Enterprising Investor Forum

George Soros: current situation, part 2 Wednesday, April 23, 2008

Here is the second part of the speech where Soros continues to explain how financial institutions gained too much freedom, going back to the unbalances caused by the oil prices in the 70s and Long Term Capital Management.

He focuses on the fact that markets are NOT self correcting and that regulators should understand this and make a real effort to understand the root-cause of problems when intervening and making sure they regulate to avoid systems from collapsing.

The bottom line is that despite the regulators doing all they can to save the system, this will not solve the inherent problem of liquidity and counter party risk – they have to understand how the system works and keep asset bubbles within limits, accepting that this is their mandate.