George Soros

George Soros (pronounced ) (born August 12, 1930 in Budapest, Hungary as György Schwartz) is a financial speculator, stock investor, liberal political activist, and philanthropist. Currently, he is the chairman of Soros Fund Management and the Open Society Institute and is also a former member of the Board of Directors of the Council on Foreign Relations. His support for the Solidarity labor movement in Poland, as well as the Czechoslovakian human rights organization Charter 77, contributed to ending the Soviet Union's rule in those nations. His funding and organization of Georgia's Rose Revolution was considered by Russian and Western observers to have been crucial to its success, although Soros said his role has been "greatly exaggerated." In the United States, he is known for having donated large sums of money to efforts to defeat President George W. Bush's bid for re-election.

Former Federal Reserve Chairman Paul Volcker wrote in 2003 in the foreword of Soros' book The Alchemy of Finance::"George Soros has made his mark as an enormously successful speculator, wise enough to largely withdraw when still way ahead of the game. The bulk of his enormous winnings is now devoted to encouraging transitional and emerging nations to become 'open societies,' open not only in the sense of freedom of commerce but - more important - tolerant of new ideas and different modes of thinking and behavior."

Biography

Family

George Soros is the son of the Esperanto writer Tivadar Soros. According to Kaufmann's biography Soros (2002), Tivadar was a prisoner of war during and after World War I and eventually escaped from Russia to rejoin his family in Budapest.

The family changed its name in 1936 (see Kaufmann, p. 24) from Schwartz to Soros, in response to the Fascist threat to Jews. Tivadar liked the new name because it is a palindrome and because it has a meaning. Though the specific meaning is unstated by Kaufmann, in Hungarian "soros" means "next in line, or designated successor", and in Esperanto it is the future tense of "to soar". Tivadar wrote of his ordeal to survive Fascist Hungary, and help many people escape it, in his book Maskerado.

George Soros has been married to Annaliese Witschak and to Susan Weber Soros. He is now divorced. He has five children: Robert, Andrea, Jonathan (with his first wife, Annaliese), Alexander and Gregory (with his second wife, Susan). His older brother Paul Soros is an engineer, and is also a well-known philanthropist, investor, and New York socialite.

Native Hungary and move to England

Soros was thirteen years old when Nazi Germany took military control over its ally Hungary (March 19, 1944), and started exterminating over 440,000 Hungarian Jews (about two-thirds of the prewar population) [1] in the Holocaust. To save his family, Tivadar gave his children false identities and even bribed Hungarian Christians to present them as their own children. One of the many false identities later reported by George, was the role as the son of a Hungarian official named Baumbach, who, according to George, delivered deportation notices to Jews and confiscated their property, while at the same time protecting George. This particular false identity has led to charges by political opponents [2] that Soros is either not pro-jewish enough, or not anti-fascist enough.

In the following year, Soros survived the battle of Budapest, as Soviet and Nazi forces fought house-to-house through the city. George first traded currencies during the Hungarian hyperinflation of 1945-46.

In 1946, Soros escaped the Soviet occupation by participating in an Esperanto youth congress in the West. Soros was taught to speak the language from birth and thus is one of the rare native Esperanto speakers.

Soros emigrated to England in 1947 and graduated from the London School of Economics in 1952 but could find only unskilled jobs. As a student of the philosopher Karl Popper, Soros funded himself by taking jobs as a railway porter and a waiter at Quaglino's restaurant. He eventually secured an entry-level position with an investment bank in London.

Move to the United States

In 1956 he moved to the United States, where he worked as an arbitrage trader with F. M. Mayer from 1956 to 1959 and as an analyst with Wertheim and Company from 1959 to 1963. Throughout this time, but mostly in the 1950s, Soros developed a philosophy of "reflexivity" based on the ideas of Popper. Reflexivity, as used by Soros, is the belief that self-awareness is part of the environment: actions tend to cause disruptions in economic equilibriums, which may run counter to the progression of free-market systems. Soros realized, however, that he would not make any money from the concept of reflexivity until he went into investing on his own. He began to investigate how to deal in investments. From 1963 to 1973 he worked at Arnhold and S. Bleichroeder, where he attained the position of vice-president. Soros finally concluded that he was a better investor than he was a philosopher or an executive. In 1967 he persuaded the company to set up an offshore investment fund, First Eagle, for him to run; in 1969 the company founded a second fund for Soros, the Double Eagle hedge fund. When investment regulations restricted his ability to run the funds as he wished, he quit his position in 1973 and established a private investment company that eventually evolved into the Quantum Fund. He has stated that his intent was to earn enough money on Wall Street to support himself as an author and philosopher. After all those years, his net worth reached an estimated $11 billion.

