Wising up with George Soros

The American Spectator ^ | 8 Oct 2007 | William Tucker

[Notary Sojac]

....I was walking out of the library and spotted George Soros's new book on the "Just Arrived" shelf. Why not give it a try? I grind my teeth over Soros just as much as any other conservative. ... Still, Soros has made billions playing the international currency markets. He must know something.

Soros, it turns out, has a very good perspective on the current meltdown. He says it's a system-wide overextension of credit, mainly through novel financial instruments and the housing market. Conservatives may fret that it all comes down to Fannie Mae and Freddie Mac and their subprime mortgages for low-income minorities, but it was a universal phenomenon.

Martin Feldstein, a former chairman of the Council of Economic Advisors [under Ronald Reagan], estimated that from 1997 to 2006, consumers drew more than $9 trillion in cash out of their home equity. A 2005 study led by Alan Greenspan estimated that in the 2000s, home equity withdrawals were financing 3 percent of all personal consumption. By the first quarter of 2006, home equity extraction made up nearly 10 percent of disposal personal income.

Obviously vast numbers of people were shoehorning money out of their home values and into present consumption. Something had to implode somewhere. Sure, Congress might have regulated more. And sure, Republicans should have steamrolled Barney Frank and borne down harder on Fannie Mae and Freddie Mac. But basically everyone took part. I still owe quite a bit on my home equity loan. So now we're suffering the consequences.

Right now Soros recommends going short on the American dollar and long on China, India, and the Persian Gulf oil sheikdoms. Americans must recognize we are going through our inheritance by ignoring technologies such as nuclear energy and living off foreign oil.

[Notary Sojac]

"By the first quarter of 2006, home equity extraction made up nearly 10 percent of disposal personal income."

Boy, do I hate it when Soros is more correct on an issue than most Freepers are.

[unspun]

Citing this contributing influence does not mean that the other factors are not highly influential, too. George the Ghoul of Jewish Hungary is covering the tracks of himself and his comrades.

And think of the timing involved...

...connecting the dots to show Barack Obama's long-standing,
continuously developing, anti-American alliances...

Barack Obama & the Strategy of Manufactured Crisis

Listen to this Interview of James Simpson, by Sandy Rios, Tuesday 9/30 - WYLL 1160AM, Chicago, IL
From http://www.culturecampaign.com/culturecorner.aspx

Simpson documents his research in his article, providing Web links. He provides a rough flow chart.

"CHANGE"

Further corroboration on Obama & The Cloward-Piven Strategy:

Obama, Voter Fraud & Mortgage Meltdown, by James H. Walsh, former federal prosecutor.

More on Obama's Marxist alliance with Radical Islamists:

Barack Obama campaigning with taxpayers' money for Raila Odinga, Marxist & pro-Islamist, despotic leader in Kenya

Barack Obama & Khalid Al-Mansour (old Black Panther friend of Ayers & Dohrn and presumably of Alice Palmer the communist State Senator who hand-picked Obama as her successor) who raised funds to get Obama into Harvard

And then there are... Herbert and Marion Sandler, the Pritzkers, and the "loose lips" of Charles Schumer and Harry Reid. Paulson? Hm.

[spetznaz]

True. I remember someone saying that all the problems are due to liar-loans to minorities, while another was saying the fault lies with borrowers far more than lenders. This crisis goes far beyond simple 2+2 garden arithmetic, and there is still a sizeable problem with any liquidity infusion being nigh-immediately sterilized, as well as a Credit Derivative overhang that hangs like a veritable sword of damocles. I understand how people want to simplify things and distill issues into a simple Democrats vs Republicans narrative, but it goes far far beyond that.

[DB]

I don’t know why people thought home equity loans were free money.

Not everyone did it. I didn’t.

[DB]

Actually it does boil down to two things. Easy money and human nature.

[ovrtaxt]

Soros is plain evil, but he’s right about economics more often than I care to admit. His balance sheet is proof.

[willyd]

This whole economy has been a house of cards for years. Why do you think Walmart wanted to become a bank? Every retailer has their own version of a credit card for a reason.

We need to get back to reality and get rid of the debt that we are all carrying. I am almost debt free!

[ovrtaxt]

“deleveraging” is the hot word being thrown around right now. Me too, paying off lots of debt at the moment, and buying metals.

