`I'm Amused By My Guru Status'

In a rare interview, George Soros met at his New York offices with Markets & Investments Editor Gary Weiss. Here are some excerpts from the interview:

Q Your public statements surface at unpredictable intervals, sometimes as almost a bolt out of the blue. What is the rationale behind the timing of your public statements?

A I generally don't want to have a public presence unless I have something to say... . And to the extent that it is possible, I prefer to say it in my own words. Because that is one definite policy that I'm developing--I find that if I give an interview, I will be quoted out of context. Even though they are my own words, the slant is different than what I intended....

Even though I express myself, I also want to remain myself and not become dependent on the media. You see? And that is also why I don't want to have a media policy, a strategy as to how to get my ideas across, because then it begins to dominate your thinking....

I don't have a love-hate relationship [with the media]. If anything, I [keep] a really wide distance. If you now write a devastating critique and find some flaws or something in me...it won't

hurt me. So you are at liberty to do it.

Q Do you have a perception as to the extent in which your statements and actions move markets?

A It's clear it has become an important factor. Now, I also know, you see, that people are basically misguided in their view of my infallibility, because--and I don't mind to stress this--if anything, I make as many mistakes as the next guy. But where I do think that I excel is in recognizing my mistakes, you see. And that is the secret to my success.... The key insight that I have reached is recognition of the inherent fallibility of human thought. The whole book [Alchemy of Finance] is about that. So it naturally applies to me.

I'm amused by my guru status. I acknowledge it. How can I deny it? I think it is a passing phase. I hope that actually, to the extent that I have an impact on people's thinking, is that they'll learn how important it is to look for the flaws and to think critically. And that is what I have been trying to convey in my books.

And what has happened, for instance, in the currency markets is a wonderful example. Because it's amazing how the [European] authorities are unable to admit their mistakes and how they are unable to change their way of thinking.

Q What's your view of the European currency crisis?

A It's very reminiscent of what happened during the interwar period, between World War I and World War II, and it's really amazing how people haven't learned from past experience. It's as if [John Maynard] Keynes had never lived. Some of the same mistakes: overvalued currencies, sticking to monetary discipline in a time of recession, you know, very high real interest rates. It's a tragic situation.

There has to be some new thinking. The monetary system is still intact, but the exchange-rate mechanism is definitely broken, so you need to fix the mechanism. You need a system. That's my position. And I think when you fix the mechanism, the strong currency has to take more responsibility than in the present. The arrangement in the ERM was tilted against the weak currencies. The weak currencies had to take all the burden of adjustment. And what destroyed the system is that the strong currency, the German mark, had the adjustment problem but was under no obligation to do anything about it.

Q Some observers surmise that your involvement in Newmont Mining Corp. and real estate implies that you are betting on a revival of global inflation.

A They are wrong. They are wrong! In each case, there's an individual reason, but there's not a unifying theme. If anything, I think that the deflationary forces are much greater than the inflationary forces. I think that there are opportunities in real estate. There have always been opportunities in real estate, so there's nothing new about that. What is new is that I had an opportunity to associate myself with a real estate investor who has been extremely successful, probably as outstanding in his field as I am in mine. That's the opportunity I went after.... The timing was that Paul Reichmann was available.

Q Are you calling a turn in the real estate market?

A I have not said it, and I'm not going to say it.

Q Would we be wrong if we said it?

A I wouldn't say that either [laughing].... I have no contribution to make on this subject.

Q What about gold?

A The same thing.

Q Those are two of the subjects that interest our readers the most.

A [Laughing] I'm sorry about that.

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