Business

Soros is the founder of Soros Fund Management. In 1970 he co-founded the Quantum Fund with Jim Rogers. It returned 3,365% during the next ten years, and created the bulk of the Soros fortune.

Currency speculation

On Black Wednesday (September 16, 1992), Soros became instantly famous when he sold short more than $10bn worth of pounds, profiting from the Bank of England's reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or to float its currency. Finally, the Bank of England was forced to withdraw the currency out of the European Exchange Rate Mechanism and to devalue the pound sterling, and Soros earned an estimated US$ 1.1 billion in the process. He was dubbed "the man who broke the Bank of England."

The Times October 26, 1992, Monday quoted Soros as saying: "Our total position by Black Wednesday had to be worth almost $10 billion. We planned to sell more than that. In fact, when Norman Lamont said just before the devaluation that he would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell."

In 1997, during the Asian financial crisis, then Malaysian Prime Minister Mahathir bin Mohamad accused Soros of using the wealth under his control to punish ASEAN for welcoming Myanmar as a member. Later, he called Soros a moron. [3] Thai extremists have called Soros "an economic war criminal" who "sucks the blood from the people". [4]

Famous partners

George Soros's most successful partners at Quantum fund have been Jim Rogers, Victor Niederhoffer and Stanley Druckenmiller all of whom are famous traders in their own rights.

Insider trading conviction

In 1988, he was asked to join a takeover attempt of the French bank Société Générale. He declined to participate in the bid, but did later buy a relatively small number of shares in the company. Fourteen years later, in 2002, a French court ruled that it was insider trading as defined under French securities laws and fined him $2 million. Soros denied any wrongdoing and said news of the takeover was public knowledge. PBS

His insider trading conviction was upheld by the highest court in France on June 14, 2006. [5]

Philanthropy

Soros has been active as a philanthropist since the 1970s, when he began providing funds to help black students attend the University of Cape Town in apartheid South Africa, and began funding dissident movements behind the iron curtain. Soros' philanthropic funding in Eastern Europe mostly occurs through the Open Society Institute (OSI) and national Soros Foundations, which sometimes go under other names, e.g. the Stefan Batory Foundation in Poland. As of 2003, PBS estimated that he had given away a total of $4 billion. The OSI says it has spent about $400 million annually in recent years. Notable projects have included aid to scientists and universities throughout Central and Eastern Europe, help to civilians during the siege of Sarajevo, worldwide efforts to repeal drug prohibition laws, and Transparency International. Soros also pledged an endowment of 420 million euros to the Central European University (CEU).

He received honorary doctoral degrees from the New School for Social Research (New York), the University of Oxford in 1980, the Budapest University of Economics, and Yale University in 1991. Soros also received the Yale International Center for Finance Award from the Yale School of Management in 2000 as well as the Laurea Honoris Causa, the highest honor of the University of Bologna in 1995.

Philosophy

Education and beliefs

Soros has a keen interest in philosophy, and his philosophical outlook is largely influenced by Karl Popper, whom he studied under at the London School of Economics. His Open Society Institute is named after Popper's two volume work, The Open Society and Its Enemies, and Soros's ongoing philosophical commitment to the principle of 'fallibilism' (that anything he believes may in fact be wrong, and is therefore to be questioned and improved) stems from Popper's philosophy. Some critics argue that Soros's static political beliefs appear to conflict with the critical rationalism espoused by Popper, though Soros argues that these beliefs were arrived at through such rationalism.

Reflexivity, financial markets, and economic theory

Soros's writings focus heavily on the concept of reflexivity, where the biases of individuals are seen as entering into market transactions, potentially changing the fundamentals of the economy. Soros argued that such transitions in the fundamentals of the economy are typically marked by disequilibrium rather than equilibrium in the economy, and that the conventional economic theory of the market (the 'efficient market hypothesis') does not apply in these situations. Whether Soros is theoretically right or wrong on this issue, Soros certainly has the market credentials and proven track record to effectively maintain that his theory of reflexivity is practically relevant in the marketplace - at least for him. Soros has popularized the concepts of dynamic disequilibrium, static disequilibrium, and near-equilibrium conditions.

