by John Arlidge
January 23, 2012
from TheDailyBeast Website
as I've experienced in my career.'
You know George Soros. He’s the investor’s investor - the man who still holds the record for making more money in a single day’s trading than anyone.
He pocketed $1 billion betting against the British pound on “Black Wednesday” in 1992, when sterling lost 20 percent of its value in less than 24 hours and crashed out of the European exchange-rate mechanism.
No wonder Brits call him, with a mix of awe and annoyance,
Soros doesn’t make small bets on anything.
Beyond the markets, he has plowed billions of dollars of his own money into promoting political freedom in Eastern Europe and other causes. He bet against the Bush White House, becoming a hate magnet for the right that persists to this day.
So, as Soros and the world’s movers once again converge on Davos, Switzerland, for the World Economic Forum this week, what is one of the world’s highest-stakes economic gamblers betting on now? He’s not.
For the first time in his 60-year career, Soros, now 81, admits he is not sure what to do.
He won’t discuss his portfolio, lest anyone think he’s talking things down to make a buck.
But people who know him well
say he advocates making long-term stock picks with solid companies, avoiding
gold - “the ultimate bubble” - and, mainly, holding cash.
He backs the beleaguered euro, publicly urging European leaders to do whatever it takes to ensure its survival.
He has bought about $2 billion in European
bonds, mainly Italian, from MF Global Holdings Ltd., the securities firm run
by former Goldman Sachs head Jon Corzine that filed for bankruptcy
protection last October.
Sitting in his 33rd-floor corner office high above Seventh Avenue in New York, preparing for his trip to Davos, he is more concerned with surviving than staying rich.
He doesn’t just mean it’s time to protect your assets. He means it’s time to stave off disaster.
As he sees it, the world faces one of the most dangerous periods of modern history - a period of “evil.”
Photograph by Jake Chessum for Newsweek
Soros’s warning is based as much on his own extraordinary personal history as on his gut instinct for market booms and busts.
Soros was just 13 when Nazi soldiers invaded and occupied his native Hungary in March 1944.
In only eight weeks, almost half a million Hungarian Jews were deported, many to Auschwitz. He saw bodies of Jews, and the Christians who helped them, swinging from lampposts, their skulls crushed. He survived, thanks to his father, Tivadar, who managed to secure false identities for his family.
Later, he watched as Russian forces ousted the
Nazis and a new totalitarian ideology, communism, replaced fascism. As life
got tougher during the postwar Soviet occupation, Soros managed to emigrate,
first to London, then to New York.
To Soros, the spectacular debunking of the credo of efficient markets - the notion that markets are rational and can regulate themselves to avert disaster,
Understanding, he says, is key.
Still, Soros believes the West is struggling to cope with the consequences of evil in the financial world just as former Eastern bloc countries struggled with it politically.
Is he really saying that the financial whizzes behind our economic meltdown were not just wrong, but evil?
Take that, Lloyd Blankfein, the Goldman Sachs
who told The Sunday Times of London at the height of the financial
crisis that bankers “do God’s work.”
He broke the Bank of England, destroyed the Conservative Party’s reputation for economic competence, and reduced the value of the pound in British consumers’ pockets by one fifth in a single day. Soros the currency speculator has been condemned as “unnecessary, unproductive, immoral.”
Mahathir Mohamad, former prime minister of
Malaysia, once called him “criminal” and “a moron.”
Critics already allege he is stoking the fires
by funding the Occupy movement through Adbusters, the Canadian provocateurs
who sparked the movement. Not so, says Soros.
Last year, Adriana Ferreyr, his 28-year-old companion for many years, sued him in New York Supreme Court in Manhattan, alleging he reneged on two separate promises to buy her an apartment, causing her extreme emotional distress. Ferreyr, a former soap-opera star in Brazil, said Soros had given the apartment he had promised her to another girlfriend.
She also claimed he assaulted her.
Soros has dismissed Ferreyr’s claims as,
Despite his baggage, the man who now views himself as a statesman-philanthropist is undeterred. Having profited from unregulated markets, he now wants to deliver us from them. Take Europe.
He’s now convinced that,
It is, “now more likely than not” that Greece will formally default in 2012, Soros will tell leaders in Davos this week.
He will castigate European leaders who seem to know only how to,
If Germany’s Angela Merkel or France’s Nicolas Sarkozy nurses any lingering hopes of finding their salvation outside the continent, they are mistaken.
Despite all its woes, he nevertheless thinks the
Euro will - just barely - survive.
He sympathizes with the Occupy movement, which
articulates a widespread disillusionment with capitalism that he shares.
People “have reason to be frustrated and angry” at the cost of rescuing the
banking system, a cost largely borne by taxpayers rather than shareholders
He reaches for analysis, produced by the political blog ThinkProgress.org, that shows how the Occupy movement has pushed issues of unemployment up the agenda of major news organizations, including MSNBC, CNN, and Fox News.
It reveals that in one week in July of last year the word “debt” was mentioned more than 7,000 times on major U.S. TV news networks.
By October, mentions of the word “debt” had
dropped to 398 over the course of a week, while “occupy” was mentioned 1,278
times, “Wall Street” 2,378 times, and “jobs” 2,738 times. You can’t keep a
financier away from his metrics.
The response to the unrest could be more damaging than the violence itself.
In spite of his warnings of political turmoil in the U.S., he has no plans to engage in politics directly.
Soros believes Obama still has a chance of winning this year’s election.
If there is a glimmer of hope for the world in 2012, Soros believes it lies in emerging markets.
The democratic-reform movement that has spread across the Middle East, the rise of democracy and economic growth in Africa, even reform in Russia may yet drag the world out of the mire.
Soros insists the key to avoiding cataclysm in 2012 is not to let the crises of 2011 go to waste.
Nor has he quite given up hope that the central bankers and prime ministers gathering in Davos this week have got what it takes to rally round and prove him wrong.
This time, being wrong would make him happy