Soros on regulation

• China: tightly regulated foreign investment; just allowed investments to resume - signaling they believe the economy is back on track
• Dubai: total debt of 80bn held by the royal family. Looking to refinance shorter term loans as longer term debt in the current favorable credit conditions
• Iron ore gradually moving to the spot market, as it had been done purely by annual negotiations previously
• Brazil: imposing tax on foreign inflow to moderate currency appreciation. IMF says that more fundamental solutions are necessary, but these take a long time time to implement, while a tax, although flawed, complex, and 'porous', may be the best immediate response

Soros: financial markets always present a distorted picture of reality. Instead of developing towards equilibrium, they develop towards bubbles. Bubbles are not irrational, as it pays to follow the crowd for awhile: no amount of regulation will fix this.

• Regulators (as Greenspan said previously) need to accept that bubbles can't be recognized
• Money supply in addition to credit has to be controlled - govt should be able to impose tighter margins due to economic color
• Prevent systemic risks by making large institutions report their larger positions, to make sure not too many people are one side of a trade
• Since the government can't credibly withdraw its 'too big to fail' insurance plan, it must instead actually make sure banks don't use this last line of defense: by reducing leverage, eliminating proprietary trading
• Regulation isn't needed now, but later. Banks are 'earning' their way out of the recession, and it is profitable for them to do so, and only reduce their profitability once things have stabilized.