Soros's view of potential problems in the capitalist free market system

Despite working as an investor and currency speculator (his fortune in 2004 was estimated at US$ 7 billion), he argues that the current system of financial speculation undermines healthy economic development in many underdeveloped countries. Soros blames many of the world's problems on the failures inherent in what he characterizes as market fundamentalism. His opposition to many aspects of globalization has made him a controversial figure.

From Victor Niederhoffer (under "external links"): "Most of all, George believed even then in a mixed economy, one with a strong central international government to correct for the excesses of self-interest."

Soros draws a distinction between being a participant in the market and working to change the rules that market participants must follow. He appears to have no problem working to further his own self-interest economically, while at the same time lobbying for a drastic overhaul of the global financial system. Responding to accusations of being personally responsible for many financial collapses, including those in England, Eastern Europe, and Thailand, he stated, "As a market participant, I don't need to be concerned with the consequences of my [financial] actions."

Political activism

Opposition to the Soviet Union

According to Neil Clark (writing in the New Statesman): "(t)he conventional view, shared by many on the left, is that socialism collapsed in eastern Europe because of its systemic weaknesses and the political elite's failure to build popular support. That may be partly true, but Soros's role was crucial. From 1979, he distributed $3m a year to dissidents including Poland's Solidarity movement, Charter 77 in Czechoslovakia and Andrei Sakharov in the Soviet Union. In 1984, he founded his first Open Society Institute in Hungary and pumped millions of dollars into opposition movements and independent media."

Since the fall of the Soviet Union, Soros' funding of progressive, anti-imperialist causes has continued to play an important role in the former Soviet sphere. His funding and organization of Georgia's Rose Revolution was considered crucial to its success by Russian and Western observers, although Soros has said that his role has been "greatly exaggerated."

Soros vs. Bush

In an interview with The Washington Post on November 11, 2003 ([6]), Soros said that removing George W. Bush from office was the "central focus of my life" and "a matter of life and death." He joked that he would sacrifice his entire fortune to defeat Bush, and many continue to state this as Soros' position even after Soros clarified the humorous nature of the statement in a Q&A session at the end of his March 3, 2004 address to California's Commonwealth Club.

Soros gave $3 million to the Center for American Progress, committed $5 million to MoveOn, while he and his friend Peter Lewis each gave America Coming Together $10 million. (All were groups that worked to support Democrats in the 2004 election.) On September 28, 2004 he dedicated more money to the campaign and kicked off his own multi-state tour with a speech: Why We Must Not Re-elect President Bush delivered at the National Press Club in Washington, DC. The online transcript to this speech received many hits after Dick Cheney accidentally referred to FactCheck.org as "factcheck.com" in the Vice Presidential debate, causing the owner of that domain to redirect all traffic to Soros's site.[7]

Soros was not a large donor to US political causes until the U.S. presidential election, 2004, but according to the Center for Responsive Politics, during the 2003-2004 election cycle, Soros donated $23,581,000 to various 527 Groups dedicated to defeating President George Bush. Despite Soros' efforts, Bush was reelected to a second term as president on November 2, 2004.

Soros has been criticized for his large donations, as he also pushed for the Bipartisan Campaign Reform Act of 2002 which was intended to ban "soft money" contributions to federal election campaigns. Soros has responded that his donations to unaffiliated organizations do not raise the same corruption issues as donations directly to the candidates or political parties.

Incidentally, Harken Energy, a firm partly owned by Soros, did business with George W. Bush in 1986 by buying his oil company, Spectrum 7.

His most recent book, The Age of Fallibility: Consequences of The War on Terror, was published in June 2006.[8]

Critics

Criticism of financial activities

Critics claim that Soros has an undue influence on currency markets through Quantum Fund, his privately-owned investment fund. Like many large hedge funds, it is registered in an offshore tax haven, specifically Curaçao, Netherlands Antilles.

