GEORGE SOROS WITH CHARLIE ROSE (1998)

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GEORGE SOROS WITH CHARLIE ROSE (1998)


GEORGE SOROS WITH CHARLIE ROSE (1998)

VIa  HEDGE FUND CONVERSATIONS

Seth Klarman’s Foundation Invested In These Three Hedge Funds

Seth KlarmanMany well-known hedge fund managers are also philanthropists, and many of them have their own foundations. Seth Klarman of Baupost is one of those with his own foundation, and he invested in a handful of hedge funds through his foundation. This list of Klarman's favorite hedge funds is based on the Klarman Family Foundation's 990 Read More

0:00George Soros is alleged in the world investment management when he moves
0:03money the markets react when he speaks the world listens
0:06is also made an impact on network abound asians dedicated the global economic and
0:10political improvements
0:12he is the chairman of source fund management and the author of the crisis
0:15of global capitalism
0:17open society endangered I am pleased admonish program
0:21for a continuation of a series of conferences we’ve had since I’ve been
0:24doing this program
0:25about the nature of the economy capitalism and how he sees the future
0:29welcome back
0:30likely to be here tell me about how I mean that the Argent love the book
0:35because you have
0:36before laid out for me and others
0:39your own philosophical base in an open society
0:42ride start with me by talking about the Open Society
0:47in a sense as a foundation and where you have gone
0:50in your concerns about the economic crisis
0:54we face as we speak well I started out with a framework that I have really
1:00developed as a student when I was influenced by Karl Popper
1:03open society and its enemies the
1:07totalitarian systems that impose themselves on the people
1:11a by force in order to
1:14get that ideology the accepted and
1:17he pound opposed to that at the concept of the
1:22of an open society wait where
1:25the it is recognized that nobody has a monopoly
1:29up to to that fear that the
1:32all a views are
1:36that he may be wrong and therefore we need a government
1:39that the that we are ready to replace a democratic government
1:44market economy and
1:47critical thinking so that was my concept of open and closed society
1:53and of course I coming from hungary
1:56where I lived through the Nazi regime and the communist regime
2:01I was
2:03for obviously in paper %uh volpert society and I set up a foundation
2:08to foster to open societies are
2:11are goal was to help open up a close societies
2:15make open societies more viable because
2:19open societies have deficiencies as well
2:22and foster critical mode of thinking then
2:26we and as the communist regime
2:30the started to collapse I got sucked into a revolutionary
2:35transition and i ended up setting up foundations in some
2:4030 countries and they did a a lot of good I think
2:45in the just by and
2:48allowing empowering people who had the concept of
2:52as the or to
2:55of an open society and to move towards it
2:59me the I don’t have a definition of what an open societies
3:04open society has to define itself try that the people in the country’s
3:09defined themselves a and
3:13then this fame but didn’t really
3:17work quite as as I expected because
3:20the collapse of a closed society did not lead
3:23to the creation up an open society there was something
3:27missing and their began to realize
3:32at that that open society is threatened
3:36not only by totalitarian regime about
3:39also by an excessive reliance on
3:43on on market values
3:46that that has to be something else to hold
3:49a society together what caused you to come to the conclusion
3:53are that there was serious danger I mean in
3:57quote runaway capitalist was it the economic crisis that you saw spring out
4:01a pager and then spread
4:03to russia and then threaten Latin America no not because it because I
4:07started
4:08writing about it I wrote an article in the Atlantic Monthly
4:12in beginning of 97 and I started writing the book
4:16when I got lot of reaction
4:19to that article and a lot of and the article has actually
4:23widely misunderstood because of the title capitalist that
4:27as so I’m about I’m not opposed to capitalism
4:31I want to improve it to make it more a viable so
4:35I’ll open societies or over a
4:38a middle ground which beach is not
4:41neither the this but I called market fundamentalism
4:48nor the let’s say
4:51communism or socialism or nationalism
4:54its it’s a recognition that all our systems
4:59are are flawed all our concept of law
5:02then we must remain open to improvement so
5:06the there is an excessive believe
5:09now in them the role of markets
5:13and this it’s been carried as
5:16to an extreme which I think endangers our society
5:19it endangers it because for supermarkets
5:23particulate financial markets are unstable
5:26at buttons the central core above what you fear about market is the its
5:31instability
5:32other financial market right and that is something that I know about and I want
5:36pity
5:37firm ground why so there I have a I think get the latest on you to your
5:41advantage
5:41yes that the me that’s my profession except
5:45so it so I think their I feel on firm grounds
5:49then I but I’m also concerned about
5:53relationship between market values and
5:56this human values are intrinsic values and
6:00there’s something I think wrong
6:03if you allow market values
6:07to enter into spheres of our society but it doesn’t properly belong
6:11what you want said you’d rather be known as certain somebody’s contributed
