prices, and future prices in turn, are contingent on present buy and sell decisions. To speak of supply and demand as if they were determined by forces that are independent of the market participants’ expectations is quite misleading. Rising prices often attract buyers and vice versa. Even a cursory look at commodity, stock, and currency markets confirms that such trends are the rule rather than the exception. p. 56 participants act not on the basis on their best interests but on their perception of their best interests, and the two are not identical. Rational expectations theory claims that the market as a whole always knows more than any individual participant—sufficiently so that markets manage to be always right. I have considered this interpretation so far removed from reality that I did not even bother to study it. p. 57 The crux of reflexivity asserts that market prices can influence the fundamentals. The illusion that markets manage to be always right is caused by their ability to affect the fundamentals that they are supposed to reflect. The change in the fundamentals may then reinforce the biased expectations in an initially self-reinforcing but eventually self-defeating process. More often the prevailing bias corrects itself before it can affect the fundamentals. p. 74 The belief that markets tend towards equilibrium has given rise to policies which seek to give financial markets free rein. I call these policies market fundamentalism, and I contend that market fundamentalism is no better than Marxist dogma. p. 75 We must reduce our expectations for the social sciences. We cannot expect reflexive events to be determined according to timelessly valid generalizations when reflexivity contains an element of uncertainty and indeterminacy (uncertainty relates to the participants’ thinking, indeterminacy to the course of events). p. 159 Reflexivity claims that the ultimate truth is beyond our human reach and explores the role that misconceptions play in shaping the course of events. further reading: Tivadar Soros, Masquerade: Dancing around death (2001), Charles Morris, the trillion dollar meltdown: easy money, high rollers, and the great credit crash (2008), Karl Popper, the open society and its enemies, George Soros, the alchemy of finance (1987), Michael Kaufman, Soros (2002) George Lakoff, cognitive linguist studies metaphors.

  6. 5 out of 5

    Peter

    Maybe it's just me, but this book felt overly complex. I personally believe the true mark of genius is someone who can both understand what is seemingly infinitely complex, while at the same time convey that concept to lay people with ease and in simple terms. George, while likely intelligent (I can't tell, I spent too much time trying to decipher what he was trying to say... and not much time really understanding what he was talking about) either cannot, or chose not to do this. The book is com Maybe it's just me, but this book felt overly complex. I personally believe the true mark of genius is someone who can both understand what is seemingly infinitely complex, while at the same time convey that concept to lay people with ease and in simple terms. George, while likely intelligent (I can't tell, I spent too much time trying to decipher what he was trying to say... and not much time really understanding what he was talking about) either cannot, or chose not to do this. The book is complex in terms of the language, the subject, personally doesn't seem to warrant such complexity. So, I'm not sure if he did this just to 'prove' his intelligence, or because he actually speaks in such a complex manor. In any case, I gave up, I spent more time trying to process the words and sentences instead of the concepts, and to me, I want to learn about the topic, not about the most intellectually significant way of extolling that message... But like I said, maybe it's just me :) Some people may understand this intellectually 'stimulating' language, and may find the book indispensable. I unfortunately, do not.

  7. 4 out of 5

    Jacob

    I was hoping to find an intelligently written response to Forbes' advocacy for free markets in "How Capitalism Will Save Us," but only found the ego of George Soros. His son, Robert, summed him up best, "My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, Jesus Christ, at least half of this is bullshit. I mean, you know the reason he changes his position on the market or whatever is because his back starts killing him I was hoping to find an intelligently written response to Forbes' advocacy for free markets in "How Capitalism Will Save Us," but only found the ego of George Soros. His son, Robert, summed him up best, "My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, Jesus Christ, at least half of this is bullshit. I mean, you know the reason he changes his position on the market or whatever is because his back starts killing him. It has nothing to do with reason." He used the words "reflexivity" and "super-bubble" like he was churning out articles for Search Engine Optimization (SEO). Sorry Mr. Soros, you are still a failed philosopher.

  8. 5 out of 5

    Rob

    I felt let down by this book. At first it gives a good overview and timeline of the current credit crunch (although nothing someone wouldn't have known from reading the paper once and a while over the past 6 months). Then, it delves into Soros's theory of "reflexivity", which attempts to debunk efficient market theory. I was highly disappointed in this section. I didn't think it was convincing at all, which says a lot since I'm not a big believer in efficient markets to begin with! All in all, i I felt let down by this book. At first it gives a good overview and timeline of the current credit crunch (although nothing someone wouldn't have known from reading the paper once and a while over the past 6 months). Then, it delves into Soros's theory of "reflexivity", which attempts to debunk efficient market theory. I was highly disappointed in this section. I didn't think it was convincing at all, which says a lot since I'm not a big believer in efficient markets to begin with! All in all, it seemed to be a very confusing way of saying: emotion can drive markets to excess. I knew this before I started.

  9. 5 out of 5

    Ajay Palekar

    As with all the finance books written shortly after the financial crisis, this one has its more forgettable and misguided moments. Written as it was during a time of fear and profound lack of confidence in the system. But George's quite intimate understanding of the machinery, his more philosophical view of things, and his candor about his own failings make this a far more interesting read. His argument is not one of fear, but a rational analysis of what he sees to be more fundamental issues that As with all the finance books written shortly after the financial crisis, this one has its more forgettable and misguided moments. Written as it was during a time of fear and profound lack of confidence in the system. But George's quite intimate understanding of the machinery, his more philosophical view of things, and his candor about his own failings make this a far more interesting read. His argument is not one of fear, but a rational analysis of what he sees to be more fundamental issues that underpinned the crisis in the first place. If only, he had raised such concerns earlier as his voice is one of the few who might have been able to sway us from that course with less damage.