In an August 2004 appearance on Chris Wallace's FOX News Sunday, Speaker of the U.S. House of Representatives Dennis Hastert (Republican), stated, "We don't know where George Soros's money comes from. We don't know where it comes from, from the left, and you don't know where it comes in the right. You know, Soros's money, some of that is coming from overseas. It could be drug money. We don't know where it comes from." Soros responded to Hastert by saying, "by smearing me with false charges and mischaracterizations you are attempting to stifle critical debate and intimidate those who believe this administration is leading the country in a ruinous direction. Now that I have called you on your false accusation, you are using additional smear tactics." [9] Soros filed an official complaint with the House Committee on Standards of Official Conduct. Soros claimed that Hastert's comments "strongly suggests a deliberate effort to use smear tactics, intimidation and falsehoods to silence criticism."

Criticism of political activities

Author Bernard Goldberg harshly criticized the philosophies of Soros in his book, 100 People Who Are Screwing Up America.

Supporters of the Bush administration dislike his contributions to campaigns against Bush.

George Soros has many critics amongst American conservatives and supporters of Israel.

Defense of political views

At a Jewish forum in New York City, Soros partially attributed a recent resurgence of anti-Semitism to the policies of Israel and the United States, and to successful Jews such as himself:

"There is a resurgence of anti-Semitism in Europe. The policies of the Bush administration and the Sharon administration contribute to that. It's not specifically anti-Semitism, but it does manifest itself in anti-Semitism as well. I'm critical of those policies.:If we change that direction, then anti-Semitism also will diminish. I can't see how one could confront it directly...:I'm also very concerned about my own role because the new anti-Semitism holds that the Jews rule the world... As an unintended consequence of my actions ... I also contribute to that image." [10]

Quotations

*On Terror: "How can we escape from the trap that the terrorists have set us?" he asked. "Only by recognizing that the war on terrorism cannot be won by waging war. We must, of course, protect our security; but we must also correct the grievances on which terrorism feeds.... Crime requires police work, not military action."
*On the Bush Administration: "An open society is a society which allows its members the greatest possible degree of freedom in pursuing their interests compatible with the interests of others," Soros said. "The Bush administration merely has a narrower definition of self-interest. It does not include the interests of others."
*On the Bush Administration: "The supremacist ideology of the Bush Administration stands in opposition to the principles of an open society, which recognize that people have different views and that nobody is in possession of the ultimate truth. The supremacist ideology postulates that just because we are stronger than others, we know better and have right on our side. The very first sentence of the September 2002 National Security Strategy[11] (the President's annual laying out to Congress of the country's security objectives) reads, 'The great struggles of the twentieth century between liberty and totalitarianism ended with a decisive victory for the forces of freedom and a single sustainable model for national success: freedom, democracy, and free enterprise.'"
*On drug legalization: "I'll tell you what I'd do if it were up to me. I would establish a strictly controlled distribution network through which I would make most drugs, excluding the most dangerous ones like crack, legally available. Initially I would keep the prices low enough to destroy the drug trade. Once that objective was attained I would keep raising the prices, very much like the excise duty on cigarettes, but I would make an exception for registered addicts in order to discourage crime. I would use a portion of the income for prevention and treatment. And I would foster social opprobrium of drug use."
*On Philanthropy: "I'm not doing my philanthropic work, out of any kind of guilt, or any need to create good public relations. I'm doing it because I can afford to do it, and I believe in it."
*On Stock Market Bubbles: "Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception."
*On Currency Speculation: "...obviously the totally free flow of capital is not advisable, so you need to create some mechanism for introducing stability." [12]
*On America: "I grew up in Hungary, lived through fascism and the Holocaust, and then had a foretaste of communism. I learned at an early age how important it is what kind of government prevails. I chose America as my home because I value freedom and democracy, civil liberties and an open society. When I had made more money than I needed for myself and my family, I set up a foundation to promote the values and principles of a free and open society."