[Notary Sojac]

I am debt free, sold my Florida house in 2005 at (nearly) the peak of the bubble, it’s all in cash now, spread around at several local and regional banks all of whom have conservative lending policies and good balance sheets.

[ovrtaxt]

That was very slick of you. Want to buy my FL house? deep deep discount available...

[Notary Sojac]

And it’s true for the nation as a whole. The 14000 Dow as well as the 1600 S&P were both about 1/3 comprised of cheap credit, Monopoly money.

[lentulusgracchus]

I understand how people want to simplify things and distill issues into a simple Democrats vs Republicans narrative, but it goes far far beyond that.

Well, no, I don't think people want to oversimplify what is obviously a horrifically complicated, multidimensional train wreck involving not just CMO's but also credit default swaps (the really big one), credit-card debt derivatives, and many other forms of securitized garbage that guys like Dick Fuld at Lehman Brothers and Jimmy Cayne at Bear, Stearns were pushing up and down Wall Street and all over Europe as well.

It's just that some very prominent Democrats who've been making political hay out of this financial drama, like Barney Frank and Barack Obama (who was an attorney litigating "red-lining" on behalf of ACORN), have not been made to sit down to their own plates of crow the way the press has done for various Republicans in particular, and all Republicans, and even a free economy for that matter.

The Left media are now promoting the values of the command economy and sovietized economics on the back of this credit crisis.

[Notary Sojac]

That was very slick of you.

I'm no genius, I just saw the handwriting on the wall and got out in time. I think of myself as "Angelo Mozilo's Mini-Me".

[Iron Munro]

Conservatives may fret that it all comes down to Fannie Mae and Freddie Mac and their subprime mortgages for low-income minorities

No, Fannie Mae and Freddie Mac are just the tools abused to implement the policies dictated by the CRA and similar legislation and regulations.

The true cause and blame lies with the legislatures that abused their power to persue a destructive, politically correct agenda; who wrote and passed these insane policies, and the presidents who aided and abetted the insanity.

[lentulusgracchus]

....it’s all in cash now....

And how did you diversify away from the dollar? (See article.)

[ovrtaxt]

I was busy completing my building project. I was too far in among the trees to see the forest. Big mistake.

My house was at 750K a year ago- I’d be happy with 500K now.

[Notary Sojac]

Well, I haven’t yet, about 85% of my cash is in USD. I still think asset deflation more likely than inflation.

[SamuraiScot]

Americans must recognize we are going through our inheritance by ignoring technologies such as nuclear energy and living off foreign oil.

In other words, McCain was correct at the debate last night. He should cite this point in ads, saying that Obomber's own backer, Soros, agrees with McCain on the source of our economic crisis, and its solution.

[dalight]

Well. This is Soro's attempting a distraction. Yes, Home equity borrowing is up but this is because Credit Card borrowing was made "non-deductable" so this move was legislated.

Moreso, it is not a collapse of Home equity loans that is the current problem but instead the failure of numerous loans given to people with terms they never could have met in the first place. Based on the cynical idea that they homes that they borrowed on would have REPO value. Which works when there are a small number but when you are dealing with huge numbers the REPO's kill the market.

Worse, each one of those REPO's kills the credit of the borrowers and often all of their financial and emotional resources as well.

Some of these borrowers cynically bought based on having a nice place for a few months... but Many hoped to refinance into a sustainable loan only to find no real way to do this especially after the stupid terms period ended and folks had to have an income to borrow again.

Acting in 2005 would have caused a recession as the economy had to retrench for the loss of the "easy money" but the 1-3 Trillion dollars lost in this round would have been completely avoided.

The ELEPHANT in the room is that the Democrats blocked action on an even bigger problem in 2005 in the same cynical mannor.. and that was dealing with the Social Security crisis.. and this will be even more fun when the chickens finally come to roost.

[LibLieSlayer]

See how he did with Outboard Marine Corporation and his group Greenway Marine. He pilfered and stole billions and he is a crook and a brother to satan. He stole retirement accounts and medical accounts... he deserves the worst the world has to offer.

LLS

[ovrtaxt]

He deserves a Caucescu style grand finale.

[CharlotteVRWC]

“Soros, it turns out, has a very good perspective on the current meltdown. He says it’s a system-wide overextension of credit, mainly through novel financial instruments and the housing market. Conservatives may fret that it all comes down to Fannie Mae and Freddie Mac and their subprime mortgages for low-income minorities, but it was a universal phenomenon. “

Soros left out that another factor was he was shorting the financials all summer long..

