Everything about George Soros totally explained
George Soros (or /ˈsɔrəs/, Hungarian ) (born
August 12,
1930, in
Budapest,
Hungary, as
György Schwartz) is a
Hungarian-born
American financial speculator,
stock investor,
philanthropist, and
political activist.
Currently, he's 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. According to his own website, Soros claims his support for the
Solidarity labour movement in
Poland, as well as the
Czechoslovak human rights organization
Charter 77, contributed to ending
Soviet Union political dominance in those countries. 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's known for having donated large sums of money in a failed effort to defeat President
George W. Bush's bid for re-election in 2004. On
BookTV,
November 12,
2007, he said that he supports
Barack Obama for the Democratic candidate in the 2008 election, but says that
John Edwards,
Hillary Clinton, or
Joe Biden are all fine candidates, as well.
Soros is famously known for "breaking the
Bank of England" on
Black Wednesday in 1992. With an estimated
current net worth of around $8.5 billion, he's ranked by
Forbes as the
80th-richest person in the world.
The family changed its name in 1936 from
Schwartz to
Soros, in response to growing anti-semitism with the rise of
Fascism. Tivadar liked the new name because it's a
palindrome and because it has a meaning. Though the specific meaning is left unstated in Kaufmann's biography, in
Hungarian "soros" means "next in line, or designated successor", and in
Esperanto it means "will soar". His son George was taught to speak Esperanto from birth and thus is one of the rare
native Esperanto speakers. George Soros later said that he "grew up in a Jewish home," and that his parents were "cautious with their religious roots." However, Soros's father was proud of his Jewish roots (which can be seen in his memoir on his experiences during the holocaust,
Masquerade).
George Soros has been married and divorced twice, to Annaliese Witschak and to
Susan Weber Soros. He has five children: Robert, Andrea, Jonathan (with his first wife, Annaliese), Alexander and Steven (with his second wife, Susan). His elder 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 wavering ally
Hungary (
March 19,
1944), and started exterminating Hungarian Jews in the
Holocaust. Soros worked briefly for the Jewish Council, which had been established by the Nazis, to deliver messages to Jewish lawyers being called for deportation. Soros claims he wasn't aware of the consequence of the messages. To avoid his son being apprehended by the Nazis, his father had Soros spend the summer of 1944 living with a non-Jewish Ministry of Agriculture employee, posing as his godson.
In the following year, Soros survived the
battle of Budapest, as
Soviet and Nazi forces fought house-to-house through the city. Soros first traded
currencies during the Hungarian
hyperinflation of 1945-1946.
In 1946, Soros escaped the Soviet occupation by participating in an
Esperanto youth congress in the West.
Soros emigrated to
England in 1947 and graduated from the
London School of Economics in
1952. While a student of the philosopher
Karl Popper, Soros funded himself by taking jobs as a railway porter and a waiter at Quaglino's restaurant where he was told that with hard work he might one day become head waiter. He also worked in a
mannequin factory, but was fired for being too slow at putting on the heads. He eventually secured an entry-level position with London merchant bank
Singer & Friedlander.
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, Soros developed a philosophy of "
reflexivity" based on the ideas of Popper. Reflexivity, as used by Soros, is the belief that the action of beholding the valuation of any market by its participants affects said valuation of the market in a procyclical 'virtuous or vicious' circle.
Soros realized, however, that he wouldn't 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 - he calculated that $500,000 after five years would be possible and adequate. After all those years, his
net worth reached an estimated $11 billion.
He is also a former member of the
Carlyle investment group.
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 (42.6% per year for 10 years), and created the bulk of the Soros fortune. In 2007, the Quantum Fund returned almost 32%, netting Soros $2.9 billion.
Rogers announced his retirement from the fund in 1980.
Currency speculation
On
Black Wednesday (September 16, 1992), Soros became immediately famous when he
sold short more than $10 billion worth of pounds, profiting from the
Bank of England's reluctance to either raise its interest rates to levels comparable to those of other
European Exchange Rate Mechanism countries or to
float its currency.
Finally, the Bank of England was forced to withdraw the currency out of the European Exchange Rate Mechanism and to devalue the
pound sterling, and Soros earned an estimated US$ 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'd borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell."
According to Steven Drobny,
Stanley Druckenmiller, who traded under Soros, originally saw the weakness in the pound. "Soros' contribution was pushing him to take a gigantic position," in accord with Druckenmiller's own research and instincts.
