近兩年讀的書都是非文學類為主，例如：《聖經》、《The Worldly Philosophers》、《擁抱神學》、《天國與財利》等等。
放下的包括：王安憶的《長恨歌》、Pablo Neruda 的詩集、何福仁的《再生樹》，還有塞萬提斯的《堂吉訶德》和歌德的《浮士德》等等。
書有未曾讀 2 (30.09.2007)
投入社會，賺了幾個錢，道聽塗說，在虛無的股海尋找機會，結果遇上百年一遇的金融海嘯。紙上的富貴曾多了五成，但現在卻少了五成。「不要為自己積攢財寶在地上，地上有蟲子咬，能銹壞，也有賊挖窟窿來偷；只要積攢財寶在天上， 天上沒有蟲子咬，不能銹壞，也沒有賊挖窟窿來偷。因為你的財寶在哪裡，你的心也在那裡。」（太 6:19-22）要是早讀耶穌的話語，我的心情也不會因指數上昇下降，而忐忑不安。
「我要向山舉目，我的幫助從何而來？我的幫助從造天地的耶和華而來。祂必不叫你的腳搖動，保護你的必不打盹！」（詩 121:1-3）我決定向神祈求、尋找和叩門，因為耶穌絕不會「求魚，反給他蛇」（太 12:10）。因此，決志信主，向耶穌認罪，求祂饒恕我過去的一切罪。
平安一天一天加在我的心裡，聖靈在努力工作。現實雖然沒有立即改寫，然而心境卻寧靜了許多。「所以，不要為明天憂慮，因為明天自有明天的憂慮；一天的難處一天當就夠了。」（太 6:34） 把憂愁留給神，讓祂為我分憂解難，保護我從今時直到永遠。
在小組導師 GL 傳道、LY 老師和 HOC 的組員鼓勵下，報了是次的受浸預備班，再次享受重新的喜悅。從母胎赤身而來，走了廿多年的路，多有煩惱，透過浸禮，重新把自己托付於神， 把憂愁留給神，求祂賜我平安帶走煩惱，常與我同在直到世界末了。
受浸後，我希望神能賜我智慧，把祢的言語轉告我的家人，讓他們有耳能聽：「人活著不是單靠食物，乃是靠耶和華口裡所出的一切話。」（申 8:3）神，求祢賜我智慧，讓我多了解《聖經》，曉得祢的訓誨。今日，我相信已經踏出第一步，因為「寅畏上主是為智之本」（箴 1:7）。
By GEORGE SOROS
In all the uproar over AIG, the most important lesson has been ignored. AIG failed because it sold large amounts of credit default swaps (CDS) without properly offsetting or covering their positions. What we must take away from this is that CDS are toxic instruments whose use ought to be strictly regulated: Only those who own the underlying bonds ought to be allowed to buy them. Instituting this rule would tame a destructive force and cut the price of the swaps. It would also save the U.S. Treasury a lot of money by reducing the loss on AIG's outstanding positions without abrogating any contracts.
CDS came into existence as a way of providing insurance on bonds against default. Since they are tradable instruments, they became bear-market warrants for speculating on deteriorating conditions in a company or country. What makes them toxic is that such speculation can be self-validating.
Up until the crash of 2008, the prevailing view -- called the efficient market hypothesis -- was that the prices of financial instruments accurately reflect all the available information (i.e. the underlying reality). But this is not true. Financial markets don't deal with the current reality, but with the future -- a matter of anticipation, not knowledge. Thus, we must understand financial markets through a new paradigm which recognizes that they always provide a biased view of the future, and that the distortion of prices in financial markets may affect the underlying reality that those prices are supposed to reflect. (I call this feedback mechanism "reflexivity.")
With the help of this new paradigm, the poisonous nature of CDS can be demonstrated in a three-step argument. The first step is to acknowledge that being long and selling short in the stock market has an asymmetric risk/reward profile. Losing on a long position reduces one's risk exposure, while losing on a short position increases it. As a result, one can be more patient being long and wrong than being short and wrong. This asymmetry discourages short-selling.
The second step is to recognize that the CDS market offers a convenient way of shorting bonds, but the risk/reward asymmetry works in the opposite way. Going short on bonds by buying a CDS contract carries limited risk but almost unlimited profit potential. By contrast, selling CDS offers limited profits but practically unlimited risks. This asymmetry encourages speculating on the short side, which in turn exerts a downward pressure on the underlying bonds. The negative effect is reinforced by the fact that CDS are tradable and therefore tend to be priced as warrants, which can be sold at anytime, not as options, which would require an actual default to be cashed in. People buy them not because they expect an eventual default, but because they expect the CDS to appreciate in response to adverse developments.
