The Crash of 2008 And What It means The New Paradigm For Financial Markets, by George Soros, © 2008, Part 3 © 2009, 244 pages, softcover, $10, available from Amazone.com.

Reviewed by Jim Benson

I have never been a fan of billionaire philanthropist and left-leaning international political interloper George Soros. According to Frontpagemagazine.com, "Soros funds an army of leftist foundations and enterprises, "and he wields widespread influence in the US Democratic Party through his funding efforts and host of leftist foundations and organizations."

But Soros has spent more than half a century making billions in US and international financial markets, and his views on the great worldwide financial crisis of late are of high interest to many people around the globe.

Wanting to gain insight into the causes and consequences of the financial dealings which led us into "The Great Recession," I purchased Soros' recently updated book on the matter.

"We are in the midst of the worst financial crisis since the 1930s," Soros states in the book's introduction. "In some ways it resembles other crises that have occurred in the last 25 years, but there's a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency, The periodic crises were part of a larger boom-bust process; the current crisis is the culmination of a super-boom that has lasted for more than 25 years."

The 79-year-old Soros was retired from active management of his very successful hedge fund, Soros Fund Management, he said, but the crisis forced him to "refocus my attention on the financial markets, and I became more actively engaged in making investment decisions."

Known for his astute analysis of market conditions and judgments that have made his wealthy investors a great deal more money, Soros admits that even he was taken by surprise at the magnitude of the 2008 worldwide financial crisis, and that he lost big with some of his initial investment decisions, though he contends he ended up making about 10 percent profit for his holdings at the end of 2008, which he considers quite a feat.

A good part of the book, however, is spent explaining Soros' "Theory of Reflexivity" and how this applies to the recession's developments. If I understand it correctly, Soros defines his theory as the differences between thinking, or perceptions, and reality, and that these two forces tend to act in opposition to each other. Thus, investors' market perceptions often drive market activity, but reality can lead to much different outcomes.

This provides an explanation for what happened to US and world financial markets in 2008 where millions of sophisticated investors as well as ordinary citizens suffered huge losses after clinging stubbornly to their perceptions that the markets would ultimately correct themselves and the incredible boom times would resume.

Soros dismisses the capitalist purists' concept of what he calls "market fundamentalism," which contends that giving markets "free rein" from government regulation allows them to correct themselves. He says this "is no better than Marxist dogma."

As stated above, the author claims we are witnessing the end of an era in world history whereby the US has dominated financial markets and the dollar was the base "reserve" currency around the globe. Although he makes a number of intriguing guesses as to what will come of all this, Soros is careful not to make too many specific predictions of future world financial and political developments resulting from this great economic downturn.

I noticed he had faltered with at least one significant prediction, on page 202, where he says, "the chances are good that Iranian President Mahmoud Ahmadinejad will not be reelected in June 2009 and that a somewhat more reasonable leadership will come to the fore, allowing for negotiations." This could still ultimately come about, but who knows when?

Now, a year and a half into the worst economic downturn since The Great Depression, it appears the worst of the recession may be beginning to end, though high unemployment and its consequences for the economy continue to be a drag on recovery, and credit remains tight, or nonexistent.

Debate is increasing over what needs to be done to get the economy moving again and the role of government. Already, government intervention has been unprecedented.

Although in other aspects Soros has demonstrated a strong tilt to the left politically, he is, thankfully, not an advocate of unbridled government intervention and control of financial markets, and even warns about too much regulation being a hindrance to recovery. But he does want a strong and decisive government response to the crisis, and seems to side with what the Obama administration has been doing as the proper course of action.

At the same time, George Soros, the longtime Bush hater, stays true to form and repeatedly blames Bush administration policies for supposedly making things worse. What is not made clear is how similar the Bush and Obama administrations have been in their responses to the crisis.

The era of the well-off US consumer being the driving force in the world economy is over, according to Soros. With some 7 million people in the US currently collecting unemployment benefits, millions more unable to find decent-paying work as well, and possibly trillions lost in home equity and retirement funds, that prediction could be true—at least for the foreseeable future.

