George Soros on the current financial crisis and his new book

George Soros, who is inter alia a founder of CEU, has a new book called "The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means". The title pretty much summarizes the topic, although readers might be surprised by his venture into philosophy (of science) in the first part of the book.





Geoge Soros talks about the current financial crisis in the US. Although he does not say anything new that an informed reader would not know, he provides accessible summary of some key issues.

Soros is trying to get across his point that financial models are build on the assumption that markets tend to equilibrium around which prices oscillate randomly are built on the false paradigm. Instead he proposes an alternative paradigm of 'reflexivity' that has a post-modern constructivist flavor (there are no hard facts in social sciences, because people manipulate these facts while trying to comprehend them and act upon such knowledge).

In the interview, he is having hard to explain what is the difference in his line of thinking and the common sense perception of markets (perhaps it is just financial economists who got themselves disconnected from common sense:). At the end he pronounces Basel II failed idea (because it presumes that banks know what they are doing) and calls for the regulation of leverage.

His new book just arrive to the library; I am reading it know an plan to do some review.