AIG thought it was selling insurance on bonds, and as such, they considered CDS outrageously overpriced. In fact, it was selling bear-market warrants and it severely underestimated the risk.
The third step is to recognize reflexivity, which means that the mispricing of financial instruments can affect the fundamentals that market prices are supposed to reflect. Nowhere is this phenomenon more pronounced than in the case of financial institutions, whose ability to do business is so dependent on trust. A decline in their share and bond prices can increase their financing costs. That means that bear raids on financial institutions can be self-validating.
Taking these three considerations together, it's clear that AIG, Bear Stearns, Lehman Brothers and others were destroyed by bear raids in which the shorting of stocks and buying CDS mutually amplified and reinforced each other. The unlimited shorting of stocks was made possible by the abolition of the uptick rule, which would have hindered bear raids by allowing short selling only when prices were rising. The unlimited shorting of bonds was facilitated by the CDS market. The two made a lethal combination. And AIG failed to understand this.
Many argue now that CDS ought to be traded on regulated exchanges. I believe that they are toxic and should only be allowed to be used by those who own the bonds, not by others who want to speculate against countries or companies. Under this rule -- which would require international agreement and federal legislation -- the buying pressure on CDS would greatly diminish, and all outstanding CDS would drop in price. As a collateral benefit, the U.S. Treasury would save a great deal of money on its exposure to AIG.
Mr. Soros is chairman of Soros Fund Management and author of "The Crash of 2008" (PublicAffairs, 2009).
George Soros: The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means (2008)
WSJ: One Way to Stop Bear Raids (23.03.2009)
By GEORGE SOROS
The forthcoming Group of 20 meeting is a make-or-break event. Unless it comes up with practical measures to support the less developed countries, which are even more vulnerable than the developed ones, markets are going to suffer another sinking spell just as they did last month when Tim Geithner, Treasury secretary, failed to produce practical measures to recapitalise the US banking system.
This crisis is different from all the others since the end of the second world war. Previously, the authorities got their act together and prevented the financial system from collapsing. This time, after the failure of Lehman Brothers last September, the system broke down and was put on artificial life support. Among other measures, both Europe and the US in effect guaranteed that no other important financial institution would be allowed to fail.
This necessary step had unintended adverse consequences: many other countries, from eastern Europe to Latin America, Africa and south-east Asia, could not offer similar guarantees. As a result, capital fled from the periphery to the centre. The flight was abetted by national financial authorities at the centre who encouraged banks to repatriate their capital. In the periphery countries, currencies fell, interest rates rose and credit default swap rates soared. When history is written, it will be recorded that – in contrast to the Great Depression – protectionism first prevailed in finance rather than trade.
Institutions such as the International Monetary Fund face a novel task: to protect the periphery countries from a storm created in the developed world. Global institutions are used to dealing with governments; now they must deal with the collapse of the private sector. If they fail to do so, the periphery economies will suffer even more than those at the centre, because they are poorer and more dependent on commodities than the developed world. They also face $1,440bn (€1,060bn, £994bn) of bank loans coming due in 2009. These loans cannot be rolled over without international aid.
Gordon Brown, the UK prime minister, recognised the problem and designated the G20 meeting to address it. Yet profound attitudinal differences have surfaced, particularly between the US and Germany. The US has recognised that the collapse of credit in the private sector can be reversed only by using the credit of the state to the full. Germany, traumatised by the memory of hyperinflation in the 1920s, is reluctant to sow the seeds of future inflation by incurring too much debt. Both positions are firmly held. The controversy threatens to disrupt the meeting.
Yet it should be possible to find common ground. Instead of setting a universal target of 2 per cent of gross domestic product for stimulus packages, it is enough to agree that the periphery countries need aid to protect their financial systems. This is in the common interest. If the periphery economies are allowed to collapse, the developed countries will also be hurt.
As things stand, the G20 meeting will produce some concrete results: the resources of the IMF are likely to be doubled, mainly by using the mechanism of the “new arrangements to borrow”, which can be activated without resolving the vexed question of reapportioning voting rights.
This will be sufficient to enable the IMF to help specific countries at risk but it will not provide a systemic solution for the less developed countries. Such a solution is readily available in the form of special drawing rights. SDRs are complex but they boil down to the international creation of money. Countries that can create their own money do not need them but periphery countries do. The rich countries should therefore lend their allocations to the nations in need.
Recipient countries would pay the IMF interest at a very low rate, equivalent to the composite average treasury bill rate of all convertible currencies. They would have free use of their own allocations but would be supervised in how the borrowed allocations were used to ensure they were well spent.
In addition to the one-time increase in the IMF’s resources, there ought to be a big annual issue of SDRs, of say $250bn, as long as the recession lasts. It is too late to use the April 2 G20 meeting to agree this, but if it were raised by President Barack Obama and endorsed by others, this would be sufficient to give heart to the markets and turn the meeting into a resounding success.
