THE NEW PARADIGM FOR FINANCIAL MARKETS: THE CREDIT CRISIS OF 2008 AND WHAT IT MEANS, by George Soros, 163 pages, $22.95.

George Soros is a noted and influential financier, chairman of Soros Fund Management and founder of a global network of foundations designed to support open societies. A Budapest native who lives in New York, Soros is very active politically.

With the country in recession and a housing market like no other, Soros analyzes it as "the worst crisis since the Great Depression." He sees a profound difference, though, between today's financial problems and those of the 1930s. "The periodic crises were part of a larger boom-bust process; the current crisis is the culmination of a superboom that has lasted for more than 25 years."

Soros believes there is a basic difference between thinking and reality. Soros learned that principle when he was a student at the London School of Economics and was heavily influenced by Karl Popper. Today, he thinks a new economic model is needed to understand the nature of the economic morass.

Although the economic crisis was "slow in coming," Soros believes it could have been "anticipated several years in advance. It had its origins in the bursting of the Internet bubble in late 2000."

Soros also asserts that "cheap money engendered a housing bubble, an explosion of leveraged buyouts and other excesses. When money is free, the rational lender will keep on lending until there is no one else to lend to. Mortgage lenders relaxed their standards and invented new ways to stimulate business and generate fees," said Soros.

The result is the housing foreclosure morass that is sweeping the country, taking houses away from people who strapped themselves too tightly and ruining their credit for the foreseeable future. Economic distress, noted Soros, "spread from residential real estate to credit card debt, auto debt and commercial real estate."

Soros said, "I used to joke that currency regimes resemble matrimonial regimes: Whatever regime prevails, its opposite looks more attractive." But he is convinced that economics and politics go hand-in-hand. For instance, the Bush administration policies "have impaired the political dominance of the United States, and now a financial crisis has endangered the international financial system and reduced the willingness of the rest of the world to hold dollars."

With all of his analysis, Soros concedes that he doesn't know what the economic future holds. He believes that "we have not learned how to govern ourselves. As a consequence, we live in great uncertainty and grave danger. We need to gain a better understanding of the situation in which we find ourselves."

Soros ends with a plea for "a better understanding of the human condition," one marked by uncertainty.

Overall, his economic analysis, while thought provoking, is reminiscent of Harry Truman's clever remark when he served as president: "What we need in this country is a one-hand economist. All my economists say, 'On the one hand ... but on the other hand ... "'

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