What will replace US consumerism as the driving force or forces in the world economies, remains to be seen. Soros sees China, India, Russia and other nations coming out of the recession in a much better economic condition than the US is in currently and with potential to play important roles in the world economic conditions of the next few years.

Here in the US, the way to revive the economy is first to inject capital—just what the Bush and Obama administrations have been doing and bringing with it the threat of inflation—and then when things improve noticeably, withdraw that same capital to ward off hyperinflation, according to Soros. Only time will tell if this was the best course of action. But for now, government printing presses have been very active, creating a staggering national debt of up to some $63 trillion in total. One can only hope things will not get much more out of hand.

But Soros, one of the founders of the modern hedge fund, hedges on predicting the future with his Theory of Reflexivity, warning that it cannot be relied upon for that, though he does make some—mostly generalized—predictions regarding economic issues and international politics.

In the end I found Soros' book as much a study of George Soros as it is of the economy. He does have some interesting insights and comments on recent and current events. His Theory of Reflexivity is not a way to predict the future, he says, but it can help one make more prudent investment decisions.

Some of the details of the author's discussions of what went wrong were over my head, with me not having an economics background. But it was clear that some wild transgressions of sensible investment and financial regulations occurred in the heady days of the US economic "super bubble" leading up to the great bust of 2008.

George Soros is to be commended for stepping up to the plate and taking his swing at explaining why and what happened. As I said, I found the book an interesting read, and came away with a somewhat better understanding of the disaster that has befallen us over the past year and a half. For that this book is well worth the modest $10 price.

Meltdown, A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse, By Thomas E. Woods Jr., © 2009, Regnery Publishing;194 pages, hardcover; available from www.consrvativebookservice.com.

Reviewed by Jim Benson

This book takes a different tack than the above referenced work by left-leaner George Soros. Specifically, it finds that government intervention in the economy led to both the great, though "artificial," economic boom of recent years, as well as the "Great Recession" we have so painfully been enduring over most of the past two years.

Author Thomas E. Woods Jr. is a senior fellow at the Ludwig von Mises Institute, which is viewed by those leftists in our leftist-dominated news media as a capitalist-oriented think tank. And this is essentially true. Von Mises was one of the founders of what has come to be called the free-market-oriented Austrian School of Economic Thought.

The socialistic, government-interventionist-oriented Keynesian (after economist John Maynard Keynes) school of economic thought is currently in vogue among our politicians in Washington.

The author declares that those economists of the Austrian School of Economic Thought are "the very people who predicted not only the Great Depression [of the 1930s], but also the calamity we're dealing with today."

"The media tells us that 'deregulation' and 'unfettered free markets' have wrecked our economy and will continue to make things worse without a heavy dose of federal regulation," says a publicity statement on the book's cover. "But the real blame lies elsewhere."

Contrary to current popular, often media-driven opinion, writes Woods, the actual causes of the current Great Recession, as well as so many of the other boom-bust business cycles of the past century, are government interference and manipulation of the money supply.

Woods traces the beginnings of the current crisis to efforts by the Clinton administration in the 1990s to promote "affordable housing" for the poor and minorities—a kind of "affirmative action" for home buyers that led, along with other things such as government manipulation of interest rates and the money supply, to the boom in the housing market and creation of the housing market "bubble" that would eventually burst and bring much of the rest of the economy crashing down with it.

Along the way, however, many people in high places, made fortunes off the boom, including former Clinton budget director Franklin Raines, who, the author notes, was paid $100 million in compensation for his brief stint as head of the Federal Home Loan Mortgage Corporation, better known as Fannie Mae.

"To add insult to injury, Woods writes in Chapter 1, "the very people who devised the policies that produced this mess are now posing as the wise public servants who will show us the way out."

