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Algora Publishing - Soros seems to have applied a curious logic to the market
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Tuesday,
Soros seems to have applied a curious logic to the market
Sir, I'm thinking of applying the logic George Soros applies to the credit derivatives market ("The game changer", January 29) to the purchase of my new car.
The Financial Times

Published: February 4 2009 02:00 | Last updated: February 4 2009 02:00

From Mr Edward Duncan.

Sir, I’m thinking of applying the logic George Soros applies to the credit derivatives market (“The game changer”, January 29) to the purchase of my new car.

I am planning to sell 1,000 Bentley GT continental convertibles on a variety of internet sites at massively discounted prices. As I don't own a single Bentley GT continental convertible I'm clearly taking "naked" short positions. This, according to Soros logic, will lead to a fall in the value of Bentleys across the globe, as “speculating on the short side ... exerts a downward pressure” on value. In a matter of weeks, we’ll all be able to afford Bentleys and the German government may even be forced to bail out the manufacturer, VW, as clearly no one will be interested in buying the cars new.

Far be it from me to question Mr Soros, but have I understood the logic correctly? Is this what he is saying happened to Lehman Brothers? I can't help but reflect on the more recent fourth quarter results of another former broker/dealer and the plight of its new parent, Bank of America.

Perhaps the market knew more than Mr Soros credits in his analysis? Perhaps it was reacting to more than just the short sellers of credit derivatives back in September 2008?

Edward Duncan,
London, SW11, UK

Soros seems to have applied a curious logic to the market