Book Review: The New Paradigm for Financial Market by George Soros

George Sors believed the equiliberium theory of market is not true and he proposed a reflexivity model, which states that market participants expectation affects markets fundementals, and the two sides are dependent on each other, making deviation from mean (equiliberium) more extreme (boom and bust pattern). In the past such situations triggers regulators intervention, but under Reagon's market driven philosophy, regulators now keep a blind eyes on market participants and rely on market's supposedly self correcting mechanism (rooted on the belief of equiliberium theory), which in turn leads to more extreme financial turmoil such as 2008 housing bubble, and he thinks there is a super-bubble superimposed on the housing bubble (credit expansion).

But his relexivity model can only explain the past but not able to predict what comes next.

This book came to my attention due to Nicholas Taleb's Fooled by Randomness: The hidden role of chance in life and in the markets

Book Review: Treasury's War, The Unleashing of a New Era of Financial Warfare by Juan Zarate

• A better title for the book may be "How to bully other countries by leveraging dollar as international trade currency and New York as financial center"
• The book did provide some useful insights on financial weapons(main one is Provision 311 of US Patriot Act) US can leverage in a conflict with another country, but these information doesn't warrant 500+ pages book, a 2000 words piece will suffice
• All the weaponry author touts were derived from US dominant position in international trade (largest financial markets, New York as world financial center, dollar as currency of international trade), but overused these tools will greatly diminish US credibility and destroy US dominant position. Case in point: forcing SWIFT data already led to mistrust of US and attempt from Europe (INSTEX) and Asia countries (Russia has an inititiative supported by China, India, Iran and Turkey) in creating alternative to SWIFT system

Financial engineering: necessary evil

I have read a lot about financial engineering after 2008 financial crisis. Books like All the devils are here by Bethany McLean and Joe Nocera, The big short:inside the doomsday machine by Michael Lewis, Hedge Hogs: The Cowboy Traders Behind Wall Street's Largest Hedge Fund Disaster by Barbara T.Dreyfuss, The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It by Scott Patterson. Some of the pioneers of financial engineering are Noble Laureates who essentially invented Wall Street money machines. My take home message is: Financial engineering is like germs on our body, they plays a critical role in the health of global financial system if under control and regulation, but they will destroy the whole system if let grow unregulated.