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. Thai nationals have called Soros "an economic
war criminal" who "sucks the blood from the people".
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 charges
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 number of shares in the company. French authorities began an investigation in 1989, and in 2002 a French court ruled that it was
insider trading as defined under French securities laws and fined him $2 million, which was the amount that he made using the insider information.
Punitive damages were not sought because of the delay in bringing the case to trial. Soros denied any wrongdoing and said news of the takeover was public knowledge.
His insider trading conviction was upheld by the highest court in France on
June 14 2006. In December, 2006 he appealed to the
European Court of Human Rights, claiming that the 14 year delay in bringing the case to trial precluded a fair hearing.
Baseball
In
2005, Soros joined a group of investors seeking to buy the
Washington Nationals of
Major League Baseball's
National League. Although he was only a minority partner, some Republican lawmakers suggested that they might tamper with baseball's antitrust exemption if Soros had
any interest at all in any baseball team, including the Nationals. Ultimately, real estate magnate
Ted Lerner was selected as the new owner, though baseball stressed that political pressure wasn't a factor.
Football
In April
2008, after months of speculation, Soros was confirmed by
Rosella Sensi, CEO of
Italian Serie A association football club
A.S. Roma, to be bidding for a takeover.
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 includes efforts to promote non-violent
democratization in the
post-Soviet states. These efforts, mostly in
Central and
Eastern Europe, occur primarily through the
Open Society Institute (OSI) and national
Soros Foundations, which sometimes go under other names (such as the
Stefan Batory Foundation in
Poland). As of 2003,
PBS estimated that he'd given away a total of $4 billion. The OSI says it has spent about $400 million annually in recent years.
Time magazine in 2007 cited two specific projects - $100 million toward
Internet infrastructure for regional
Russian universities; and $50 million for the
Millennium Promise to eradicate extreme poverty in Africa - while noting that Soros has given $742 million to projects in the U.S., and given away a total of more than $6 billion.
Other 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 to the
Central European University (CEU). The
Nobel Peace Prize winner,
Muhammad Yunus and his
microfinance bank
Grameen Bank received support from the OSI.
According to
National Review the Open Society Institute gave $20,000 in September 2002 to the Defense Committee of
Lynne Stewart, the lawyer who has defended alleged terrorists in court and was sentenced to 2⅓ years in prison for "providing material support for a terrorist conspiracy" via a press conference for a client. An OSI spokeswoman said "it appeared to us at that time that there was a right-to-counsel issue worthy of our support."
In September 2006, Soros departed from his characteristic sponsorship of democracy building programs, pledging $50 million to the
Jeffrey Sachs-led
Millennium Promise to help eradicate extreme poverty in Africa. Noting the connection between bad governance and poverty, he remarked on the humanitarian value of the project.
He received honorary doctoral degrees from the
New School for Social Research (New York), the
University of Oxford in 1980, the
Corvinus University of Budapest, 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, under whom he studied 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' 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. Soros doesn't consider himself religious, and has stated that he doesn't believe in God.
Reflexivity, financial markets, and economic theory
Soros' writings focus heavily on the concept of
reflexivity, where the biases of individuals enter into market transactions, potentially changing the fundamentals of the economy. Soros argues that such transitions in the fundamentals of the economy are typically marked by disequilibrium rather than equilibrium, and that the conventional economic theory of the market (the '
efficient market hypothesis') doesn't apply in these situations. Soros has popularized the concepts of
dynamic disequilibrium,
static disequilibrium, and
near-equilibrium conditions.
Reflexivity is based on three main ideas:
- Reflexivity is best observed under special conditions where investor bias grows and spreads throughout the investment arena. Examples of factors that may give rise to this bias include (a) equity leveraging or (b) the trend-following habits of speculators.
- Reflexivity appears intermittently since it's most likely to be revealed under certain conditions; for example, the equilibrium process's character is best considered in terms of probabilities.
- Investors' observation of and participation in the capital markets may at times influence valuations AND fundamental conditions or outcomes.
A current example of reflexivity in modern financial markets is that of the debt and equity of housing markets. Lenders began to make more money available to more people in the 1990s to buy houses. More people bought houses with this larger amount of money, thus increasing the prices of these houses. Lenders looked at their balance sheets which not only showed that they'd made more loans, but that their equity backing the loans--the value of the houses, had gone up (because more money was chasing the same amount of housing, relatively). Thus they lent out more money because their balance sheets looked good, and prices went up more, and they lent more, etc. Prices increased rapidly, and lending standards were relaxed. The salient issue regarding reflexivity is that it explains why markets gyrate over time, and don't just stick to equilibrium--they tend to overshoot or undershoot.