Books

Authored or co-authored

The Age of Fallibility: Consequences of the War on Terror (PublicAffairs, 2006) ISBN 1586483595
The Bubble of American Supremacy: Correcting the Misuse of American Power (PublicAffairs, 2003) ISBN 1586482173 (paperback; PublicAffairs, 2004; ISBN 1586482920)
George Soros on Globalization (PublicAffairs, 2002) ISBN 1586481258 (paperback; PublicAffairs, 2004; ISBN 1586482785)
Open Society: Reforming Global Capitalism (PublicAffairs, 2000) ISBN 1586480197
Science and the Open Society: The Future of Karl Popper's Philosophy by Mark Amadeus Notturno, George Soros (Central European University Press, 2000) ISBN 9639116696 (paperback: Central European University Press, 2000; ISBN 963911670X)
The Crisis of Global Capitalism: Open Society Endangered (PublicAffairs, 1998) ISBN 1891620274
Soros on Soros: Staying Ahead of the Curve (John Wiley, 1995) ISBN 0471120146 (paperback; Wiley, 1995; ISBN 0471119776)
Underwriting Democracy: Encouraging Free Enterprise and Democratic Reform Among the Soviets and in Eastern Europe (Free Press, 1991) ISBN 0029302854 (paperback; PublicAffairs, 2004; ISBN 1586482270)
Opening the Soviet System (Weidenfeld & Nicholson, 1990) ISBN 0297820559 (paperback: Perseus Books, 1996; ISBN 0813312051)
The Alchemy of Finance (Simon & Schuster, 1988) ISBN 0671662384 (paperback: Wiley, 2003; ISBN 0471445495)

Biographies

Soros: The Life and Times of a Messianic Billionaire by Michael T. Kaufman (Alfred A. Knopf, 2002) ISBN 0375405852
Soros: The Unauthorized Biography, the Life, Times and Trading Secrets of the World's Greatest Investor by Robert Slater (McGraw-Hill, 1997) ISBN 0786312475

Contributed

MoveOn's 50 Ways to Love Your Country: How to Find Your Political Voice and Become a Catalyst for Change by MoveOn.org (Inner Ocean Publishing, 2004) ISBN 193072229X

External links and references

*George Soros official site and blog
*Open Society Institute and Soros Foundations Network
*George Soros' Project Syndicate op/eds
*George Soros' Political Campaign Contributions
*Soros and the Nazis: The Whole Truth, In His Own Words

Bio

*Forbes.com: Forbes 400 Richest in America
*PrimeBiography.com: George Soros Worlds Greatest Business Biographies
*George Soros Bio

About

*Stephen Adams "Furious George" on Citizen - Family Issues in Policy and Culture
*Laura Blumenfeld, Billionaire Soros Takes On Bush, MSNBC, November 11, 2003
*Neil Clark Analysis of Soros' role in Eastern Europe from "New Statesman"
*Heather Coffin George Soros: Imperial Wizar
*Fortune City List of articles and speeches by and about George Soros
*John Horvath The Soros Effect on Central and Eastern Europe
*Matt Welch, Open Season on 'Open Society': Why an anti-communist Holocaust survivor is being demonized as a Socialist, Self-hating Jew Reason magazine, December 8, 2003
* Malcolm Gladwell mentions George Soros in his article Blowing Up.

Speech

*Testimony of George Soros to a congressional sub-committee, Sept. 15, 1998
*The Theory of Reflexivity Delivered April 26, 1994 to the MIT Department of Economics World Economy http://www.geocities.com/ecocorner/intelarea/gs1.html

Writings

*George Soros, The Bubble of American Supremacy, editorial in The Korea Herald, March 12, 2003.
*George Soros, The Bubble of American Supremacy, column in the Atlantic Monthly, December 2003.
*Johnson's Russia List Issue - Moskovsky Novosti: George Soros, Bitter Thoughts with Faith in Russia
*(stop-imf) FT: Soros on Brazil - Aug 13, 2002

Scholarly perspectives on Soros's thought

*Bryant, C. G. A. (2002). 'George Soros's theory of reflexivity: a comparison with the theories of Giddens and Beck and a consideration of its practical value', Economy and Society, 31 (1), pp. 112-131.
*Cross, R. and D. Strachan (1997). 'On George Soros and economic analysis', Kyklos, 50, pp. 561-74.

Interviews

*The Leonard Lopate Show (WNYC) - Audio Archive: "George Soros on Freedom"
*frontline: the crash: interviews: george soros
*Wall $treet Week with FORTUNE . TV Program | PBS
*Challenge: The international financial crisis - International ...
*NOW with Bill Moyers. Transcript. David Brancaccio interviews ...
*Booknotes with Brian Lamb. Transcript and streaming video.
*Rocketboom: The Age of Fallibility (Video, 2006)

George Soros: Encyclopedia BETA

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