In Chapter 2, Woods lays blame on those in government he declares created the housing bubble: 1) Fannie Mae and Freddie Mac (Federal National Mortgage Association), two "government sponsored enterprises" enjoying numerous special powers and privileges including almost unlimited credit from the US Treasury, which have come to be responsible for about half the nation's mortgages. 2) The Community Reinvestment Act, "a Jimmy Carter-era law that was given new life by the Clinton administration" to promote affirmative action and "racial equality" in housing. 3) What Woods calls "the government's artificial stimulus to speculation": "The push for relaxed lending standards for low- and middle-income borrowers was so pervasive and systematic, persisting for a full decade, that it is no surprise that it should have spilled over into the standards for higher-income borrowers as well." 4) The "pro-ownership" tax code" which resulted in hundreds of programs to encourage people to buy homes. 5) The Federal Reserve and artificially cheap credit. The boom in construction and real estate over the past decade is an example of this. 6) The "too big to fail" mentality." The author says "certain actors in financial markets have been allowed to operate in the confidence that they, and the system as a whole, will not be allowed to fail, and that in one way or another, the American population will absorb the losses."

Throughout the book the author cites example after example of what he sees as unjustified government interference and mismanagement which made worse and will prolong the current recession, or even make it a depression.

Government, he says, causes the boom-bust cycles in business which have been a fact of life in this country and around the world for the past century and even before.

There are lots and lots of interesting quotes, statistics and historical data which back up his contentions. Woods even spends considerable time examining what he sees as the causes of the Great Depression of the 1930s, contending that both Presidents Herbert Hoover and Franklin Roosevelt had essentially the same interventionist policies which prolonged that crisis—just as he contends both Presidents George Bush and Barack Obama have been doing the same things to make worse and extend our latest economic bust.

But government intervention does not have to be inevitable or wrong-headed, says the author, citing what he calls the "depression" of 1920-21, which was a short-lived economic bust, thanks to noninterference by the government that time.

There is also a fascinating discussion of what money is and how it is used to affect markets and other economic activity.

"The United States need not be bogged down in recession for years and years," says Woods. "The free market may yet transition us out of the current mess swiftly and efficiently." But the current efforts to free up credit for more people than those who should have it and increase credit-based consumer spending, including home buying, are not the answer, Woods states.

"The best way to avoid the bursting of economic bubbles and to clean up the wreckage caused by artificial booms is to not initiate artificial booms in the first place," the author declares. "We should at last abandon our superstitions about the expertise of Fed officials and their ability to manage our monetary system."

While there's certainly merit in Woods' free-market analyses of the boom-bust business/economic cycles of past and present, I'm not convinced that absolute, laissez-faire economic policy is always and without question the best government role. There are simply too many crooks out there to undermine the best intentions of the free market. But this book certainly makes a strong case against the kind of government intervention we have seen, both at present and historically.

Whitaker Wellness Institute, www.whitakerwellness.com. Offering alternatives to the standard, drugs-and-surgery approach of conventional "health" practitioners.

Calling itself the "largest alternative medicine clinic," the Whitaker Wellness Institute is staffed by medical doctors who have conventional medical training and credentials but who specialize in alternative treatments for a variety of diseases and health problems.

It's not that the institute's founder, Dr. Julian Whitaker, MD, is always against conventional medical practices. On the contrary, Dr. Whitaker himself is a member of the American Medical Association, whose policies and practices have long dominated American health care. But Dr. Whitaker and his staff offer alternatives to the conventional medical treatments which have often failed to restore patients to good health.

"As a longtime practitioner of alternative medicine," Dr. Whitaker states, "I am often asked why I took the 'road less traveled' in medicine. I certainly didn't set out to be unconventional. I graduated from Dartmouth College in 1966, earned my medical degree at Emory University Medical School in Atlanta in 1970, and completed my internship at Grady Memorial Hospital, also in Atlanta. Good formal medical education is important, and I'm grateful for this foundation in basic medicine. However, there was something ahead that was far more important to my career as a physician.