View of potential problems in the free market system
Despite working as an investor and currency speculator, 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.
Victor Niederhoffer said of Soros: "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 claims to draw a distinction between being a participant in the market and working to change the rules that market participants must follow.
Views on antisemitism
At a Jewish forum in
New York City, Soros partially attributed a recent resurgence of
antisemitism 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.
In a subsequent article for the
New York Review of Books, Soros emphasized that
I don't subscribe to the myths propagated by enemies of Israel and I'm not blaming Jews for anti-Semitism. Anti-Semitism predates the birth of Israel. Neither Israel's policies nor the critics of those policies should be held responsible for anti-Semitism. At the same time, I do believe that attitudes toward Israel are influenced by Israel's policies, and attitudes toward the Jewish community are influenced by the pro-Israel lobby's success in suppressing divergent views.
Political activism
Opposition to the Soviet Union
According to
Neil Clark (writing in the
New Statesman):
}}
Since the fall of the Soviet Union, Soros' funding 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."
Criticism of Bush Administration
In an interview with
The Washington Post on November 11, 2003, Soros said that removing President
George W. Bush from office was the "central focus of my life" and "a matter of life and death." He said he'd sacrifice his entire fortune to defeat President Bush, "if someone guaranteed it", and many continue to state this as Soros's 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.
Soros wasn't 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 Bush. Despite Soros' efforts, Bush was reelected to a second term as president in
U.S. presidential election, 2004.
After Bush's reelection in 2004, Soros and other wealthy liberal political donors backed a new political fundraising group called
Democracy Alliance which aims to support the goals of the U.S. Democratic Party.
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 don't raise the same corruption issues as donations directly to the candidates or political parties.
Harken Energy, a firm partly owned by Soros, did business with George W. Bush in 1986 by buying his oil company,
Spectrum 7.
His book,
The Age of Fallibility: Consequences of The War on Terror, was published in June
2006.
Gun control
Directly and through his organization Open Society Institute (OSI), he's funded various gun control organizations, such as the
Tides Foundation, the HELP Network and
SAFE Colorado. He and seven friends founded their own political committee —
Campaign for a Progressive Future — and spent $2 million on political activities in 2000, including providing the prime financial backing for the
Million Mom March. OSI has supported UN efforts to create international gun control regulations and has singled out the United States for failing to go along with other countries on national gun control measures.
Critics
Criticism of financial activities
In an August 2004 appearance on
Chris Wallace's
FOX News Sunday, then-Speaker of the U.S. House of Representatives
Dennis Hastert (Republican), questioned the source of George Soros' money: "You know, Soros' money, some of that's coming from overseas. It could be drug money. We don't know where it comes from." Soros rejected Hastert's criticism as smears using "false charges and mischaracterizations". Hastert was further attacked for "attempt[ing] to stifle critical debate and intimidat[ing] those who believe this administration is leading the country in a ruinous direction." Soros filed an official complaint with the House Committee on Standards of Official Conduct.
In 2006, Hastert criticized Soros again, this time in regards to the controversy over whether or not Hastert should have acted on information regarding
Rep. Mark Foley: "The people who want to see this thing blow up are
ABC News and a lot of Democratic operatives, people funded by George Soros."
Criticism of political activism
In an editorial in September 2007,
Investor's Business Daily criticized Soros for funding organizations such as
MoveOn.org and has claimed that Soros isn't transparent in the way he gives away his money. The newspaper said: "The irony here's that Soros claims to be an advocate of an 'open society.' His
OSI does just the legal minimum to disclose its activities. The public shouldn't have to wait until an annual report is out before the light is flipped on about the Open Society's political action."
IBD said that Soros' giving can't be considered philanthropy to the extent that it's political activism. The editorial compared Soros and
Bill Gates, pointing out that the latter gave money to improving medical services, while Soros tends to fund foundations and NGOs which he characterises as promoting
civil society and
democracy."
In April 2008, Soros hosted an event in his apartment that had guests such as
David Brock of the self-described progressive watchdog group
Media Matters and liberal commentator
Paul Begala. Brock described that the plan intends to raise $40 million to run political attack advertisements against the presumptive Republican nominee, Senator
John McCain, through a group called The Fund for America and Progressive Media, whose key backer, according to
politico.com, is Soros. Commentator
Bill O'Reilly, who on numerous occasions has accused Soros of secretly backing what O'Reilly feels are "far-left" political causes, repeated Soros "wants to buy America" after learning about the event.
