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Canadian Value
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Interview with Hedge Fund Pioneer George Soros

April 09, 2014 | About:

Gregor Peter Schmitz: Every time Der Spiegel publishes an interview with you, the standard comment of many readers is: “Why should anyone listen to the thoughts of an aggressive speculator on the global financial system who repeatedly undermined the stability of that system?”

George Soros (Trades, Portfolio): Given the attitude to hedge funds in Germany, I am not surprised, but I should like to convince them that I understand the financial system better than some of the regulators who are in charge. I have been successful within the capitalist system. Who is better qualified to criticize the system than somebody who flourished within it?

Schmitz: Does it upset you when people call you a ‘speculator’?

Soros: No, I do not mind that at all. As a matter of fact when I was given an honorary degree from Oxford and they asked me how I wanted to be described, I suggested “financial, philanthropic, and philosophical speculator.” But they talked me out of it.

Schmitz: But speculation can upset markets and trigger instability.

Soros: That is true and I recognise it. As far as my actions are concerned, I always play by the rules. I have always acted within the existing legal framework. So if my actions serve to undermine the stability of the system, it means that there is something wrong in the system that allows market participants, call them ‘speculators’, to disrupt it. As a concerned member of society, I have spent a lot of time arguing that the rules governing the global financial system need to be improved. In doing so, I often suggest changes that may be detrimental to me as a speculator.

Schmitz: Really? Can you give us an example?

Soros: In the United States, hedge funds spend a lot of money lobbying for lower taxes for their industry. I don’t do that. In fact, I advocate for higher taxes, which would mean I would have to pay more. Nowadays, I can afford to stand up for principles. True, I cannot expect others to do the same. I did not always do it myself until I became rich.

Schmitz: But the perception many people have of you and your colleagues is very different. They blame speculators for the latest financial crisis in the United States or the euro crisis. Is that the reason you’ve decided to give billions of dollars to charity and your foundation?

Soros: Do people think I am giving away money because I have pangs of conscience?

Schmitz: Isn’t there some truth to it?

Soros: No, it is a total misconception. I have a clean conscience. The big events in which I participated would have occurred sooner or later, whether I speculated on them or not. For example, whether I had been born or not, the British pound would have been forced out of the European Exchange Rate Mechanism in 1992. My talent has been to anticipate or recognise a coming wave, and to ride it, not to cause the waves.

Schmitz: But are you really such a little wheel as you claim? If you bet against gold or currencies, many other investors follow suit. You can definitely influence markets, for better or worse.

Soros: To some extent that’s true. Since I became a public figure, the man who allegedly “broke the Bank of England”, I have been cast as a financial guru who can influence markets. That has forced me to impose self-censorships on my statements -- exactly because I can move markets.

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