  10. 4 out of 5

    InvestingByTheBooks.com

    Can we observe the market objectively, being participants as well? What is reflexivity, and why is it a must to understand it? What is George Soros’ long-term scenario for the financial markets? This book consists of two parts: (1) Perspective and (2) The Current Crisis and Beyond. The second part is good. The first is great. For the first time, I believe I understand his thoughts on the two driving forces behind reflexivity. And now, in the current dangerous monetary experiment - it’s obvious w Can we observe the market objectively, being participants as well? What is reflexivity, and why is it a must to understand it? What is George Soros’ long-term scenario for the financial markets? This book consists of two parts: (1) Perspective and (2) The Current Crisis and Beyond. The second part is good. The first is great. For the first time, I believe I understand his thoughts on the two driving forces behind reflexivity. And now, in the current dangerous monetary experiment - it’s obvious why it’s so important to understand, especially for the professional investor. This well written book is a great improvement in explaining his philosophy – far better than the more famous Alchemy of Finance. George Soros needs no introduction. His accomplishments as a hedge fund manager are legendary, and his philanthropy for “Open Societies” is impressive. But his efforts within Economic Theory have not been successful so far. One of the first chapters is even called “Autobiography of a Failed Philosopher”. One hundred years from now, I would not be surprised if he is mainly remembered as a philosopher. We are moving away from the theory of equilibrium and its stepdaughter, the theory of rational expectations. Complexity Guru Doyne Farmer said recently at a Soros-sponsored Institute for New Economic Thinking seminar in Berlin that economics has not really improved during the last 50 years. But a lot is happening now, and the theory of reflexivity seems to be a part of the journey. Soros’ philosophical starting point is that our understanding of the world is inherently incomplete because we are part of the world we try to understand. “Reflexivity can be interpreted as a circularity, or two-way feedback loop, between the participant’s views and the actual state of affairs. People base their decisions not on the actual situation that confronts them but on their perception or interpretation of that situation. Their decisions make an impact on the situation (the manipulative function), and changes in the situation are liable to change their perceptions (the cognitive function).” The new paradigm states that instead of being always right, the financial markets are always wrong. ”The illusion that markets manage to be always right is caused by their ability to affect the fundamentals that they are supposed to reflect. The change in the fundamentals may then reinforce the biased expectations in an initially self-reinforcing but eventually self-defeating process. Of course such boom-bust sequences do not occur all the time. More often the prevailing bias corrects itself before it can affect the fundamentals. But the fact that they can occur invalidates the theory of rational expectations. When they occur, boom-bust processes can take on historic significance.” When does this happen and what can be done? These are the remaining questions for the theory of reflexivity to answer for it to be of great value. Misconceptions of the situation and leverage are probably parts of the answer. But unlike the current paradigm of utopian economics - that tries unsuccessfully to be deterministic like a natural science, based on ridiculous assumptions - the theory of reflexivity does not claim to make predictions in time. The other part of the book – the current crisis and beyond – is still interesting even though it was written several years ago. Soros focuses on the Housing Bubble and its big brother, the Super- Bubble, which is a cocktail of globalization, liberalization (market fundamentalism) and the ever increasing credit expansion to avoid recessions and banking system risks. I believe every reader will have second thoughts about their beliefs after they have finished this book. It’s intriguing. George Soros will be remembered as a true free thinker.

  11. 4 out of 5

    Ралица Генчева

    Не съм чела другите книги на Сорос, но след тази мисля, че знам как биха звучали. Най-вероятно той пак ще е намесил своята теория. Самата теория се нарича теория на рефлексивността и не е открита от самия него, по-скоро той я доразвива, може и да се каже и разпространява поради известността на самия автор. Изразява се в това, че съществува рефлексивна връзка между възприятието и реалността, тоест участниците в дадена ситуация действат според нея, но те също така се опитват да я разберат и да й в Не съм чела другите книги на Сорос, но след тази мисля, че знам как биха звучали. Най-вероятно той пак ще е намесил своята теория. Самата теория се нарича теория на рефлексивността и не е открита от самия него, по-скоро той я доразвива, може и да се каже и разпространява поради известността на самия автор. Изразява се в това, че съществува рефлексивна връзка между възприятието и реалността, тоест участниците в дадена ситуация действат според нея, но те също така се опитват да я разберат и да й влияят и така манипулират ситуацията или събитията. Следователно участниците в събитията винаги грешат, защото никога не могат да разберат напълно ситуацията и техните гледни точки никога не отговарят на действителното състояние на нещата и така не може да се постигне равновесието, което предполага икономическата теория. С две думи, онези две линийки на търсенето и предлагането и общата икономическа теория може да се окажат безполезни. Вероятно всеки, който си има малко понятие от икономика, се е съмнявал в перфектната теория на равновесието, която е с две думи too good to be true. Но и всеки разбира, че всичките предположения, които я правят идеални, са по-скоро за да се опрости и да се правят изводи по-лесно. И в крайна сметка, за мен тя наистина работи. И то не само в идеалния свят с изолираните други фактори. Сорос май не успява да се аргументира много добре. Макар че теорията се нуждае от минимална защита. Естествено, че инвеститорите взимат решенията си въз основа на наблюденията си върху пазара, естествено, че поради невъзможността да разполагат с цялата информация, която им е нужна, винаги малко или много грешат. И естествено, че от друга страна, не само пазарът влияе на решенията им, но и техните решения влияят на пазара и т.н. Това, което ме подразни, когато четох тази книга, беше всеобхватната приложимост на неговата теория на рефлексивността. Със същия успех книгата можеше да е за съвсем различно явление (а не финансовата криза), обяснено пак със същата тази теория, която дори не ми звучи като откритие.

