- Hardcover: 208 pages
- Publisher: PublicAffairs (May 6 2008)
- Language: English
- ISBN-10: 1586486837
- ISBN-13: 978-1586486839
- Product Dimensions: 14 x 1.4 x 21.6 cm
- Shipping Weight: 295 g
- Average Customer Review: 3 customer reviews
- Amazon Bestsellers Rank: #445,075 in Books (See Top 100 in Books)
The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means Hardcover – May 5 2008
|New from||Used from|
Customers who bought this item also bought
No Kindle device required. Download one of the Free Kindle apps to start reading Kindle books on your smartphone, tablet, and computer.
To get the free app, enter your mobile phone number.
"The London Times" "They're wrong about oil, by George: In short, the standard economic assumption that supply and demand drive prices is only a starting point for understanding financial markets. In boom-bust cycles, the textbook theory is not just slightly inaccurate but totally wrong. This is the main argument made by George Soros in his fascinating book on the credit crunch, "The New Paradigm for Financial Markets," launched at an LSE lecture last night." "Reuters" "Soros says market rebound a bear-market rally: Billionaire hedge-fund manager George Soros said at LSE on Wednesday that the current rebound in stock markets is only a bear-market rally, because monetary authorities are unlikely to be able to handle the credit crisis." "Tucson Citizen" "Brilliant...examines a complex problem with both insight and philosophical depth....A much-needed contribution that should help many of us better understand the great credit crisis and what it means, not just for the United States but the entire world." BBC Business editor Robert Peston "Totally compelling"
About the Author
Top customer reviews
There was a problem filtering reviews right now. Please try again later.
Very insightful, at times not easy to digest but overall gives a coherent picture of what was to happen in anticipation (and finally did) which is true testament to a genius in his field.
We should all learn from such wise men.
Most helpful customer reviews on Amazon.com
Book is short. Reflexivity is a nice idea/theorie, but he never shows a mathematical example. He does mention that the market participants can reinforce a trend and so on, explaining that markets don't go to equilibrium. He fails to mention natural disasters, drought, or market manipulation as other real world reasons that economic models don't work.
First half of the book gives you an idea of how he thinks, the past that has influenced his ideas, and good examples of the basis for the current credit crisis. There is a section on history of the markets, boom in 60s, stagflation 70s, reagan 80s, and so on...
Second half of the book is the meat. (Take note of the charts, very timely, and more informative than anything you'll see on the news) Lots of info and a timeline on the spread of the crisis. The pearl in all this, is that the economy runs on credit, and with credit lending damaged, basically even if the crisis is averted, limited credit will hamstring the economy for the next 3-7 years. (he does not draw any comparissons to Japan, which was a combo corporate and consumer credit bubble with a similar but worse fate. Lack of credit and slow growth occured in Japan in the 10 years afterwards... read "The bubble economy" for more on that.)
He busts on the current administration, lack of leadership etc. Well a real estate bubble and booming oil bubble while most other industries fall behind is nothing to be proud of... If he's right, and all we've done for the last eight years is create paper wealth and run a deficit, then we're going to pay for it over the next 8 years and it's gonna bite.
One thing I don't buy in what he writes... He talks about a super bubble, and it being based on US finance, since Bretton woods agreement etc... Historically economies expand during periods where scientific discoveries can be applied to industry or our everyday lives. Booms created by autos, railroads, electricity, computing, plastics/chemicals... Then we hit a bust. The Feds job is to offset the busts and the govt basically spends on infrastructure during the busts to keep everything going. Now that inovation, with a huge economy, and a sound military, is what gives the dollar, our goods, dominance on the world stage, not some piece of paper signed 50 years ago.
He is right in that the US is sucking in value right now, as wealth funds save the banks, and the Fed gives out credit to save the system. Basically anyone holding US Bonds overseas is taking a bath to keep our system going. I think it's this short term Dollar/Bank moves, that has him upset, but he's blaming Reagan for it... Eh... I think it's more a banking problem with the current administration turning a blind eye.
Look at it this way. If it wasn't for the housing bubble... adding 4% to GDP or more each year... We'd still be stuck in recession since 2000... Bushes big problem is that it just popped on his watch. Now they're mailing checks worth 1% GDP just to keep us "Technically" out of a recession... Buying time until someone else comes into office and then it's "Their problem"... LOL
No mention of the new financial markets in Dubai or oil trading there.
Does mention the Gulf Arab states now reinvesting in their own countries and industries... Which is really happening.
Say's he's bullish on China and India, that the china bubble is in there early stages... (I think it's late) and he looses money when their markets tank this year... At least he's honest and admits it.
Definately worth buying (used) but skip the first half of the book. Flip to page 79 and start there. Read ALL of the rest of it.
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.
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.
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.
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.
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!
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.
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.
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:
"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)
Soros credits Karl Popper with the underpinnings of his economic philosophy and his argument is clean and satisfying from a philosophical perspective.
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.
Lots of people think they know. Unfortunately many of those same people are the ones who brought us to where we are.
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!
I strongly recommend you read this book.