Soros Says Upheaval Marks End of Free-Market Era That Started Under Reagan

[marmar]

Soros Says Economic Crisis Signals End of a Free-Market Model
By Walid el-Gabry


Feb. 23 (Bloomberg) -- Billionaire investor George Soros said the current economic upheaval has its roots in the financial deregulation of the 1980s and signals the end of a free-market model that has since dominated capitalist countries.

Liberalization of the financial industry begun by the Reagan administration has led to a series of crises forcing government intervention, Soros told economists and bankers at a Feb. 20 private dinner at Columbia University in New York. The global recession, triggered by the collapse of the U.S. housing market, has “damaged the financial system itself,” he said.

Regulators are in part to blame because they “abrogated” their responsibilities, Soros, 78, said. The philosophy of “market-fundamentalism” was now under question as financial markets have proved to be inefficient and affected by biases rather than driven by all the available information, he said.

“We’re in a crisis I think that’s really the most serious since the 1930s and is different from all the other crises we have experienced in our lifetime,” Soros said.

Soros, founder of New York-based hedge-fund firm Soros Fund Management LLC, said last month at the World Economic Forum in Davos, Switzerland, that the Obama administration’s plan to buy toxic assets from U.S. banks won’t be enough to get financial institutions to start lending again.

A more effective approach for restarting the economy would be to inject capital directly into the banks and cut minimum capital requirements, Soros, whose firm oversees $21 billion, has said.

Soros’s Quantum Endowment Fund returned 8 percent last year. That compared with an average loss of 18 percent by hedge funds, according to data compiled by Hedge Fund Research Inc. of Chicago.


http://www.bloomberg.com/apps/news?pid=20601087&sid=a60APVwmz01g&refer=home

[xchrom]

1. recommend

[closeupready]

2. The regulators were irresponsible, yes, but also the actors in the free market failed to police

themselves, as they were supposed to do. We have had NUMEROUS stories about those in investment banks who were 99% certain Madoff's fund was a Ponzi scheme, but they said NOTHING to ANYONE, including the SEC (well, I mean, except for their friends). So those who benefitted MOST from free markets ABUSED their freedoms. So no tears or sympathy from me.

[jobycom]

4. The concept failed to be self-regulating,

Free market gurus claimed the market would regulate itself, that bad business practices would destroy themselves, and the market would correct its own mistakes.

It hasn't worked. Unregulated, there is too much collusion in the market, and complete industries wind up in the hands of a few monopolies too large to have any serious competition. You can't start a new car company in an abandoned seafood warehouse, and you can't start a rival conglomerate bank from the profits of a small business. So soon monopolies are making decisions based on their own greed rather than supply and demand, unsound practices become the norm, and no one is regulating them or offering a viable alternative. You get a Ponzi scheme, waiting for collapse.

It's not just about individuals abusing their freedoms, it's about a failed ideology that refuses to acknowledge that individuals will be dishonest. The free market Utopia is twice as delusional as the forced-communism Utopia, and that was proven in the 20s as well as recently.

The market, like people, operates most freely when a strong government protects it from predator abuse. The "free" market isn't free. It's a slave to its own worst offenders.

[ananda]

5. There is no such thing as a self-regulating free market.

The terms are mutually exclusive.

There is also no such thing as enlightened
self-interest or responsible individualism.

In other words, insanity is driving our
politics and economics right now.

[closeupready]

6. Or even if they won't accept that argument, we know for a fact that GREED is as much

a natural part of the human psyche as is laziness or lust or anger, and we MUST HAVE built in regulations to guard against the ravages of its workings.

[Orrex]

3. I've always heard that the free market is a pure good, a great boon to everyone

Don't tell me that 30 years of hardcore Randian propaganda is wrong?!?!? Say it ain't so!

[arcadian]

7. Free-Looting Era is a more apt description.

n/t