  12. 4 out of 5

    Bob Edwards

    Anyone as successful as him is worth reading about, but his economic theory was not sufficiently fleshed out and was difficult to understand. Still in all, it was worth reading. He used this information which he developed through 40 years of investing to accumulate over 25B in assets, primarily by not following the precepts of traditional economics, realizing the principal of reflexivity, that similar to quantum mechanics, the presence of investors impacts economic equilibrium. The book was publ Anyone as successful as him is worth reading about, but his economic theory was not sufficiently fleshed out and was difficult to understand. Still in all, it was worth reading. He used this information which he developed through 40 years of investing to accumulate over 25B in assets, primarily by not following the precepts of traditional economics, realizing the principal of reflexivity, that similar to quantum mechanics, the presence of investors impacts economic equilibrium. The book was published in mid 2008 and made very accurate predictions of what was about to occur in September 2008.

  13. 5 out of 5

    Yuni Amir

    I suspect Soros was aspired to be a politician. This book discusses less about money, but more on how to understand the world around us by taking the Global Meltdown in 2008 as an example. Reflexivity is the word. PostScript: There is a chapter dedicated on his political aspiration in Russia.

  14. 4 out of 5

    Hallie

    Not a fun read. Way too theoretical and philosophical and rambling.

  15. 5 out of 5

    Madam Anastasija

    IMNO, the author is too selfminded.

  16. 4 out of 5

    Geoff

    This is not good literature. Mr. Soros’s writes in a condescending tone throughout the whole thing and uses “I” waaaay to much. He doesn’t explain his theory of Reflexity in a clear, succinct manner. Really couldn’t tell you what it means, other than what you think affects what see and experience, kinda like self-actualizing.. but again, I could be off, b/c Soros does not explain things at a simple level. His bias permeates the whole book. He constantly impugns Bush administration, but give no fu This is not good literature. Mr. Soros’s writes in a condescending tone throughout the whole thing and uses “I” waaaay to much. He doesn’t explain his theory of Reflexity in a clear, succinct manner. Really couldn’t tell you what it means, other than what you think affects what see and experience, kinda like self-actualizing.. but again, I could be off, b/c Soros does not explain things at a simple level. His bias permeates the whole book. He constantly impugns Bush administration, but give no further explanations as to why said action or policy was wrong...very weak arguments, which is sad b/c knowing he was a liberal going into this book, wanted to hear some cogent arguments. Not here. Some points on Reflexity: He makes the distinction that the study of economics cannot be observed like natural phenomena, like nature, and it not a true science. Is this a novel idea among liberals and/or economists? He seems to state this fact over and over again in the book like some profound statement, that humans behavior study at the macro level is not like the laws of nature and cannot be studied like a true science. This is somewhat baffling to me because I knew that for a long time, humans have a free will, emotions, psyche, etc. and this will play into financial markets and in the boarder course of history. Possibly it’s the liberal mindset to “know it all” and have answer for everything and force policy or regulation that makes this fact profound to someone like Soros. Just a thought. If I had to summarize his theory of Reflixity, it would be that human actions and though can affect reality (duh) and because of this, current economic theory cannot adequately be used in the field of economics for policy, regulation, etc. It’s more confusing and high-minded than that… I’d say its like a self fulfilling prophecy… or something. Mr. Soros states b/c of this fact, older models of economics, i.e. conservative or traditional, market equilibrium, are proven wrong by the recent crash. Oh should probably have wrote that earlier, the crash of 2008 was the reason for him writing this book, and in his mind a test to “prove” his theory. He criticizes the Wall Street and the creation of CDO, CDS, and various other financial products that were heavily involved in the crash of 2008… but I think he misses that a lot of these tools where a result of government policy, i.e. the dream of affordable house, i.e. the extension of credit, i.e. the massive expansion of subprime loans, that where the foundation of the derivatives. Here’s a walkthrough of how his theory is applied with short selling: 1. Typical risk in short selling stocks is asymetirical with long positions; when going long, the risk is limited when said stock loses all value (most you can lose is the initial capital), the potential upside is unlimited. With short selling, the risk is theoretically unlimited, a stock could up to infinity. Thus short positions are closed very quickly when the market moves against them. This asymmetry discourages shorts. 2. The CDS offers a much better risk/reward scenario for a bear wanting to short a bond. In this situation, the asymetircal relationship is reversed that of stocks. Selling the insurance offers very little reward but much risk; buying the insurance offers little risk with much potential. 3. Reflexity. Mispricing of the CDS contracts on bonds can affect the market price of the bond the CDS was supposed to insure. B/C the CDS where mispriced, market will assume the bonds are worth much less. Bear raids on the institutions become self-validating.. Soros’ then prescribes an economic recovery program. Critical of Paulson letting Leaham fail, then asking for 700 billion from congress…this needs further studying… Soros does recommend getting rid of the twins, and moving to the dutch mortgage system; of all his ideas this one appears to be good one. All of his other points are a elaborate redistribution scheme; at one point he prescribes inject massive capital into the banks (stimulus) but didn’t specify where this money would come from.