The writer is chairman of Soros Fund Management and author of the forthcoming The Crash of 2008 (PublicAffairs 2009)
Copyright The Financial Times Limited 2009
FT: Peripheral care should be the central concern
舊夢完了，捷克之行回來，西藏走過，相機的 Live View 壞了等。
西環尋常錄：Carving a Chinese Seal (21.08.2007)
Las Cifras de Koohag: Hong Lai, Fujian (03.06.2007)
Las Cifras de Koohag: Carving a Chinese Seal (19.05.2007)
Las Cifras de Kookahg: Life@Brno (2003-2004)
By GEORGE SOROS
The Obama administration should come out of the gate with a comprehensive economic program that has two pillars in addition to a fiscal stimulus package. One would prevent housing prices from overshooting on the downside by making mortgages cheaper and more available and reducing foreclosures to a minimum; the other would enable banks to resume lending by adequately recapitalizing them. It would take several months to implement the program and a further period before it impacts the economy. But in the meantime, people could see that there is a way out, and that would help mitigate the severity of the downturn.
Adequate recapitalization of the banking system now faces two seemingly insuperable obstacles. One is that former Treasury Secretary Henry Paulson has poisoned the well by the arbitrary and ill-considered way he implemented the $700 billion Troubled Asset Relief Program (TARP). As a result, the Obama administration feels it cannot ask Congress for more money at this time. The other is that the hole in the banks' balance sheets has become much bigger since TARP was introduced. The assets of the banks -- real estate, securities, and consumer and commercial loans -- have continued to deteriorate, and the market value of bank stocks has continued to decline.
It is estimated that an additional $1.5 trillion would be required to adequately recapitalize the banks. Since their total market capitalization has fallen to about $1 trillion, this raises the specter of nationalization, which remains politically and even culturally unpalatable.
Consequently, the Obama administration plans to use up to $100 billion from the second tranche of TARP funds to establish an aggregator bank, or "bad bank," that would acquire toxic assets from the banks' balance sheets. By obtaining 10-to-1 leverage from the balance sheet of the Fed, the bad bank could have $1 trillion at its disposal. That is not sufficient to cleanse the balance sheets of the banks and restart lending, but it would bring some welcome relief.
The bad bank could serve as a useful interim measure, except that it will make it more difficult to obtain the necessary funding for a proper recapitalization in the future. It will also encounter all kinds of difficulties in valuing toxic securities, and it will serve as a covert subsidy to the banks by bidding up the price of their toxic assets. This will generate tremendous political resistance to any further expenditure to bail out the banks.
For these reasons it would be a mistake to take the "bad bank" route, especially when there is a way to adequately recapitalize the banks with currently available resources. The trick is not to remove the toxic assets from the banks' balance sheets but instead put them into a "side pocket," as hedge funds are doing with their illiquid assets. The appropriate amount of capital -- equity and unsecured debentures -- would be sequestered in the side pocket.
This would cleanse bank balance sheets and transform them into good banks but leave them undercapitalized. The same $1 trillion that is now destined to fund the bad bank could then be used to infuse capital into the good banks.
Although the amount needed to recapitalize the banks would be more than $1 trillion, it would be possible to mobilize a significant portion of the required total amount from the private sector. In the current environment, a good bank would enjoy exceptionally good margins. Margins would narrow as a result of competition, but by then the banking system would be revitalized and nationalization avoided.
The scheme I am proposing would minimize valuation problems and avoid providing a hidden subsidy to the banks. Exactly for that reason it is likely to encounter strong resistance from vested interests.
Losses would first accrue to holders of shares and debentures; only if losses exceed a bank's capital would the FDIC be liable for the deficiency, as it is already. Shareholders would be severely diluted, but they would be given tradable rights to subscribe to the good bank, and if there is a positive residue in the side pocket it would also revert to the good bank, giving shareholders the benefit of any subsequent appreciation.
The fact that debenture holders may lose money will make it more difficult to sell bank debentures in the future. But that is as it should be: Banks should not be as highly leveraged as they have been recently.
In addition to restarting bank lending, my scheme would resolve the moral-hazard issue for years to come. The banking industry is accustomed to turning to the state in a crisis and effectively demanding a bailout on the grounds that financial capital has to be protected to ensure the proper functioning of the economy. Given the aversion to state ownership of banks, this form of blackmail has always worked, and indeed helped create the financial crisis we're in today. The Obama administration ought to resist this blackmail and adopt the scheme outlined here.
Mr. Soros is chairman of Soros Fund Management and the author of "The New Paradigm for Financial Markets" (Public Affairs, 2008).
George Soros: The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means (2008)
WSJ: We Can Do Better Than a 'Bad Bank' (23.03.2009)