Virgil
02-23-2009, 05:25 PM
http://www.bloggingstocks.com/2009/02/23/soros-says-world-is-witnessing-end-of-pure-unregulated-capitali/
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Posted Feb 23rd 2009 3:00PM by Joseph Lazzaro
You might say that a key investor, one of the exemplars, is no longer bullish on the pure bulls. Or on the unregulated bulls. Or on the totally free market bulls.
Billionaire investor George Soros told Bloomberg News that the current global financial crisis originated during the deregulation of the 1980s, and signals the end of the free market model that has dominated capitalist countries, and indeed much of the developed world, since the the end of the Cold War with the break-up of the Soviet Union in 1991.
The end of market absolutism?
Speaking at a private dinner for economists and bankers at Columbia University in New York, Soros said liberalization of the financial industry started by the Reagan administration in 1981 has led to a series of crises requiring government intervention, Bloomberg News reported.
Further, Soros added that the U.S. housing sector's collapse has "damaged the financial system itself" and the philosophy of "market fundamentalism" was now in doubt because, contrary to economic conservatives' theory, markets have proved to be inefficient and affected by bias, rather by all available information, Bloomberg News reported.
Soro also reiterated that the Obama administration's plan to buy toxic assets from banks won't be enough to normalize credit flows. Two weeks ago, Soros wrote in The Wall Street Journal that a better plan, among other measures, would involve injecting capital into the banks, and cutting minimum capital requirements. (Subscription required.)
Currently, Soros is chairman of the Soros Fund Management, LLC, a hedge fund, and is also is founder of the Open Society Network, a private, grant-making foundation that focuses on democracy and human rights issues.
Soros is perhaps best known for one of the most cunning and successful short-term plays in investment fund history. In September 1992 Soros sold short more than $10 billion of the British pound, after the Bank of England failed to raise interest rates. Soros' profit on the ensuing fall in the pound: about $1.1 billion.
Market / Economic Analysis: Much to stir on from Soros. Briefly, Soros is in agreement with most economists that deregulation went to far, and that toxic asset removal by itself will not solve the financial crisis. Less convincing, at least at this juncture, concerns assessments of free markets. At present, what we can argue is that markets provide incentives and, over time, are more efficient than other economic systems, but they are not self-corrective / self-regulating and are subject to crises. Still, the above does not negate the market model, but rather argues for mixed capitalism, as opposed to pure capitalism.
During the Bush administration (but not every deregulation act started during 'Bush 43'- - some originated before), the U.S. went from 'markets represent the best model and deploy resources efficiently,' to 'markets are self-correcting' and 'markets are not subject to crises.' That shift is in large part responsible for where we are today - - experiencing the worst systemic conditions in generations. Hence, after the system has been stabilized, the regulatory reform must proceed from the following premise: that markets provide incentives, but there must be limits and safeguards to prevent excessive risk, incompetence, fraud, and greed from jeopardizing the flow of credit.
=========
Posted Feb 23rd 2009 3:00PM by Joseph Lazzaro
You might say that a key investor, one of the exemplars, is no longer bullish on the pure bulls. Or on the unregulated bulls. Or on the totally free market bulls.
Billionaire investor George Soros told Bloomberg News that the current global financial crisis originated during the deregulation of the 1980s, and signals the end of the free market model that has dominated capitalist countries, and indeed much of the developed world, since the the end of the Cold War with the break-up of the Soviet Union in 1991.
The end of market absolutism?
Speaking at a private dinner for economists and bankers at Columbia University in New York, Soros said liberalization of the financial industry started by the Reagan administration in 1981 has led to a series of crises requiring government intervention, Bloomberg News reported.
Further, Soros added that the U.S. housing sector's collapse has "damaged the financial system itself" and the philosophy of "market fundamentalism" was now in doubt because, contrary to economic conservatives' theory, markets have proved to be inefficient and affected by bias, rather by all available information, Bloomberg News reported.
Soro also reiterated that the Obama administration's plan to buy toxic assets from banks won't be enough to normalize credit flows. Two weeks ago, Soros wrote in The Wall Street Journal that a better plan, among other measures, would involve injecting capital into the banks, and cutting minimum capital requirements. (Subscription required.)
Currently, Soros is chairman of the Soros Fund Management, LLC, a hedge fund, and is also is founder of the Open Society Network, a private, grant-making foundation that focuses on democracy and human rights issues.
Soros is perhaps best known for one of the most cunning and successful short-term plays in investment fund history. In September 1992 Soros sold short more than $10 billion of the British pound, after the Bank of England failed to raise interest rates. Soros' profit on the ensuing fall in the pound: about $1.1 billion.
Market / Economic Analysis: Much to stir on from Soros. Briefly, Soros is in agreement with most economists that deregulation went to far, and that toxic asset removal by itself will not solve the financial crisis. Less convincing, at least at this juncture, concerns assessments of free markets. At present, what we can argue is that markets provide incentives and, over time, are more efficient than other economic systems, but they are not self-corrective / self-regulating and are subject to crises. Still, the above does not negate the market model, but rather argues for mixed capitalism, as opposed to pure capitalism.
During the Bush administration (but not every deregulation act started during 'Bush 43'- - some originated before), the U.S. went from 'markets represent the best model and deploy resources efficiently,' to 'markets are self-correcting' and 'markets are not subject to crises.' That shift is in large part responsible for where we are today - - experiencing the worst systemic conditions in generations. Hence, after the system has been stabilized, the regulatory reform must proceed from the following premise: that markets provide incentives, but there must be limits and safeguards to prevent excessive risk, incompetence, fraud, and greed from jeopardizing the flow of credit.