  17. 4 out of 5

    Álvaro da Luz

    As longas viagens a trabalho têm vários aspectos positivos. E um deles é que a solidão dos hotéis acaba deixando muito tempo livre para colocar as leituras em dia. Assim, consegui terminar o livro O Novo Paradigma para os Mercados Financeiros de George Soros, lá para os lados do Vale Europeu (Itapocu para os íntimos). George Soros é um investidor bastante conhecido, talvez o mais conhecido do mundo pelos não financistas. Boa parte de sua fama vêm das histórias terríveis de como ele ataca países As longas viagens a trabalho têm vários aspectos positivos. E um deles é que a solidão dos hotéis acaba deixando muito tempo livre para colocar as leituras em dia. Assim, consegui terminar o livro O Novo Paradigma para os Mercados Financeiros de George Soros, lá para os lados do Vale Europeu (Itapocu para os íntimos). George Soros é um investidor bastante conhecido, talvez o mais conhecido do mundo pelos não financistas. Boa parte de sua fama vêm das histórias terríveis de como ele ataca países e suas moedas, gerando lucros exorbitantes com a tão odiada profissão de especulador. Quem conhece um pouco do funcionamento do mercado financeiro sabe o que tornou Sorros tão importante foi ter um dos primeiros fundo de hedge (para resumir, fundos que operam em diversos mercados de forma alavancada) do mundo. Atualmente têm um monte de gente fazendo o que ele fazia, mas sem a mesma publicidade. O livro é uma tentativa – na minha visão, não tão bem sucedida – de tentar demonstrar o quão instável é o ambiente financeiro através de uma abordagem filosófica. No entanto, como filósofo Soros é um grande financista. Ele desenvolve conceitos um tanto quanto confusos para a interpretação da realidade. O único que é claro é o da reflexividade, o qual, em resumo, afirma que a interação entre ações e expectativas geram resultados inesperados em um moto contínuo. O problema é que este resultado não é novo. Ele é bastante similar ao equilíbrio de Nash com incerteza Knightiana (em língua de humanos: as seguidas interações entre os agentes geram resultados, mas estes resultados possuem elevado grau de incerteza). Portanto, nenhuma novidade. O que é bastante incômodo, sobretudo para quem trabalha no mercado financeiro, é a sua decepção com as bases sobre as quais os modelos econômicos e de risco foram construídos. Qualquer economista com um mínimo de treinamento sabe que as ideias de equilíbrio e expectativas racionais são simplificações da realidade, e que servem de ponto de partida para a avaliação desta mesma realidade, mas não são nem de longe um arcabouço completo para análise. O mundo é muito mais irracional do que a teoria alcança. Especialmente o mundo dos humanos. Mas a forma como Soros destrói os modelos de risco, sobretudo pelo fato de estes são baseados na física newtoniana, a qual, por sua vez, é baseada na ciências naturais, e que não serve para explicar comportamento humano, dado que este pertence as ciências não naturais, é um pouco exagerada. Ele toma o caminho do Nassim Taleb, e coloca um cachorro - nada de pulgas - atrás da nossa orelha. Será que estamos todos errados? As últimas crises não nos permitem dizer que não, e nem que sim, e nem que talvez....Fácil entender por que ele apela para o fundamento filosófico. A melhor parte do livro é a descrição de como alguém que lidou com a perspectiva de perder tudo, inclusive a vida, lida muito bem com os aspectos de risco e tomada de decisão sob pressão. É incrível o fato de que depois do que passamos pelo pior, as situações perigosas para as pessoas normais, são tão mais fáceis de serem encaradas, e superadas. A sua descrição de como é o processo de tomada de decisão em um hedge fund é bastante interessante, mais uma vez, mas não exclusivamente, para quem trabalha diretamente com isto, é uma aula. Como ele terminou o livro em março de 2008, não conseguiu escrever sobre o desfecho da crise, mas ele nos dá uma boa noção do que estaria por vir. Fica a lição de humildade de um mega gestor de hedge funds que transformou seu fundo em um veículo bem comportado, assumindo que não conseguia entender este novo mundo das finanças exóticas. Recomendo o livro para quem está na indústria ou estudantes que desejam iniciar sua carreira neste ramo. Para os demais, fica a dica de entender como funciona a cabeça de um cara que quase morreu em um regime nazista e comunista, conseguiu fazer fama e fortuna no difícil mundo das finanças, e ainda se mete a filósofo.

