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The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means | 
| Author: George Soros
Publisher: PublicAffairs,U.S.
Category: Book
List Price: £12.99
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Avg. Customer Rating:  18 reviews
Sales Rank: 1437
Media: Hardcover
Number Of Items: 1
Pages: 208
Shipping Weight (lbs): 0.7
Dimensions (in): 7.6 x 5.4 x 0.8
ISBN: 1586486837
Dewey Decimal Number: 332.0973
EAN: 9781586486839
ASIN: 1586486837
Publication Date: May 15, 2008
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| Customer Reviews: Read 13 more reviews...
 Nothing New January 3, 2009
1 out of 1 found this review helpful
I found this book disappointing. I expected a whole raft of suggestions of where we were going from here, and I feel that if you tend to keep in touch with economic events and what those in the financial world are saying, there is nothing new here. Some of these things were being predicted by experts back in the late 90's which was far more intersting then reading about it retrospectively.
Poorly researched theory, but interesting narrative December 17, 2008
2 out of 2 found this review helpful
The theory Soros is proposing is poorly researched and worded: I agree with its main tenets, while its mathematics and physics foundations are well known to many scholars and practitioners but not at all mentioned in the book. The fact that markets do not tend to equilibrium is well-known to non-mainstream economists. See for example Masanao Aoki and Hiroshi Yoshikawa (2007), Reconstructing Macroeconomics, Cambridge Univ Press. Having said that, I like Soros historical descriptions based on his own experience, and the lessons he draws for practitioners and policy-makers. Hopefully the fellows from the New Classical Macroeconomics and Rational Expectations breed will learn from the current crises, and Nobel-memorial prizes in Economics (A. Nobel did not establish a Prize for Economics; what we get today has been established by the Bank of Sweden) will flow to people that really make real world-based and possibly logic-based contributions to economics and finance.
The Theory of Reflexivity and its application to financial markets December 8, 2008
2 out of 2 found this review helpful
I have great admiration for Soros and his financial expertise but getting to grips with this book was a challenge and I remain unconvinced that the application of reflexivity is a necessary tool for analysing how future financial markets will evolve. Soros himself admits that he doesn't know how much philosophy has helped his financial success and that discussing reflexivity is difficult because he has to use a language that doesn't recognize its existence. Nevertheless, this short book, which is in part an autobiographical account, neatly summarizes the challenges faced by the financial markets going forward and is a worthwhile read.
For the most part the book is a thesis on the theory of reflexivity centred around the connection between perception and reality or rather the interplay between the cognitive (theoretical) and manipulative (practical) functions.
According to Soros the current paradigm is centred on the idea that financial markets are self correcting and tend towards equilibrium. However he believes that new instruments were based on the flaw that the markets will tend towards equilibrium but instead many of these instruments have changed the functioning of the financial markets. A new paradigm is therefore required that takes a more cautious approach to leverage. Market participants cannot base their decisions just on knowledge because they have to deal with the future as well as the past and expectations are not knowledge.
Soros gives us a useful historical account of past financial crises and a few examples of how the application of reflexivity would have enabled investors to react differently. For example, in the 1960s some companies with relatively high stock prices went on acquisition sprees as their per share growth expanded along with their price earnings multiples. Investors paid little heed to how growth was achieved and were caught in a bubble which subsequently burst. Had the theory of reflexivity been applied, it would have taught investors that equity leveraging does not necessarily generate earnings growth.
In the case of the 80s banking crisis, there was a failure to recognize reflexivity in the form of a connection between the creditworthiness of the borrowers and the willingnesss of the creditors to lend.
The book concludes that the current crisis was caused by credit expansion, the globilisation of the financial markets, the removal of financial regulation and the ensuing acceleration of financial innovation. Looking into the future, Soros predicts that the US may no longer be the centre of the global financial system and that there will be a flight from the dollar. He also thinks that the crisis may not last long because of the huge growth in China, India and the Middle East.
If you are interested in how the finance and philosophy interact, read this book. Otherwise be warned, there are some chapters that are heavy going so you might want to skip through them.
 Debunking myths, economy, philosophy November 26, 2008
4 out of 4 found this review helpful
I really don't know what the people giving one star only to this book are smoking.
First things first. If you expect to read this book casually like you would read an easy novel, then this certainly is not the book for you.
What Soros is asking from you is to read, take pause, and think.
Soros is not only bringing into question the fundamental paradigms about how capitalism works, he is also bringing into question the whole foundation of enlightened Western thinking since the Renaissance. Another reviewer said Soros was delaing in platitudes. Phwa! He obviously skimmed a bit too much...
That my friends is not a small fish to fry, it is the first book or article I have seen linking the failure of markets to a misconception at the very heart of rational thinking.
Soros makes reference to philosophy in order to explain why economists use mathematics models based on bogus assumptions. This is important and is worth thinking about.
If anything, you get a valuable insight in how a guy that is making tons of money is thinking. That by itself should be enough reason to read this book.
Philosophy and Finance October 6, 2008
0 out of 1 found this review helpful
This is very much like Soros's other books: a mix of (his own) Philosophy in PART I, and its possible applicability to the Finance markets of the time in PART II.
If you like Taleb's mix of Philosophy and Finance in Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets and The Black Swan: The Impact of the Highly Improbable then you'll Soros's approach.
If you're looking to emulate Soros's success, this book doesn't tell you how to do this in concrete steps. The theory of reflexivity explains the nature of financial markets (the problem) but doesn't give a solution.
Tony Loton, author --
DON'T LOSE MONEY! (in the Stock Markets)
Financial Trading Patterns
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