8. The New Paradigm for Financial Markets

By George Soros
(PublicAffairs — $22.95)

To understand the current financial crisis, says investor philanthropist Soros, we need a new paradigm that breaks with the old truism that financial markets tend toward equilibrium. Here, he expands upon his "theory of reflexitivity," discussed in previous books. In this case, his insight suggests that "every bubble consists of a trend and a misconception that interact in a reflexive manner." In other words (I think), we have trouble seeing the world as it is because we are simultaneously engaged in trying to shape it. The New Paradigm is compact—but don't mistake it for an airplane read.