  18. 4 out of 5

    Austen

    "People want to know what lies ahead. I cannot tell them because I do not know. What I want to tell them is something different. I want to explain the human condition." I am not an economist, nor do I participate in financial markets in any significant way. Really, I never even took a business course as an undergraduate. I mention this because many of the specific details that Soros presents are cloaked in a specialized language that is almost totally unfamiliar to me. Even Wikipedia can't help m "People want to know what lies ahead. I cannot tell them because I do not know. What I want to tell them is something different. I want to explain the human condition." I am not an economist, nor do I participate in financial markets in any significant way. Really, I never even took a business course as an undergraduate. I mention this because many of the specific details that Soros presents are cloaked in a specialized language that is almost totally unfamiliar to me. Even Wikipedia can't help me understand what a Hedge Fund is... However, there are some concepts that I can wrap my head around. Th Federal Reserve Bank lowered interest rates significantly after the internet bubble (think .com entrepreneurs who made tons of money) burst in 2000, and then again after September 11th, 2001. They continued to do so until the federal interest rate had reached just 1% in 2004, from 6.5% in early 2000. This is done, of course, to stimulate economic growth when a possible economic crisis looms. However, this extremely low interest rate meant that central banks and other financial institutions took out alot of money from the Fed, so that they could turn around and loan it out (think mortgages to people who really can't afford them). This however, is only part of a larger "super bubble" that Soros perceives in today's (semi-global?) economy that has been growing since Ronald Reagan was elected in 1980. Soros is proposing that an economic era is ending--an era that has placed the United States in the center of a global economy, and that has meant lavish and relatively unrestricted profits for largely-American companies and corporations. He insists that traditional ways of looking at the marketplace are fundamentally incorrect because they assume that free (unrestricted) markets are self-correcting, and that equilibrium is the default state. Soros, instead further develops his idea of (two-way) reflexivity, which has led many over the years to refer to him as a failed philosopher, if an extremely successful investor and Hedge Fund manager. His concept of reflexivity doesn't strike me as profound--that there is a difference between the reality we perceive and reality, itself. In the case of financial markets, this is difficult because we affect the reality we perceive because we act upon it, based upon our assumptions of a reality that we are constantly manipulating. As such, Soros says that his theory can help us to understand the past, but not the future--markets tend toward unpredictability, and humans possess an imperfect understanding of reality. Also, complicating his and our understanding of modern day economic trends are the increasing abstraction and complexity of recently developed market tools. These new ways of buying, repacking, trading, rearranging, and selling are so complicated that when, for example, I default on my mortgage, it is extremely difficult to figure out who owns what, and who has to pay whom. The increasingly amorphous and abstract way that investments are rearranged and exchanged has created a situation (already abetted by Republican politicians infatuated with the self-regulating, free market myth) where regulatory agencies can sometimes no longer assess the risk of a given investment, and instead rely upon the information provided by the institution offering the investment, itself. Our economy is out of control, but it appears that the past few decades of economic deregulation, bold risk-taking, and unimagined prosperity for some (perhaps even the reality of the dollar standard!) has largely come to an end. Although, no one, including Soros seem to know what even the next few years will hold for our economy.

  19. 4 out of 5

    Greg

    Soros turns philosopher and develops his "theory of reflexivity". The way he does this is by repeating it about three dozens times. Repeating oneself does not equal profundity. Throwing in a plethora of anecdotes about how one made or lost money doesn't do it either. I kept waiting for this amazing theory to be developed. Then I hit the end of the book. The "theory," he admits, is not really a theory, but a rejection of the idea of market equilibrium. One reason is that equilibrium theory assumes Soros turns philosopher and develops his "theory of reflexivity". The way he does this is by repeating it about three dozens times. Repeating oneself does not equal profundity. Throwing in a plethora of anecdotes about how one made or lost money doesn't do it either. I kept waiting for this amazing theory to be developed. Then I hit the end of the book. The "theory," he admits, is not really a theory, but a rejection of the idea of market equilibrium. One reason is that equilibrium theory assumes perfect knowledge, and human knowledge is limited and fallible. More importantly, he reasons that the interplay between human analysis and manipulation is too intertwined. In other words, we cannot study markets like we do physics, because the humans studying are also participating. It's a good point as far as it goes. I always view it as a good sign when we humans step back from our pretense of objectivity and realize the limitations of our our knowledge. I did appreciate this book for explaining the current mortgage crisis, something I knew little about. The crisis is an example of his theory. Lenders after the tech bubble burst (and after 9/11) began to lend more with the extremely low fed rates. Housing prices rose. Then the lenders looked at their "objective" fundamentals and found they had high principle-to-loan ratios. So they lent more, often to folks with bad credit. And they packaged the credit into all sorts of innovative unregulated instruments, and sold them to other "objective" humans. More people buying and refinancing homes meant housing prices continued to rise. Everything went up - expectations and the so-called fundamentals. And so the "reflexive" cycle went. Soros is no socialist - he believes the free market can be very efficient and in most cases, is the most beneficial system of economics for everyone. It just needs some level of judicious regulation. How much and what kind is the real question. He proposes some such regulations. For example, he proposes some ideas for how to regulate these new innovative credit instruments that are out of control. But he does so at a very high, almost sound-bite, level. I would have liked more there. I don't know enough to evaluate his idea that we are in a dangerous "super-bubble," extending far beyond the housing market. He predicts its going to burst in a big way. Maybe so. Hope not. POST-REVIEW NOTE: It did burst. I wrote the review above in July 2008. It's now March 2009 and the Dow is below 7000 - still diving since the mortgage crisis last fall. Wow. He was right.

