George Soros Looks for a Re-Test of Market Lows

George Soros has gotten beat up on his positions in Asian and Indian equities this year, but don't worry about his solvency. He should make back the losses, and then some, with his book, The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means

Anything George writes is mandatory reading for the hedge fund set, although this one might not prove to be an instant classic, and seems to be rehash of the feedback loop known as "reflexivity":

In the midst of the most serious financial upheaval since the Great Depression, legendary financier George Soros explores the origins of the crisis and its implications for the future. Soros, whose breadth of experience in financial markets is unrivaled, places the current crisis in the context of decades of study of how individuals and institutions handle the boom and bust cycles that now dominate global economic activity. “This is the worst financial crisis since the 1930s,” writes Soros in characterizing the scale of financial distress spreading across Wall Street and other financial centers around the world. In a concise essay that combines practical insight with philosophical depth, Soros makes an invaluable contribution to our understanding of the great credit crisis and its implications for our nation and the world.

Soros has long believed that markets drive fundamentals, and the tome argues that a "super bubble" has burst, although George's track record predicting is spotty, given he was 0-2 coming into this.

Soros thinks the "acute phase" of the financial crisis behind us, which seem to be the consensus thinking, but he looks for the damage it has inflicted to take down the real economy, as opposed to the world of billionaires George lives in.

George is running a macro fund again, and although his crystal ball is as fuzzy as mine, he thinks we are merely in a bear market rally:

“I think we’ll retest the lows, depending on what measures the authorities take,” Mr. Soros said in an interview with The Wall Street Journal Wednesday. He made similar comments later that day in a discussion at the Council on Foreign Relations in Washington. “We may go beyond” those lows, he said.

And while hedgies might want to debate taking the other side of the trade, they might want to pay attention to comments he made to Judy Woodruff in an interview that is hot off the presses;

Woodruff: Few people know more about hedge funds than you do. You’ve been enormously successful with your own hedge fund. Should hedge funds be more regulated by Washington?

Soros: I think hedge funds should be regulated like everything else. In other words, you have to control leverage—credit obtained for investment purposes—somewhere. Excessive use of leverage is at the bottom of this problem. And there have been hedge funds that have been using leverage excessively and some of those have gone broke. The amount of leverage that people are allowed to use has to be regulated. I think it’s best done through the banks. In other words, the banks’ reserve requirements—the amounts of money they are obliged to hold—should be tailored to the riskiness of their customers. So investment funds that use a lot of leverage ought to be seen as very risky; and therefore they would not get the amount of leverage they seek because the banks wouldn’t give it to them.

Woodruff: New regulation, though: Could that impede the ability of hedge funds to be the big players that they have been in these markets?

Soros: Yes, I think that there has been excessive use of credit and it does have to be limited. So we are now in a period of very rapid deleveraging and I think that in the future we ought not to allow leverage to be used to the extent that it has been in the past.

Soros weighs in on China, the Fed, and future of the housing market in an interview that even the Bulls will find illuminating.
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The Financial Crisis: An Interview with George Soros
The New York Review of Books

The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means
Amazon

Soros: Market Will Retest Its Lows
Real Time Economics
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