[Notary Sojac]

Acting in 2005 would have caused a recession as the economy had to retrench for the loss of the "easy money"

Yep, spot on, right you are, and absolutely correct, sir!

Trying to eliminate recessions permanently only ensures that when you do finally run out of buttons to push, the recession you get is on the Krakatoa scale.

[AmericaUnited]

Soros, it turns out, has a very good perspective on the current meltdown. He says it's a system-wide overextension of credit, mainly through novel financial instruments and the housing market.

Well it doesn't not take a financial genius to come up with that.

[spetznaz]

Actually there has been a lot of simplification going on, which makes a lot of 'sense' considering elections are just a couple of weeks away. Sure, a number of Democrats pushed for policy action that made financial institutions give loans to certain segments of the population, but even if that had never happened (but all other factors went ahead, meaning that there is ZERO lending to low-credit minorities but all other aspects remain as they were) we would still be in EXACTLY the same situation.

Or, for another example, take some posts I saw where people were saying that this is the fault of the media that is creating a 'false crisis' so that Obama can win. Sure, there is nothing that would make the MSM happier than a BHO win, but come on people ....the media is NOT that powerful! Some lackeys at CBS and NBC creating a major financial crisis, with EVERYONE but a few FReepers not being able to see through the obfuscation ....Occam's razor guys! A few here have even said that BHO had a direct hand in this, orchestrating his powerful donors to fiddle with the market and make it collapse. Well, yeah ...BHO does have some very opulent donors, and he is slicker than Slick-Willie drenched in lard, but one cannot call him an empty suit with one breath and with the next claim that he just orchestrated the greatest fiscal usurpation in World history.

Anyways, the truth is that Democrats have a lot of blame in this and there is a lot of evidence to show that. In the same vein, so do Republicans who either said nothing, did nothing, or participated (have people wondered why McCain is not using the ammo that comes up on FR everyday? Things that could easily shake Obama like a tweed in an Oklahoma twister! Either McCain is myopic, or he is waiting for the 'perfect time' to spring his October surprise even though elections are a month off, or maybe it is simply because the effects of such an attack would also rebound back on him). However, this even goes beyond the two parties (the Dems and the Repubs, or in other words, the more liberal party and the liberal party). It goes deep into the way the financial industry was working, the level of risk assessment (and the warped assumptions), the accounting standards, several government passed policies, all sorts of exotic financial instruments (and no, do not blame the quants, of which I am one. Even though a model may show you a picture, if the modeler is told to make certain assumptions in the model so as to post a very healthy profit for the quarter based on 'profits' that are projected over the next 10 quarters, and this is coming from a boss who is several boss-levels up, and that will give the department a big boost and give the quant a bonus of 800K, what do you expect will happen?). It goes all across the globe, and is affecting all and sundry from nations (like Iceland that would be effectively bankrupt were it not for a loan from RUSSIA of all places), to small municipal funds, to large corporations.

This is not due liar-loans to minorities or CNN trying to give some empty suit from Illinois a better chance at the presidential dais. The only thing about Obama in this is (apart from the usual doubts about him even being worthy to run for POTUS) is that he has purely evident marxist ideologies that are not needed now (or ever), and that he is one lucky b@$tard to have this happening now.

[Notary Sojac]

He’s at least as smart as the geniuses who seem to think that pumping MORE cheap credit into the system will solve our problems.

[Gorzaloon]

Or, for another example, take some posts I saw where people were saying that this is the fault of the media that is creating a 'false crisis' so that Obama can win. Sure, there is nothing that would make the MSM happier than a BHO win, but come on people ....the media is NOT that powerful! Some lackeys at CBS and NBC creating a major financial crisis, with EVERYONE but a few FReepers not being able to see through the obfuscation ....Occam's razor guys!

But it is possible to talk up and deepen a recession by hammering away at confidence and instilling panic. The media was using the "R" Word in the last election also, despite the numbers. They love this.

[Notary Sojac]

In 2002 and again in 2005, if we had been willing to just let a recession take its course, we would not be staring into the abyss today.

It's hard to blame that on Soros or on the MSM.

[wolfcreek]

And you live in what?