  20. 4 out of 5

    Peter

    Soros' theory of reflexivity is interesting, even if I am not sure that what he is talking about is really what should be called a theory. I mean what he has to say about reflexivity is more along the lines of descriptive. But difference between description and theory is so hard to draw. He has a lot to say about why Economics is not a science. I think few would disagree. However the book is obsessed with random references to various other authors, all of which seem like apostrophes. Certainly h Soros' theory of reflexivity is interesting, even if I am not sure that what he is talking about is really what should be called a theory. I mean what he has to say about reflexivity is more along the lines of descriptive. But difference between description and theory is so hard to draw. He has a lot to say about why Economics is not a science. I think few would disagree. However the book is obsessed with random references to various other authors, all of which seem like apostrophes. Certainly his understanding of the general movements of financial markets is informed and I enjoyed his synopsis of the events leading up to but not including these last few months of the current economic debacle. He is by reputation a very successful trader, but I am not sure he shed much light on either how he applies his 'theory' to his trading or how he thinks reflectivity should be applied to policy decisions. And yet I would not call his effort philosophical. I am not sure what he is really trying to accomplish beyond the brute act of speaking. At one point he tells an interesting story: his son thinks his financial decisions are motivated more by his aching back than his theoretic understanding of the markets. I become more and more sure, as I continued to read, that his son was probably right. How theorectic speculation affects ones understanding or feeling for something is a very difficult thing to talk about. He does really get into it at all. Neither was I convinced that the notions contained in the book are as radical or as new as he suggests they are. I am not an expert but I am pretty sure there are many out there who are not big believers in equilibrium assumptions concerning market cycles. And the idea that market movements are self motivating and so ultimately none responsive to static economic models seems to have been around a good long while as well. But who knows? But mostly the book is hampered in its efforts to explicate what it is it has to say by being as badly written as it is. My word. The book is openly obsessed with its own reception in ways that are not only a little pathetic but have so much of our attention as to systemically interfere with his presentation. The organization of the material, in general, is just awful. To call it sophomoric would be kind. I guess he sells a lot of books. I read this book in a few hours in the bookstore. If his notion of the reflexive nature of market cycles is a jewel, it is a jewel still very much in the rough.

  21. 4 out of 5

    Alberto Lopez

    A great book about Soros' philosophical take on the impossibility of scientific evaluations of social sciences; namely economics. I very much liked his Theory of Reflexivity. This book seems parallel in value to "the black swan" by Taleb.

  22. 5 out of 5

    Eric

    Picked up this book three weeks ago as it seemed timely. Just finished it last night, not quite so timely! Soros wants to be a philosopher, but he should just stop with that and read some more. He has the Theory of Reflexivity - that real people and their thoughts are a part of market dynamics, and thus markets don't behave according to the dominant equilibrium analysis. There is feedback between facts and thoughts, and between thoughts and thoughts. He spends way to much time on this without pro Picked up this book three weeks ago as it seemed timely. Just finished it last night, not quite so timely! Soros wants to be a philosopher, but he should just stop with that and read some more. He has the Theory of Reflexivity - that real people and their thoughts are a part of market dynamics, and thus markets don't behave according to the dominant equilibrium analysis. There is feedback between facts and thoughts, and between thoughts and thoughts. He spends way to much time on this without progressing the concept. He seems unaware that there are sciences that incorporate uncertainties. Thermodynamics, of resurgent importance in this day and age, has has done so for like 150 years. Soros also does not take care to isolate the issue of unstable positive feedback loops from that of uncertainty. Brains in the loop - impossible to analyze. Positive feedback though, is another matter. I was also disappointed that in the end, he discloses that his investment strategy for 2008 included shorting US stocks. I personally have believed for a long time that shorting is a dangerous practice, and unnecessary for liquidity as is so often argued. Shorting makes it possible for individuals to make money in a downward drafting market. That is why it is done. If a company is doing poorly, there will be plenty of sellers. And the price will drop. We need that to be accelerated by shorting? Anyway, to get to the point, shorting is an amplifying positive feedback. A. I see a stock going down and think it will go further. B. Even though I don't own it, I sell it. C. It goes down. If shorting is done on a big enough scale, it drives the price down even faster than it would otherwise. That's the positive feedback. Buying stock is also a positive feedback loop, in that large enough purchases will cause the stock to rise, leading to more purchases. This can lead to bubbles, perhaps you can think of a few of those in the recent past. But buying is at least a bet on a positive outcome. Why allow people to place self-fulfilling bets on negative outcomes? Is the liquidity value worth the damage? So I was hugely disappointed when after Soros' analysis of the market problems, his so-called super-bubble, he then invokes a strategy of shorting without acknowledging its role in the problems.

  23. 5 out of 5

    Max Stone

    I have the more-or-less standard criticism of this book, I assume. The author is a great and famous investor, and a not-so-great and not-so-famous philosopher, and again he has written a book that is 85% about his philosophy and added just enough stuff about current financial markets that people will buy it to read his investing opinion. on the positive side, he is very upfront that that is what he is trying to do. the problems with his philosophy (which very briefly, is that markets are inheren I have the more-or-less standard criticism of this book, I assume. The author is a great and famous investor, and a not-so-great and not-so-famous philosopher, and again he has written a book that is 85% about his philosophy and added just enough stuff about current financial markets that people will buy it to read his investing opinion. on the positive side, he is very upfront that that is what he is trying to do. the problems with his philosophy (which very briefly, is that markets are inherently unstable because there is a feedback loop between markets and people's opinions on markets, which leads to chaotic price action, in the sense that it is impossible to create rules to predict what will happen, because those very rules will alter the process, etc) are: 1. it isn't as original or as important as he seems to think. sure, I buy that no investing rule is guaranteed to work because the very knowledge of it working will make it not work so well any more. and I get that there are all sorts of feedback loops there. but not sure I need his whole philosophical framework around that. 2. i think his fundamental message about the credit crash is somewhat misguided. briefly, it is that since markets are subject to feedback loops which take prices far from equilibrium prices, we need more regulations to prevent stuff from getting too out of control. but it the leap from "sometimes stuff moves far beyond equilibrium or fair pricing" to "therefore we need to regulate" that I think is a stretch. sometimes intervention is the right thing, but he presents no evidence about how far is too far from equilibrium, and the costs and consequences of waiting for markets to returns in the direction of equilibrium of their own accord (which they will; I assume even Soros wouldn't say they will move infinitely far away). I'm not a market fundamentalist who believes everything is best off left solely to markets, but I didn't think his reasoning here was very convincing. of course he is a kajillion times more successful investor than I will ever be, so what do I know? I'm sure he'd give any book I wrote negative 3 stars....

