Emperor Soros’s new clothes
Matthew Lynn says hedge-fund pioneer and currency speculator George Soros is still a brilliant player of markets — but as a philosopher, frankly, he’s incomprehensible
If nothing else, three decades as one of the world’s most successful speculators has taught George Soros how to pitch a book. While the main title of his latest work, The New Paradigm for Financial Markets, might not be the kind of thing to get Waterstone’s managers clearing their shelves, its subtitle — The Credit Crisis of 2008 and What It Means — makes it bang up to date. Even better, Soros rushed it out as a digital download within days of the final words being penned. The implication was that the world couldn’t possibly wait until 19 May — when the print version published by PublicAffairs is released — to find out what Soros made of the credit crunch.
The hedge-fund billionaire, still best know for his role in forcing the pound out of the European Exchange Rate Mechanism in 1992, immediately hit the television studios to frighten everyone. The ‘super-boom’ that had lasted since the end of the second world war is now over, he told the BBC. Britain, like the US, is heading for a full-blown recession. The City and Wall Street will have to ‘shrink’ as banks retrench. ‘The whole world is facing a very serious financial crisis... the most serious financial crisis of our lifetime.’ A quarter-century-long ‘super-bubble’ was finally bursting, he told the New York Times.
And yet, download the book itself and it turns out not to be about any of those things at all. Anyone wondering if they should sell their Credit Suisse shares and stash gold bars under the floorboards instead will come away little the wiser. ‘Near panic conditions prevail in the financial markets,’ he writes. ‘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.’
We look to hedge-fund managers for various different things. Wreaking havoc on small nations by destroying their currencies, for example, as Neil Barnett described here a couple of weeks ago. Or running up £30,000 bills in London restaurants. But explanations of the human condition? That’s not usually what we expect.
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Alan Scott
May 8th, 2008 6:41pmSoros is obviously a man of great intelligence, strategical analytical capacity etc. Would have made a good Roman Emperor in the time of Justinian, perhaps. But his confusion of the worth of financial skills - and in him,there can be no doubt about that - with philosophy or the understanding of or empathy with the human condition, is evidence of his Cyclopean condition. And I yield to noone in my admiration of his philanthropical activities.
It is yet again a reflection of our celebrity obsessed culture - that a person who excels in one sphere is automatically assumed to be competent to act in/ pronounce upon/be listened to in other spheres.
Fredd Kambo
May 9th, 2008 2:08pmGeorge Soros did not invent the hedge fund industry. Alfred Winslow Jones did so in 1949, including the practice of charging the fee of 20% of performance. Hedge funds were in fact quite popular in the 1960s, a popularity that declined in the following decades. It could be argued that Soros and men like him ignited their resurgence to the fashinable status they enjoy today. A philosopher, he is not however.