It’s time to create the Soros rule. We need to protect financial markets from a guy who’s too big to fail and just can’t help himself.
You can be sure that even as he gave a speech over the weekend nagging Eurozone officials into more of the easy money policies that have the world teetering on a the brink of a depression, that George Soros has something at stake.
“In my judgment the authorities have a three months’ window,” said Soros at the Festival of Economics, in Trento Italy, “during which they could still correct their mistakes and reverse the current trends [of requiring austerity]. By the authorities I mean mainly the German government and the Bundesbank because in a crisis the creditors are in the driver’s seat and nothing can be done without German support.”
Translation: Soros has either got a long or short position in some currency, or commodity, or other investment.
And he plans on making a bundle.
Why mince words: The guy is a vampire when it comes to currency crises.
And in Europe, as he has elsewhere, he’s looking for blood.
He broke the Bank of England with $10 billion in 1992. In 1997 he was implicated in the currency crisis in Thailand, which eventually moved to the U.S. stock markets, which crashed in October of that year.
He was convicted of insider trading in France and in 2003, according to Dan Gainor at the Media Research Center, Russian authorities raided Soros’ offices in Moscow, essentially driving him and his fund out of the country. He’s long been suspected of manipulating Russian currency and creating the crisis that saw the rise of Putin in Russia.
In short- pun intended- wherever there is financial pain around the world, expect Soros to show up and make himself money- and hated too.
“Large speculators, like George Soros or Julian Robertson, have not only been blamed for destabilizing the market unnecessarily during the turmoil of contagious currency crises,” wrote Kenshi Taketa, an economist who specializes in currency crisis, “but also for triggering these contagious crises by themselves. For instance, during the turmoil of the Asian Flu [in 1997], the then Malaysian prime minister, Mahathir Mohamad, accused George Soros and others of being ‘the anarchists, self-serving rogues and international brigandage.’”
Taketa argues that large currency speculators, such as Soros, help spread financial contagion by creating a feeding frenzy amongst smaller speculators.
“Two main conclusions are derived,” writes Takea. “First, financial disclosure of speculators eliminates contagion, but may make countries more vulnerable to crises. Second, regulating the size of speculators (e.g., prohibiting hedge funds from high-leverage) makes countries less vulnerable to crises, but makes contagion more severe.”
That’s why we need to implement new rules- the Soros Rules- that require large, systemic speculators, which can cause the collapse of financial institutions and countries- like Soros can- to fully disclose their purchases and sales in the same way that we require insiders to report inside trading.
In addition we need to limit their ability to use leverage thereby limiting their ability to attack countries and destabilize their currencies by sheer volume alone.
We already require systemic financial services companies to limit risk so as to limit the danger to the nation’s financial system.
Why would we allow one bad actor to get away with actions we allow no one else?
Even liberal economist Paul Krugman can agree: "[N]obody who has read a business magazine in the last few years,” writes Krugman in The Accidental Theorist: and Other Dispatches from the Dismal Science, “can be unaware that these days there really are investors who not only move money in anticipation of a currency crisis, but actually do their best to trigger that crisis for fun and profit. These new actors on the scene do not yet have a standard name; my proposed term is 'Soroi.’”
When Obama and company get up on their soapbox and demand draconian regulatory schemes to fence in the financial industry, how can they ignore the folks, like Soros, who apparently create mayhem on purpose?
They protect us from the stupidity of banks at great cost to the banking system, but allow the predations of the speculator done with intent to harm, at great cost to the rest of us.
After spending literally trillions in taxpayer money in bailing out our financial system, should we put it all at risk just because a speculator writes big checks to progressive causes?
Don’t get me wrong: I believe in free markets.But in a free society we also have the right to self-defense.
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