George Soros' sleeper hit: the credit crisis of 2008

International financier George Soros is a billionaire who has made a habit of supporting liberal activists in the U.S. His financial career is summed up by John Cassidy in a new piece in the New York Review of Books:

George Soros has been an active investor for more than half a century. In the mid-1980s, when I started writing about Wall Street, he was already a leading hedge fund manager. Not many people understood hedge funds back then, but for those in the know Soros's Quantum Fund, which he founded in 1973, was the model: year after year, it had achieved returns in excess of the broader market. After weathering the 1987 stock market crash, Quantum, since 1989 under the day-to-day management of Stanley Druckenmiller, racked up more big gains, culminating in a huge bet against the pound sterling in 1992, which reportedly netted more than a billion dollars. (Soros has never publicly confirmed the exact figure. The British newspapers put it at $1.1 billion.)

... Soros remains first and foremost a speculator. In 2007, after the subprime crisis erupted, he returned, at the age of seventy-seven, to directing Quantum's investments, with results suggesting he hadn't lost his touch. Alpha magazine, a glossy publication that covers hedge funds, estimates that he made $2.9 billion in 2007, placing him second on its list of mega-speculators, behind only John Paulson, of Paulson & Co., who raked in an even more astonishing $3.7 billion.

The other thing Soros has returned to is writing. His book "The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means" was published earlier this year. It was hurried to shelves; the manuscript was completed in late March and it hit shelves in May. In June, the book made the L.A. Times bestseller list.

And it's back, at least on Amazon. The last few weeks of turmoil in the markets have book-buyers wanting to know what the credit crash means. As of this writing, the book is No. 2 in two categories — Business & Investing > Finance, and Professional & Technical > Accounting & Finance > Finance — and No. 1 in Business & Investing > Economics > Money & Monetary Policy. It's a theoretical book but one that's "digestible," according to the New York Review of Books. The introduction begins:

... the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boombust process; the current crisis is the culmination of a superboom that has lasted for more than twenty-five years. To understand what is going on we need a new paradigm.

Hardly comforting, but it might make what's happening on Wall Street today understandable. Soros, the New York Review of Books writes, "doesn't have all the answers, not by any means. But unlike some of the professors who dismissed him as an overremunerated gadfly, he has something to say." And with the book now on sale for $15.61, it seems like one investment that's worth the risk.

— Carolyn Kellogg

Photo: Jeff Ooi / LensaMalaysia.com

Comments

[Rob Diego]

I'm sure Mr. Soros doesn't blame the Democrats for the financial crisis. After all, they just wanted to loan more money to poor people. You've got to wonder at the investment acumen of a "world-class" investment guru who repeats the Democratic party line as an explanation for a global crisis. If anyone is responsible it is organizations that Soros has helped to support such as ACORN and leftist politicians who get his money and do his bidding. Really, Mr. Soros, why are you off-shore? Is it because you know the regulations you advocate for the U.S. financial industry won't touch you? Why don't you advocate the kind of unregulated environment under which you operate?