by Jennifer Coote


G. Soros, The New Paradigm for Financial Markets: the Credit Crisis of 2008 and What It Means, Public Affairs, 08, argues that three trends were contained in the current super-bubble. A long-term trend towards ever-increasing credit expansion, globalisation of financial markets and the progressive removal of financial regulations. Underlying this is the belief that markets tend towards equilibrium, even as each bubble” is misinterpreted and the problem intensifies. A sounder theory utilises reflexivity, the relationship between thinking and reality, leading to the following conjectures:the sixty year period of credit expansion centred on the US, has ended; regulators will regain control over banking and investment depending on the severity of the crisis; global contraction of credit depends on the countervailing influence of China, India and some oil states; US power has declined dramatically through poor political leadership, and this will be reinforced by a US recession; a great period of uncertainty and destruction of financial wealth will result before a new order emerges. (continue…)

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