"It took place one evening when I was working in the emergency room during my orthopedic surgery residency at the University of California in San Francisco. A young woman came in with a sprained ankle. As I tended to her injury, I was struck by how healthy she was—so healthy, in fact, that her eyes actually sparkled. It suddenly dawned on me that physicians never study health, and certainly never advise their patients how to achieve it.

"I found out that this woman sold vitamins and took them herself and, as a result of this encounter, I began taking vitamins myself. I also started learning all I could about nutrition and natural therapies, things I was never taught in medical school. I soon became convinced that these approaches, which drew upon the body's own healing powers, held far more potential for preventing disease and restoring health than traditional medicine's blunt tools of prescription drugs and surgery.

"In 1974, I met with four other doctors in the modest conference room of a Motel 6 to form the California Orthomolecular Medical Society. To my surprise and delight, one of my medical heroes, two-time Nobel Prize winner Linus Pauling, PhD, showed up to lend support to our fledgling organization.

"Dr. Pauling himself had coined the term orthomolecular medicine in 1968, which he defined as "the preservation of good health and the treatment of disease by varying the concentrations in the human body of substances that are normally present in the body and are required for health." More than any other label—alternative, nutritional, natural, holistic, or complementary medicine—orthomolecular medicine comes closest to describing what I have believed in.

"In 1976, I went to work at the Pritikin Longevity Center under the direction of Nathan Pritikin. Until then, in spite of my years of training in medical school, internship, and residency, I couldn't recall ever having seen patients get well. True, many got better, but virtually all stayed on 'follow-up' prescription medications.

"Now, for the first time in my medical career, I saw patients get well, not as a result of dangerous drugs or risky surgical procedures, but through the powerful effects of diet and exercise. And not only did these patients drop their medications, they dropped their diseases.

"While my training with Pritikin convinced me of the therapeutic power of diet and exercise, I believed there was more that could be done to reverse disease and achieve optimal health. I continued my education in earnest, with the goal of identifying safe and effective solutions to some of the most common health problems of modern life: heart disease, high blood pressure, diabetes, arthritis, and more.

"In 1979, I opened the Whitaker Wellness Institute with the goal of helping people who had been failed by conventional medicine and had nowhere else to turn. At the clinic, patients learned the nuts and bolts of lifestyle changes. They were prescribed an intensive program of targeted nutritional supplements. And they were treated with powerful noninvasive therapies not offered by conventional physicians.

"Today, the Whitaker Wellness Institute follows that same model. We are now the largest, most comprehensive integrative medical clinic in the United States. More than 40,000 patients have come through our doors, and time after time, they've proven the medical establishment wrong by improving and in many cases reversing 'incurable' diseases and achieving newfound health and vitality.

"My mission remains the same today as it was all those years ago: to help patients restore their health with safe, proven, natural therapies that allow them to get off prescription drugs and avoid surgery."

The "heart and soul" of the Whitaker Wellness Institute," says the website, "is our Back to Health Program, a comprehensive approach to treating illness and restoring health. During your one-, two-, or three-week stay at the clinic, our talented staff of physicians and medical professionals will assess your health status. Your physician will then prescribe a personalized program of nutritional supplements, diet and lifestyle modifications, and other specialized therapies that in many cases can eliminate or reduce your need for medication.

"Patient education is an important component of the Back to Health Program. You will attend informative workshops where you'll learn about the dangers of the overuse of drugs and surgery as well as the benefits of natural therapies. You will also participate in exercise sessions and enjoy delicious and healthy meals prepared by our gourmet chef.

"We specialize in therapies you won't find in any other single clinic. These include IV treatments such as EDTA chelation for heart disease and circulatory problems, vitamins and minerals for immune enhancement, and specialized formulas for the treatment of chronic fatigue, vision problems, and Parkinson's disease. We also offer Enhanced External Counterpulsation (EECP), a noninvasive treatment that improves circulation and relieves angina; hyperbaric oxygen therapy (HBOT), which facilitates wound healing, stroke recovery, and other serious medical conditions; and infrared light therapy, microcurrent therapy, prolotherapy, and acupuncture for pain control and multiple other health concerns.

