Sunday, February 28, 2010

Being George Soros

On Fareed Zakaria GPS respected billionaire global financier George Soros said that although President Reagan is highly regarded "something went terribly wrong when Reagan and Thatcher" were in office. During the Reagan years deregulation was championed and continued under President Clinton which included unfair trade and globalization policies. With the major collapse of the global economy it is clear that Soros is well-respected for a reason. When asked if banking reform is necessary he said yes but it is most important to get it right.

It's not difficult to find Soros to be admirable. He gives $500 million dollars, which he noted is steadily increasing, annually to his foundation, Open Society Institute, to consider "issues confronting humanity such as climate change" and helping the "vulnerable" in the world. Like is contemporary Warren Buffett, Soros is deeply dedicated to global human causes. For this, both should be resoundingly praised. But Soros seems to not have lost his edge as it is believed Buffett may have.

George Soros' pulse on economic issues remains vibrant. I wonder if it has to do with positioning. How has he managed to be so accurate for so many years? His position as a hedge fund manager demands constant immediate attention that includes out of the box decisions and outlook. Unlike Buffett, Soros did not lose big with bogus alphabetical financial instruments such as CDOs, CDO squareds, CDSs, ABXs, CMBXs, etc that nearly brought the global economy to near collapse.

Berkshire Hathaway, Inc., Buffett's company, invested in some of the aforementioned financial instruments and lost its coveted Triple A credit score. As the founder and chairman of the Soros Fund Management, LLC, Soros undoubtedly bet against the subprime housing market, recognizing it as a bubble. Wherever there is a bubble, Soros seems likely to capitalize on it. This should keep some on their toes, but it doesn't seem to matter largely. Boom and bust seems built into the system. The problem is that with technology the potential for global collapse is greater. I wonder how Soros sees his role as the chairman of a successful hedge fund which is often oppositional to government. Governments (international and local) often depend on the investment advice of others such as Goldman Sachs to do their bidding. How might Soros see this?


zorro said...

"Boom and bust seems built into the system."

Not true - the first bust we had after 1929 was in 1987 - after Reagan's deregulation made the system more like it was pre-1929.

Before 1929, busts happened every 20 years. Much like today.

Judith Ellis said...

Yes, I think you are right, Zorro. The current deregulated system most definitely causes such.