By an everyday book reader on October 11, 2008
In explaining why we had the tremendous rise in housing prices and then the plummeting of housing prices, George Soros, the respected economist, puts the responsibility on the financial industry for the bubble, both the rise and fall of prices. He explains, "Banks give you credit based on the value of the houses. But they don't seem to somehow understand that the value of the houses can be affected by the amount of credit they are willing to give."
George doesn't believe that economies will self-adjust. Nor does he think the financial industry should police itself. He points out that "...this belief that everybody pursuing his self-interests will maximize the common interests or will take care of the common interests is a false idea. It's a suitable idea for those who are rich, who are successful, who are powerful. It suits them to justify you know, enjoying the fruits without paying taxes."
Most commentators agree that the freezing of credit, tied to a lack of confidence in the economy — among banks, investors and consumers alike — are key problems threatening to push the world into a recession. The near-daily, sweeping interventions improvised by governments in the United States and across the globe are attempts to halt the break-down of the financial system and restore the faith needed for credit to start moving again.
In this book, George Soros explains the credit crisis through the lens of his conception of financial markets and human affairs.