"Thousands of Back to Health graduates have successfully combated serious health challenges. Equally important, they have experienced for themselves the many side benefits of this program, including:

• Renewed energy and vitality
• Lower cholesterol and blood pressure
• Better blood sugar control
• Enhanced immunity
• Sharper memory and better mood
• Improved fitness and weight control

"The best news is that this approach is entirely doable—and enjoyable. Our unique blend of conventional and alternative therapies coupled with caring, professional guidance will help get you started on the road Back to Health."

The website says Dr. Whitaker "is a member of the American Medical Association and is board certified in anti-aging medicine. A popular speaker and lecturer, Dr. Whitaker is the author of 13 books, including Reversing Heart Disease and Reversing Diabetes, and the author of the widely-read monthly newsletter, Health & Healing. He is also a tireless crusader against abuses by the FDA and a champion for medical freedom."

The institute has a store which sells books and video tapes on natural healing and health strategies, and offers a growing selection of high quality nutritional supplements to help you get back to health and restore your vitality at any age. These are produced for Whitaker's associated Institute for Vibrant Living (www.ivlproducts.com). If you're interested in new and high quality nutritional supplements and other natural health aids, you'll enjoy a visit to IVL's website. These products are usually not cheap, but we have purchased a number of them and have found them to be of excellent quality and believe we have benefited from them. There are also periodic sales in which you can buy them at considerably reduced prices.

If you believe conventional medicine has failed you, or if you are just interested in alternatives to the very expensive and often unsuccessful conventional medical practices of endless tests, operations, and dosing of patients with powerful prescription drugs that have harmful side effects, then you will find the Whitaker Wellness Institute and related websites of great interest.

Makeshift Workshop Skills for Survival and Self-Reliance, Expedient Ways to Make Your Own Tools, Do Your Own Repairs and Construct Useful Things Out of Raw and and Salvaged Materials, by James Ballou, © 2009, 230 pages, softcover, $29. Available from the website at www.paladin-press.com.

One of the traditional tenets of modern-day survivalism is that eventually, one way or another, some cataclysm will happen which will throw the human race, or part of it, back into a primitive state of existence. A nuclear war, a meteor slamming into the earth, or what have you will occur and some or all of us will, for an indefinite period, be forced to survive by our wits and whatever natural or manmade resources are available.

We all hope and pray this will never happen in our lifetimes, but we all know it could happen tomorrow. Therefore, preparations for such an event have always been part of the survival mindset.

This way of thinking has inspired numerous books on the subject over the years. One of the latest— and best—is James Ballou's Makeshift Workshop Skills for Survival and Self-Reliance. This book is remarkable in a number of ways, not the least of which is its depth and scope. The ability to make tools, equipment and clothing out of natural and available manufactured items is certainly desirable, and has practical applications as well in today's tough economy where money is increasingly scarce and the term "self-reliance" takes on new meaning.

"In today's high-tech society, even the most advanced devices and systems are not failsafe," according to a statement on the book's back cover. "Tools can break or wear out, batteries can go dead, and all sorts of malfunctions can render the modern conveniences we rely on totally useless. If quick replacements of failed items are not readily available, the ability to improvise and adapt in the workshop suddenly becomes very practical.

"James Ballou, author of the best-selling Long-term Survival in the Coming Dark Age, dramatically expands on the popular home workshop material in his first book to present a 'makeshifter's' way of building and repairing things with only a pile of raw or salvaged materials, your hands and your mind. In this fascinating new book, he presents a wide range of unconventional, remarkably creative home workshop skills, including:

HOMEMADE TOOLS-Make your own hammers, drills, screwdrivers, wrenches, pliers, saws, files, chisels, vises, clamps . . .

EXPEDIENT REPAIRS-Perform sturdy repairs with ordinary glue, tape, cord, wire, dowels, nuts and bolts . . .