  24. 5 out of 5

    Jon

    If you haven't read any Soros books in the past then you'll be frustrated by the first half of the book. He talks about his reflexive theory which his attempt at providing some kind of philosophic idea. The problem with this presentation is that 1/3rd of the time he apologizes for his previous books and attempts to explain reflexive theory. Unfortunately you're not given enough information in this book to fully understand the theory nor make a determination of his motives of this theory. (I alwa If you haven't read any Soros books in the past then you'll be frustrated by the first half of the book. He talks about his reflexive theory which his attempt at providing some kind of philosophic idea. The problem with this presentation is that 1/3rd of the time he apologizes for his previous books and attempts to explain reflexive theory. Unfortunately you're not given enough information in this book to fully understand the theory nor make a determination of his motives of this theory. (I always want to know why someone believes the way they do.) As for his talk about the credit crisis which is the main reason why you would read this book, he doesn't really say too much different than what everyone else is saying. (Maybe they're just repeating what he says in this book.) He does attack market fundamentalism and is confused that Reagan's supply-side doesn't work. He's right about that, but he's confused that Reagan and the republicans were really pro-market. That is a fallacy that the left want to keep saying so as free markets can be blamed for the problem and thus free markets will never be given the option for a fix. Instead he believes in a new world order, "I foresee a period of political and financial instability, hopefully to be followed by the emergence of a new world order." So there you have it. He further goes on about government intervention in that groups of people in charge have a better understanding about your future (financial, social, etc.) that you can't decide on your own. Kiss your freedoms and liberty good bye. Read the book, but only give it an afternoon of your time. It is a small book, made smaller by throwing out the philosophic garbage in the book.

  25. 5 out of 5

    Wayne

    I really want to like this book and can't deny that Soros obviously has some fundamental truth to his Reflexivity Theory. The first half of the book is spent explaining his theory of reflexivity and how it contradicts to the financial equilibrium theory. Both theories are philosophical ideas and the first half of the book reads like a mixture of a philosophy text and an short autobiographical summary of his role in the financial market. This is also the part that I leaves me finding it hard to r I really want to like this book and can't deny that Soros obviously has some fundamental truth to his Reflexivity Theory. The first half of the book is spent explaining his theory of reflexivity and how it contradicts to the financial equilibrium theory. Both theories are philosophical ideas and the first half of the book reads like a mixture of a philosophy text and an short autobiographical summary of his role in the financial market. This is also the part that I leaves me finding it hard to really enjoy the book. There were numerous times when I found myself resorting to reading paragraphs over for a second or third time to make sure I understood them. I don't think that it was the complexity of the subject matter though, but instead was the overly-complex way that Soros explained it all. The second half of the book is his attempt at analyzing the credit crash of 2008 with his reflexivity theory. This part is an easier read, but only if you've spent the time to make sure the first half sunk in properly. It lends great credit to his credibility that the majority of his predictions for the latter half of 2008 came out as he expected. Overall I'd say that this book is worth reading, but only if you have a string desire for financial literature and/or you really enjoy reading philosophical texts. I read it based on the former and had to struggle based on the latter.

  26. 4 out of 5

    Anna Murray

    I paid $2.97 for this book. It was regularly priced at $22.95. I was ripped off! Now I know how the Bank of England felt! It is amazing that George Soros could be a billionaire, yet have such convoluted and immature thought processes. While he repeatedly claims to be seeking the historical truth, he utterly fails to acknowledge (even once!) the Community Reinvestment Act of 1977 and its ramifications on the current financial crisis. While he seems to want to be an oracle of the economy, he makes I paid $2.97 for this book. It was regularly priced at $22.95. I was ripped off! Now I know how the Bank of England felt! It is amazing that George Soros could be a billionaire, yet have such convoluted and immature thought processes. While he repeatedly claims to be seeking the historical truth, he utterly fails to acknowledge (even once!) the Community Reinvestment Act of 1977 and its ramifications on the current financial crisis. While he seems to want to be an oracle of the economy, he makes predictions, only to follow each prediction with the disclaimer that this may not come to pass. While he blames the lack of regulation on the current financial crisis, he also blames the regulators for failing in their positions! As for his "theory of reflexivity," such theory is really nothing new. Anthropologists and sociologists have recognized for over 150 years the danger of the researcher interfering in the subject of study. And yes, people are emotional and this makes the market act a bit funky sometimes. It is a factor that should be taken into account when investing. However, it is not a factor that can be regulated out of the economy, as Soros himself acknowledges. Essentially, it seems that George Soros, while having made a fortune thanks to free market capitalism, seeks to destroy that same free market that made him the rich man that he is today. A touch of self-loathing perhaps? Who could possibly know from reading this book?

