George Soros has an estimated current net worth of around $9 billion; he is ranked by Forbes as the 97th-richest person in the world. He was dubbed "the man who broke the Bank of England." This is a man whose financial acumen has been proven. In this book, he explains and applies his philosophy of “Reflexivity” to the financial markets and provides his insight to the current and future economic turmoil. Here are some exceprts:

The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means by George Soros, 2008

When the financial crisis erupted, I had retired from actively managing my fund, having previously changed its status from an aggressive hedge fund to a more sedate endowment fund. The crisis forced me, however, to refocus my attention on the financial markets, and I became more actively engaged in making investment decisions. The drama currently unfolding is all-absorbing, and I have a lot at stake. I foresee a period of political and financial instability, hopefully to be followed by the emergence of a new world order.

The United States is facing both a recession and a flight from the dollar. The decline in housing prices, the weight of accumulated household debt, and the losses and uncertainties in the banking system threaten to push the economy into a self-reinforcing decline. Measures to combat this threat increase the supply of dollars. At the same time, the flight from the dollar has set up inflationary pressures through higher energy, commodity, and food prices.

There has been a bubble in the U.S. housing market, but the current crisis is not merely the bursting of the housing bubble. It is bigger than the periodic financial crises we have experienced in our lifetime. All those crises are part of what I call a super-bubble. The current crisis constitutes the turning point when both the trend and the misconception have become unsustainable.

A sixty-year period of credit expansion based on the United States exploiting its position at the center of the global financial system and its control over the international reserve currency has come to an end. The current financial crisis will have more severe and longer-lasting consequences than similar crises in the past. On previous occasions each crisis was followed by a new period of economic growth stimulated by easy money and new forms of credit growth. This time is will take much longer for growth to resume.

Global Outlook

A recession in the United States and the resilience of China, India, and the oil-producing countries will reinforce the decline in the power and the influence of the United States. The decline of the dollar as the generally accepted reserve currency will have far-reaching political consequences and raise the specter of a breakdown in the prevailing world order. Generally speaking, we are liable to pass through a period of great uncertainty and destruction of financial wealth before a new order emerges.

Europe is liable to be affected almost as badly as the United States. Spain, with its own real estate bubble, and the United Kingdom, given the importance of London as a financial center, are particularly vulnerable. European banks and pension funds are even more heavily weighted down with assets of doubtful value than American banks, and the over-evaluation of the euro and sterling is going to hurt European economies. The Japanese economy is also doing poorly.

China is undergoing a radical structural transformation, and the asset bubble engendered by negative interest rates is facilitating the process. No doubt a bubble is in formation, but it is in a relatively early stage, and there are powerful economic interests at work to keep the bubble going. The economic elite are eager to convert the perks of office they currently enjoy into ownership of property that they can pas on to their heirs. Nothing is quite as profitable as investing in an early-stage bubble. The long-term outlook for China is highly uncertain. It would not be surprising if the currently developing bubble ended in a financial crisis several years down the road.

Housing Crisis

About 40 percent of the 7 million subprime loans outstanding will default in the next two years. This will maintain the downward pressure on house prices. Foreclosures reduce the value of surrounding houses, pushing additional home owners to abandon their property because their mortgages exceed the values of their houses. Ultimately, concentrated foreclosures destabilize entire neighborhoods and have repercussions in other areas, such as employment, education, health, and child well-being. Local governments face the daunting prospect of huge inventories of distressed properties being dumped on the market in precisely those neighborhoods least equipped to absorb the shock.

The human suffering caused by the housing crisis will be enormous. Senior citizens were targeted for some of the worst predatory practices and are disproportionately defaulting on their mortgages. Communities of color are also disproportionately affected. Given that home ownership is a key factor in increasing wealth and opportunity in the United States, upwardly mobile young professionals of color will be particularly hard hit. They bought into the promise of the “ownership society,” and their assets are concentrated in home ownership.

The already enacted initiatives of the Bush administration does not amount to more than exercises in public relations.