MAKESHIFT CONSTRUCTION-Construct all sorts of functional items out of coat hangers, old car parts, 2 x 4s, wooden dowels, nails, rebar, coffee cans . . .

USEFUL PROJECTS-Build a homemade forge out of an old barbecue; handle simple soldering jobs with a road flare; perform quick weld repairs with car batteries, jumper cables, and a pair of pliers . . .

"Ballou also gives extensive instruction in makeshift metalworking, practical calculating skills, resourceful salvaging, plus dozens of practical tips for the craftsman or handyman who might need this information in an emergency or who simply enjoys learning about alternative ways to handle home workshop projects.

"As far back as James Ballou can remember, his interests have included survival activities—hunting, fishing, exploring, treasure hunting, backpacking, shooting, making and using tools, and just plain improvising. The author of dozens of magazine articles on various subjects, he also served four years in the US Army as a paratrooper with the 82nd Airborne Division."

Regular readers of ModernSurvival.net may have also noticed James Ballou's byline here as well, since he has contributed numerous articles to our online publication over the years.

The book's chapters include:

Know Your Raw Materials. Rocks and minerals, clay, animal products, wood, plastics, metals.

Making and Using Cord. Types of cord, homemade cord, useful knots, net making.

Makeshift Metalworking. The forge, the forge air supply, forge fuel, homemade forge and forge blower project, makeshift anvils, additional makeshift forge tools, basic blacksmithing processes.

Improvised Tools. The first tools, improvised drills, makeshift saws, makeshift files and rasps, homemade knives, improvised wrenches, thread-cutting tools, vises and clamps, measuring and marking aids, wooden tools.

Expedient Repair Methods. Repairing with glue, adhesive tape repairs, repairs with cord, wire and ties, rawhide repairs, pins, pegs and dowel repairs, riveted connections, working with screws and bolts, preparing the work before repairs, clothing repairs.

Doing Your Own Soldering, Brazing, and Welding. Soldering and brazing, gas welding, MIG welding, TIG welding, arc welding, weld joints, forge welding.

Things You Can Make Out of Other Things. Coat hangers, coffee cans, wooden dowels, file steel, plastic and steel pipes, saw blades, rebar, nails, 2 x 4 lumber, things made from car parts, a list of makeshift substitutes.

Practical Tips for the Craftsman or Handyman. Drill a straight hole, drill a smooth, clean hole, cut a straight line, cut out a large diameter hole, find the center of a circle, make a right angle, loosen a stubborn screw, clean file teeth, prevent split boards, pull tight nails, prevent overheating small metal parts, create makeshift tool handles, remove rust, make your tools easily accessible, categorize miscellaneous hardware.

Theorems and Formulas for Inventors and Builders. Temperature scale conversions, determining the mechanical advantage of pulleys, blocks and tackles, determining the mechanical advantage of a wedge, calculating gear ratios, calculating dimensions, using the Pythagorean Theorem.

Suggested Resources for Further Study.

These headings give you only an inkling of what's inside this fascinating book. For example, in the chapter on raw materials, just the discussion of metals alone includes several pages on copper, aluminum, lead, tin, zinc, cadmium and bismuth, silver, iron and steel.

The ability to fabricate that odd little metal part, make sandals out of tire treads, make files, saws and screws and even a forge or a barbecue can not only be tremendously satisfying, but also can save you lots of money—as anyone who's paid for costly repairs can attest.

As always, many people will find the subject matter of this book at least a little odd, if not outright silly or strange, being addicted as they are to the conveniences of modern life and unable to imagine living without them. But as one old salt related in a letter to the editor of the now defunct paper magazine American Survival Guide, people who think like this haven't experienced the hardships of events like World War II or the Vietnam War.

James Ballou's book is for those of us who know better and think differently than the hordes of high-tech junkies whom we live among today. It's nice to have and enjoy the many conveniences of modern technology. But knowledge of how to adapt and prosper in tough times as well as good times is even nicer—and provides a great deal of peace of mind as well. l