Books
Authored or co-authored
The New Paradigm for Financial Markets: The Credit Crash of 2008 and What It Means (PublicAffairs, 2008) ISBN 978-1586486839
The Age of Fallibility: Consequences of the War on Terror (PublicAffairs, 2006) ISBN 1-58648-359-1
With MoveOn.org, MoveOn's 50 Ways to Love Your Country: How to Find Your Political Voice and Become a Catalyst for Change Inner Ocean Publishing, 2004 ISBN 1-930722-29-X
The Bubble of American Supremacy: Correcting the Misuse of American Power (PublicAffairs, 2003) ISBN 1-58643-217-3 (paperback; PublicAffairs, 2004; ISBN 1-58648-292-0)
George Soros on Globalization (PublicAffairs, 2002) ISBN 1-58648-125-8 (paperback; PublicAffairs, 2005; ISBN 1-52648-278-5)
Open Society: Reforming Global Capitalism (PublicAffairs, 2001) ISBN 1-58648-039-7
With Mark Amadeus Notturno, Science and the Open Society: The Future of Karl Popper's Philosophy (Central European University Press, 2000) ISBN 963-9116-69-6 (paperback: Central European University Press, 2000; ISBN 943-9116-70-X)
The Crisis of Global Capitalism: Open Society Endangered (PublicAffairs, 1998) ISBN 1-891220-27-4
Soros on Soros: Staying Ahead of the Curve (John Wiley, 1995) ISBN 0-471-12014-6 (paperback; Wiley, 1995; ISBN 0-371-11977-6)
Underwriting Democracy: Encouraging Free Enterprise and Democratic Reform Among the Soviets and in Eastern Europe (Free Press, 1991) ISBN 0-02-930285-4 (paperback; PublicAffairs, 2004; ISBN 1-58948-227-0)
Opening the Soviet System (Weidenfeld & Nicolson, 1990) ISBN 0-297-82155-9 (paperback: Perseus Books, 1996; ISBN 0-8133-1205-1)
The Alchemy of Finance (Simon & Schuster, 1988) ISBN 0-671-66338-4 (paperback: Wiley, 2003; ISBN 0-471-44549-5)
Biographies
Soros: The Life and Times of a Messianic Billionaire by Michael T. Kaufman (Alfred A. Knopf, 2002) ISBN 0-375-40585-2
Soros: The Unauthorized Biography, the Life, Times and Trading Secrets of the World's Greatest Investor by Robert Slater (McGraw-Hill, 1997) ISBN 0-7863-1247-5
Journalism
Authored
George Soros, On Israel, America and AIPAC
, New York Review of Books, April 12, 2007.
George Soros, The Bubble of American Supremacy, The Korea Herald, March 12, 2003.
George Soros, The Bubble of American Supremacy, Atlantic Monthly, December 2003.
George Soros, The Bubble of American Supremacy, audio recording of the Atlantic Monthly article via Assistive Media, read by Grover Gardner, 18 minutes.
George Soros Soros on Brazil, Financial Times, Aug 13, 2002.
George Soros, Bitter Thoughts with Faith in Russia, Moskovsky Novosti (Moscow News), translated from the Russian by Olga Kryazheva, February 27, 2000.
George Soros, The Capitalist Threat, Atlantic Monthly, February 1997
About
James Dellinger and Matthew Vadum, "George Soros's Democracy Alliance: In Search Of A Permanent Democratic Majority," Foundation Watch, December 2006
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"
Malcolm Gladwell, "Blowing Up," New Yorker Magazine, April 22 & 29, 2002, at gladwell.com.
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
Martin Peretz, "Tyran-a-Soros: The Madness of King George," The New Republic, February 12, 2007.
TIME's 25 Most Influential Americans, TIME Magazine April 21, 1997. Accessed May 21, 2007.
The TIME 100, The Power Givers, George Soros, TIME Magazine May 14, 2007 accessed May 21, 2007.
Scholarly perspectives
Speeches
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
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)
Google Video: Eric Schmidt, CEO of Google interviews George Soros (Video, 2006)
Fox News Interview with Neil Cavuto, October 11, 2006 Video and text, accessed May 25, 2007.
Interview with George Soros, Septermber 5, 2000Further Information
Get more info on 'George Soros'.
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