6:15something to philosophy than someone who contributed
6:18got nothing but the making of a lot of money
6:21like that in a purely economic resources with up
6:24staying with this idea of where you began to realize
6:28that capitalism had para within it
6:32yes I’ll in-state unstable markets and the like
6:35that came before the global economic crisis that we should deal with
6:40a very much so yes wide then don’t know what was it about
6:44said to you before everybody else thought things could go wrong
6:48because I have a theory of markets which is
6:51that’s it different from the prevailing wisdom
6:55is debating the wisdom is that markets tend toward sector Librium
6:59which is true when markets deal with known
7:02quantities but financial markets
7:05deal with it not only unknown quantities but actually
7:09unknowable quantities because the quantities that the deal said
7:14namely the future values deep and
7:17on how financial markets please them
7:21at at present so a but financial markets due today
7:26has an impact on the economy tomorrow
7:30so so the concept the vector Librium is really not appropriate
7:35you I I use the concept of left Lake City
7:39which recognizes that there is this two-way connection
7:42that marcus don’t just reflect they also affect
7:47and that doesn’t necessarily lead to equilibrium intact it can
7:51the you quite far from equilibrium
7:54let me talk about the ideas that you raised here and you begin to think about
7:58before the economic crisis book but move ahead to the economic crisis
8:03what how did capitalism and unstable markets
8:06contribute to play a part in
8:09the economic crisis that we’ve seen sweep as I said from a generation to
8:14Latin America well you had than a variety of factors at play
8:19and different factors affected different countries
8:23but none of the factors was present in all
8:27two countries what was present it was the free flow of
8:31above capital which is
8:34inherently unstable and
8:37tends towards boom bust is so that the
8:41the bust was preceded by a
8:44tremendous bull and the
8:48the scenes markets are unstable be do have
8:52and monetary authorities at that try to preserve stability and we have
8:59you know central banks in each country and so on we also have been
9:02International Monetary fund and the
9:05regulatory system that the that applies
9:09actually exacerbated that the
9:12the problem the regulatory system that the
9:16the intervention by the International Monetary Fund and the monetary
9:19authorities
9:21what does this crisis say to you
9:24needs to be done what does the threat that you saw
9:27from capitalism cause to be done
9:31other words said better what’s which should we do and what’s your solution
9:35a we need to the
9:39to recognize how the system works and
9:42and the the shape at the
9:46mechanism for controlling the excesses
9:49I think that the mission the I’ll the International Monetary Fund
9:53has to be considered we need something like a
9:57a new Bretton Woods no for a word
10:01which is characterized by the free flow of capital because
10:04the Bretton Woods was designed for a very different
10:07world now before we have such a new Bretton Woods
10:11be actually have to come to terms and and and
10:16with the situation and develop
10:20a some concept as to what
10:23new system should work should look like and that’s what I try to do
10:29in the book but the I will be the first one to admit
10:33that the that the I would say that I’m stronger and the analysis
10:38and then I am on the solution okay but I need dampen the flow of capital
10:42that rushes crazily torch economic opportunity
10:45to well and what I have in mind is
10:49with that when the flow of capital is
10:52turned off and there is not enough if you then
10:55provided some of some official
10:59guarantees each allow the countries in need
11:03do to access to market then by be drawing
11:07that support you give a signal to the market
11:11that it is getting overheated so its by
11:14injecting money when when it’s not available
11:18then you can yet something to be drawer which then gives a signal
11:22that the things are getting overheated
11:27and then when if there is a a bus
11:31you then demand
11:35the or or allowed the countries concerned
11:38to impose conditions on lenders
11:41as well as the having to
11:45undergo some severe restrictions themselves
11:48so you you you spread the
11:51the burden up the adjustment between lenders and borrowers
11:56this is the this is incidently what
11:59should really should have been done in this crisis
12:03because it some countries have over borrowed a hat too much debt
12:08and not enough equity princes Korea for Thailand
12:12now I believe lending them more money
12:16a it can get you out of the trouble
12:19you need do the you need to a change to the relationship of equity and debt
12:25so you daily would have had to have
12:28as some kind of a moratorium and some the
12:31the dead equity reorganization it is happening now
12:35that’s a Korea and is just moved in that direction
12:39but it’s one year after the at the
12:43crisis and so the in the meantime the economy has
12:47plunge into and CB recession
12:51I think an earlier move would have abated this
12:55problem World Bank has been critical of the IMF
12:58share their quizzes E yes
13:01I i think but I I also have love
13:05has a lot of respect for the IMF and a lot of understanding
13:09for their position because de mission
13:12his for deaf first ask is to preserve
13:16the financial system so they want to make sure
13:20that the a debtor countries a
13:24can and meet their obligations because the date defaulted
