George Soros And Open Society
George Soros (pronounced [ʃoroʃ]) [Shorosh] (born August 12, 1930, in Budapest, Hungary, as György Schwartz) is an American financial speculator, stock investor, philanthropist, and political activist.[1]
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 Soviet Union political dominance in those countries.[2] 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 in a failed effort to defeat President George W. Bush's bid for reelection in 2004.
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 is ranked by Forbes as the 80th-richest person in the world.[2]
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 Teodoro Schwartz. Teodoro (also known as Tivadar) was a Hungarian Jew who was a prisoner of war during and after World War I and eventually escaped from Russia to rejoin his family in Budapest.[3]
The family changed its name in 1936 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 left unstated in Kaufmann's biography, in Hungarian "soros" means "next in line, or designated successor", and in Esperanto it means "will soar".[4] Tivadar wrote of his ordeal to survive in Fascist Hungary, and help many people escape it, in his book Maskerado. George Soros later said that he "grew up in a Jewish, anti-semitic home," and that his parents were "uncomfortable with their religious roots."[5]
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 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 wavering ally Hungary (March 21, 1944), and started exterminating Hungarian Jews[6] 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 was not aware of the consequence of the messages.[7] 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 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. 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, 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 - 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 (42.5% per year for 10 years), and created the bulk of the Soros fortune. Rogers "retired" 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 would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell."
According to Steven Drobny,[8] 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.[9] Thai nationals have called Soros "an economic war criminal" who "sucks the blood from the people".[10]
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.[11]
His insider trading conviction was upheld by the highest court in France on June 14, 2006.[12] In December, 2006 he appealled to the European Court of Human Rights, claiming that the 14 year delay in bringing the case to trial precluded a fair hearing.[13]
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 Soviet Union political dominance in those countries.[2] 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 in a failed effort to defeat President George W. Bush's bid for reelection in 2004.
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 is ranked by Forbes as the 80th-richest person in the world.[2]
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 Teodoro Schwartz. Teodoro (also known as Tivadar) was a Hungarian Jew who was a prisoner of war during and after World War I and eventually escaped from Russia to rejoin his family in Budapest.[3]
The family changed its name in 1936 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 left unstated in Kaufmann's biography, in Hungarian "soros" means "next in line, or designated successor", and in Esperanto it means "will soar".[4] Tivadar wrote of his ordeal to survive in Fascist Hungary, and help many people escape it, in his book Maskerado. George Soros later said that he "grew up in a Jewish, anti-semitic home," and that his parents were "uncomfortable with their religious roots."[5]
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 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 wavering ally Hungary (March 21, 1944), and started exterminating Hungarian Jews[6] 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 was not aware of the consequence of the messages.[7] 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 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. 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, 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 - 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 (42.5% per year for 10 years), and created the bulk of the Soros fortune. Rogers "retired" 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 would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell."
According to Steven Drobny,[8] 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.[9] Thai nationals have called Soros "an economic war criminal" who "sucks the blood from the people".[10]
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.[11]
His insider trading conviction was upheld by the highest court in France on June 14, 2006.[12] In December, 2006 he appealled to the European Court of Human Rights, claiming that the 14 year delay in bringing the case to trial precluded a fair hearing.[13]
ISBN 1-891220-27-4
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