  27. 4 out of 5

    Berhan Polat

    I read many comments of fellow readers ofthis book. I agree that he repeats himself, especially stressing the reflexivity concept and one can also argue that many things are maybe not clear even in the mind of the writer. However, he explains a critical relationship between the asset fundamentals and their valuation, which may end in a crash. This is a powerful argument and needs to be taken seriously. Moreover, this suggestion wipes out many theories which are feeded by market fundamentalism. H I read many comments of fellow readers ofthis book. I agree that he repeats himself, especially stressing the reflexivity concept and one can also argue that many things are maybe not clear even in the mind of the writer. However, he explains a critical relationship between the asset fundamentals and their valuation, which may end in a crash. This is a powerful argument and needs to be taken seriously. Moreover, this suggestion wipes out many theories which are feeded by market fundamentalism. He makes an analogy between quantum mechanics and the behaviour of market participants in his alchemy of finance book and repeats himself somehow also in this book. This argumentation could taken as contradictive to his thinking that social and natural phenomena can not be treated in the same way. " Nevertheless, I have learned a lot from the book. First of all, one can not go and ask to a billion dollar speculator about his experiences and ask him to tell them to you in detail. He gives a part of his own real world. His reality may not overlap with mine or yours but he has his own way of understanding things and he is succesfull. He tries to share them and as you see, it is not so easy.. Even for him. As a writer, he can improve a lot, but still I liked the book and recommend it for people who are interested in economics, some philosophy and financial markets.

  28. 5 out of 5

    Celine

    We were used to Soros thinking of himself as a genius of financial markets - he's been pretty successful (read: lucky) at dodging black swans, you can't take that from him... Now meet the Soros who thinks of himself as a genius of economic theory - one step short of a genius full stop. He confesses to having started "reading classical philosophers in [his:] early teens" (!) and now rubs his 2 neurons together to try and deliver a holistic theory of financial markets through a rather shallow and We were used to Soros thinking of himself as a genius of financial markets - he's been pretty successful (read: lucky) at dodging black swans, you can't take that from him... Now meet the Soros who thinks of himself as a genius of economic theory - one step short of a genius full stop. He confesses to having started "reading classical philosophers in [his:] early teens" (!) and now rubs his 2 neurons together to try and deliver a holistic theory of financial markets through a rather shallow and messy analysis of the participants' behaviour, their interaction, and their impact on the market. The whole effort is quite laughable - the only thing he clearly demonstrates is an unbelievable megalomania (I would love to see a review of this book by a psychoanalyst...) and a propensity to deliver nuggets like "I contend that social events have a different structure from natural phenomena" (no sh!t, Sherlock ??). I still gave the book half a star as the author actually did read Popper (and reminds you so every other page). Now come on, Georgie, just because you coughed up a few half-digested concepts borrowed from some eminent (and far more articulate) thinkers and renamed them with your own concocted terminology does not make you an original thinker, or even a good reader - the word plagiarism springs to mind...

  29. 4 out of 5

    Lucas

    It's best to avoid any book with 'paradigm' in the title, but it was the only financial crisis book I could find in the Good Will I was in. The first third of the book should have been cut in half, Soros repeats himself using mostly the same phrasing many times. Also his invented terms for what already has good names in other fields is annoying. One thought provoked was that his view of the economic system that has participants with faulty knowledge (rather than the perfect knowledge assumption It's best to avoid any book with 'paradigm' in the title, but it was the only financial crisis book I could find in the Good Will I was in. The first third of the book should have been cut in half, Soros repeats himself using mostly the same phrasing many times. Also his invented terms for what already has good names in other fields is annoying. One thought provoked was that his view of the economic system that has participants with faulty knowledge (rather than the perfect knowledge assumption of traditional economics) has a lot in common with modeling robotic systems with sensors with non-Gaussian noise like described in 'Probabilistic Robotics'. But the later two section which have to do with specific events rather than his philosophy of economics are much better. I appreciated the end section that was added a year after the initial publication (2008), but he should have rewritten the conclusion that follows that is immediately concerned with the likely failings of the Bush administration going forward in the crisis. This early passage talking about Soros' father escaping from prison in Siberia struck me: "My father came home a changed man... he lost his ambition and wanted nothing more from life than to enjoy it... he had no desire to amass wealth or become socially prominent. On the contrary, he worked only as was necessary to make ends meet."

  30. 4 out of 5

    Patrick

    Interesting and thought provoking concerning Soros' theory of "Reflexivity," silliness raised to a power of ten when Soros accuses others of being ideological. Curiously, it does not look like most of the predictions he had the cojones to make at the end of the book have come to pass. Yet. I would also have liked more information on the "Super-bubble" he posited, and whose start date seemed to shift from the end of World War II to the election of Reagan and Thatcher, to whenever was most convenie Interesting and thought provoking concerning Soros' theory of "Reflexivity," silliness raised to a power of ten when Soros accuses others of being ideological. Curiously, it does not look like most of the predictions he had the cojones to make at the end of the book have come to pass. Yet. I would also have liked more information on the "Super-bubble" he posited, and whose start date seemed to shift from the end of World War II to the election of Reagan and Thatcher, to whenever was most convenient...The concept of all organizations suffering from fatal flaws that will bring them down in the end, makes a great deal of sense but still made for startling reading. I cannot comment on his claims that monetarism is a complete failure, and that markets not only never achieve equilibrium, they often fail to even move towards equilibrium, my ignorance is simply too vast on the topic. But the market fundamentalists (to use Soros' term) don't seem to be able to explain things any better than he can, and in fact seem to be doing an even worse job.

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