[Notary Sojac]

A nicely maintained two bedroom rented house. Even at today’s microscopic interest rates, the return on my Florida sale covers almost 3x my monthly rent.

[LibLieSlayer]

Amen!!!!!!!!

LLS

[wolfcreek]

How did you get around not reinvesting the money from the sale of your house? Weren’t you heavily taxed?

[lentulusgracchus]

I saw where people were saying that this is the fault of the media that is creating a 'false crisis' so that Obama can win

I don't think too many people believe that one.

I think you're essentially correct in all respects about the origins of the problem, viz., in perverse incentives to lend, collect origination and other fees, and then pass the loans off quickly. An acquaintance who worked in a bank years ago said the cycle is as old as hogs and corn: bankers lend more and more aggressively until there's a crash, and then they won't lend at all. "They'll drive it into the ditch every time," was his pithy summation.

My comment about the Democrats' legislation is a fairness beef with the press, not an attempt to give an overview of the financial crisis. I do disagree with you in this, that the volume of such "liar loans"/undocumented loans was large enough to have created a problem by itself, regardless of other problems that may have grown up at the same time that were perversely incented in a similar fashion as you described previously.

I agree that the bad mortgages are not the biggest part of the problem, either. The credit-default swaps are said to be two or three orders of magnitude larger, in the trillions of dollars.

[lentulusgracchus]

Well, I haven’t yet, about 85% of my cash is in USD. I still think asset deflation more likely than inflation.

Well, just be careful how you do it. I diversified into overseas mutual funds and precious-metals mining funds three years ago, and was looking very good last spring. In three months, though, the gains have all evaporated and now I'm sitting with a net loss -- even though gold has lost only about 10% since the spring highs, and silver about 20%. The mining stocks took a disproportionate beating because of the hedgers and mutual funds being forced to meet redemptions. Right now the mining stocks are very deeply discounted to their underlying values, having been cut in half or worse since June, victims of Henry Paulson's dollar-manipulative necromantic skill.

The long-term picture hasn't changed, however, and when the dollar plunges again, it'll be for good. Unfortunately.

[Oatka]

Based on the cynical idea that they homes that they borrowed on would have REPO value. Which works when there are a small number but when you are dealing with huge numbers the REPO's kill the market.

This is my interpretation of the current mess. Insuring mortgages works when only a few default but when the whole block goes into receivership, it's Katie Bar The Door.

[AndyJackson]

Outboard Marine Corporation and his group Greenway

Actually, if you review the history, OMC was already in difficulty before Soros took it over. At the same time, it was a leveraged buyout, and the additional debt doomed the company.

Wherein lies the tale of this entire sordied economic mess - leveraged speculation in paper.

[LibLieSlayer]

Since I was with them for 30 years... you are wrong. I saw what he did to a company that Penski could have turned around... only one machine in Waukegan was rebuildable when Bombardier bought them out... 24 million dollars of parts that did not meet specs... golden parachutes and outright stealing was his hallmark. They went through bad times with poor management but soros pilfered 1.6 billion and then stole retirement funds. soros is a satanic POS and why are you defending this POS??? Hmmmmm???

LLS

[AndyJackson]

I am not defending Soros fer chrissakes. The underlying problem, however, was a culture of leveraged buyouts which Greenspan provided the vigorish for with his expansionary credit policies.

[dalight]

This is my interpretation of the current mess. Insuring mortgages works when only a few default but when the whole block goes into receivership, it's Katie Bar The Door.

This is the nature of all insurance, but in the current mess.. the insurance was used to artificially create a supposedly secure investment out of a putrid pile of crap asset. The full faith and credit of the US was held out as the guarantee by two unaccountable, government sponsored companies which were run buy and for the profit of a few. When folks said.. oops.. this is going to be a problem.. The Democrats said like they said about Social Security.. that there was no problem and anybody trying to fix it was a racist, bigot and hated the little guy.

[mlocher]

Americans must recognize we are going through our inheritance by ignoring technologies such as nuclear energy and living off foreign oil.

Agreed. When there is panic, it seems like there is nothing that can be done. Here is one very good, specific action for our leaders.

[GOPJ]

Right now Soros recommends going short on the American dollar and long on China, India, and the Persian Gulf oil sheikdoms.

He's right - but it's too much like cheering for the "other team"...