13:28as the as in the end Russia did it can disrupt the whole
13:33system so day it seems that is there concern
13:36they want to stabilize the currency because if the currency force too much
13:40then the debt did on a denominated in dollars
13:44becomes overwhelming and they want to
13:47actually have the country go into recession
13:50so that it gets a it has a trade surplus
13:54which allows it to debated so
13:57it they are the confined by their mission
14:01today do the right thing but the effect is they raise interest rates to punitive
14:05level
14:06beach then have a negative effect on the economy
14:10whereas what for instance the Federal Reserve has done
14:13when the crisis looked like it was
14:16beginning to impinge an arm a lower interest rate immediately lowered
14:20interest rates
14:21and lo and behold we seem to be
14:24breeding easier do you believe that today as we speak
14:27I before christmas nineteen ninety-eight
14:31that the crisis is under control and the worst
14:34is behind us I think that the penny faces behind
14:38cinemas the this wrecking ball at that
14:41traveled around the world the notion that it would somehow
14:44overwhelm us like a tidal wave right to that has been call
14:48that I think has definitely been calm what we are now
14:51suffering from is the after effects
14:55the the effect of the financial markets
14:58on the DL economies so you have
15:01the a third of the world in
15:04and CVR review session you probably
15:08have some more because Brazil
15:11has yet to enter into recession
15:15but is certain to Brazil it is likely to
15:18it’s the its best interest because
15:21the program calls for right the program call me I’m a program called
15:27I mean the even the government gone because this is actually
15:30a a program designed by the government a
15:33the Brazilian government a so
15:36you have already there and you have a
15:40generally a deflationary environment in the world
15:43today because there is overcapacity
15:46demand is of course at at the low
15:49level a and companies
15:53have to sell in order to generate
15:57positive cash flow in order to pay that debt
16:01so now there’s very little pricing power
16:05profits are under pressure
16:08the investment demand
16:12is liable to decline since there is overcapacity
16:16as so a the
16:20it is it is possible although less likely today
16:24than it was two months ago that the whole world
16:27economy slips into recession me come to the the issue where
16:32is is a recession coming to the united states. in your judgment a
16:35I its its its
16:39me there will be as a slowdown in the growth whether it be
16:42go into recession I think depends a great deal on what the market does
16:46actually a if you had a and
16:50significant decline in the market submarket do you
16:53its moral is likely to create a recession because
16:57the our consumption now has become
17:00very much dependent on the capital gains
17:04that people make in the stock market so instead of markets reflecting
17:10you know economic conditions they are causing it
17:14so hey having lowered interest rates
17:17a maybe the market won’t go down very much
17:21in which case we may have a slowdown the dow to research
17:25can you have a slowdown in the economic growth of the country
17:29and at the same time have its markets
17:32resigning keep going up yes I think I think because it is something healthy
17:36about
17:37can keep in the economic growth under control a
17:40are within our our innocence well is
17:43menu have less less demand for money for investment
17:47but you have a and then easing of
17:50the supply of money then there a lot of that money finds its way
17:54into the stock market rich kid which leads to
17:57do in peace and in
18:01I the value are stocks might be
18:04excessive speculation in certain areas which then
18:08you have to pay for later but in the meantime
18:11i think is more likely to push prices up than down so you think the market’s
18:15going to do what
18:16well I personally think that is but this is really just a
18:19injure a.m. a survey a balanced judgment which
18:24he which the
18:28ready to the prize as it as events
18:32unfold I i think we are in a bear market actually
18:36because of the pressure on on
18:39on margins a and
18:42and say
18:45the the decline in investments
18:49that I expect to come so therefore if you are an investor largest mall you eat
18:53you are to either so short a girl the market
18:56and find other avenues to investor my I wouldn’t I wouldn’t
18:59I would like to a would like to go that far because
19:03actually in the final phase is over bull market sometimes the biggest profits are
19:08made
19:09final has a mobile marketing and two people who leave too early
19:12by themselves no in great remorse later
19:16like have you final question had you yet
19:19done what you most want to be remembered
19:23for apart from family
19:27have you done with your personal why
19:31have you achieved yet what you most want to be
19:34remembered for I think so and I think and I think the book
19:38has a lot to do with it because I actually want that this is the book I
19:42always wanted to write
19:43and and and and have have it
19:47actually read so I I think
19:51I got there now it’s not the end of the road
19:54because as I said I I think I’m better on the analysis and I am on the solution
20:00so I think have to keep on working
20:03on on trying to refine
20:06the solution the crisis a global capitalism George source it’s a pleasure

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