Tags: Soros | Planning | 'October | Surprise' | for | Bush?

Is Soros Planning 'October Surprise' for Bush?

Sunday, 01 February 2004 12:00 AM

Soros did not make this comment glibly, telling the Washington Post it would be a real consideration "if someone could guarantee" Bush's defeat.

The billionaire's zeal to unseat Bush has caught the notice of top policy-makers in Washington who worry that Soros would not need to risk his whole fortune to cause mischief.

Here's the real worry: Could the master currency trader manipulate the financial markets to create a panic, collapsing the stock market or the U.S. dollar on the eve of the November election?

The thought of such a scenario – dubbed a "Financial October Surprise" – has some worried.

New York Times best-selling author and investigative reporter Kenneth R. Timmerman details in the current edition of Insight Magazine ("Will George Soros Panic the Market?") how such an October Surprise might play out.

In his analysis, Timmerman writes that the idea of disrupting consumer confidence to the detriment of the Bush White House first came from Clinton Treasury Secretary Robert Rubin, who now heads Citigroup.

Rubin argues in a new study that the Bush tax cuts could eventually lead to a crisis of confidence in the markets and in the dollar, because they are contributing to a sea of federal red ink. That could mean staggering losses to investors, the Rubin study says.

Timmerman quotes economist Bruce Bartlett, who believes Rubin is "laying the groundwork for a political assault on President George W. Bush over his budget policies, [hoping] to give the Democratic presidential candidate an issue to run on that could propel him into the White House."

But, say Wall Streeters, there may be another aspect to Rubin's study. As a man who continually talked the markets up during the Clinton administration, today he could be talking the market down, Timmerman writes.

"This market is thin enough that if you made a big move all of a sudden you could move it," Bartlett told the magazine. "At some point, something could happen on its own, and then someone like George Soros could turn a minor blip into something else."

The Hungarian-born Soros' hatred of President Bush is no secret.

In his fanatical zeal to unseat Bush, he has bankrolled – to the tune of $18 million – groups seeking to change U.S. campaign finance laws. He also has provided $15 million in funding to left-wing organizations committed to defeating Bush in November.

The Washington Post reports that Soros, who gave away $5 billion over the years to "promote democracy in the former Soviet bloc, Africa and Asia," believes defeating Bush – "the central focus" of his life – is "a matter of life and death."

He has committed some $5 million to MoveOn.org, a left-wing organization that has, among other things, sponsored an ad contest in which two of the ads submitted compared Bush to Adolf Hitler, according to the Washington Times.

Overnight, Soros has become the billion-dollar piggybank for the far left.

"If necessary, I would give more money," Soros, 74, told the Post. "America, under Bush, is a danger to the world. And I'm willing to put my money where my mouth is."

Soros also hinted that there were Nazi-like tendencies in the Bush White House.

"When I hear Bush say 'You're either with us or against us,' it reminds me of the Germans," he told the Post.

The paper said such rhetoric conjures up memories of Nazi slogans on the walls – Der Feind Hort mit ("The enemy is listening"). "My experiences under Nazi and Soviet rule have sensitized me," he told the Post.

Bush made his "with us or against us" comments during a post-Sept. 11, 2001, speech in which he admonished the nations of the world to join the U.S. in its battle against global terrorism, which affects many countries and has killed scores of people worldwide.

Soros is so fervent in his opposition to Bush, Timmerman indicates, that investment pros are already advising a cautious watch-and-wait attitude toward the billionaire.

Timmerman writes, "Investment adviser and author Don Luskin thinks investors should watch Soros carefully but calmly."

"At least two of three conditions must be met for a speculative attack on the market to succeed," Luskin told the magazine. "First and foremost, the speculators have to be right."

Timmerman says that when Soros sought to break the British pound with massive currency trading in 1992, "he played into a market that knew the existing exchange rates were unsustainable."

Adds Luskin: "So he speculated against the Bank of England, not against the whole damn world. You can influence the market by the very act of betting."

In an ideal situation, Luskin says, there should be technical market conditions that force other players "to take action triggered by what you did, independent of wanting to help you."

He used the Oct. 19, 1987, stock market crash as an example. On that day, computer-driven selling of stocks picked up steam as the market fell, which drove prices down even further. At day's end, stock prices had plunged 20 percent (compared with a 23 percent drop on Oct. 28 and 29, 1929).

The New York Stock Exchange has, since that "Black Monday," when the Dow Jones Industrial Average fell to 1,738.34, installed "circuit breakers" that ostensibly make panic selling impossible. But still, there are concerns.

"Soros believes that if he can force the market down, he will have an effect in the real world," Luskin says. "If it happens on Oct. 31, people might go into the voting booth with fear in their hearts."

Timmerman says he put two questions to Luskin and to private investment adviser Jim Klima of Klima and Associates in Ellicott City, Md.: "Should Soros decide to make a power play on the eve of the November 2004 elections, how would he do it? And what is the likelihood he would do so?"

According to Luskin, Soros could decide to sell massive amounts of stock index future contracts. If this tactic succeeded in driving down the market and keeping it down for a few days, he would make a profit from his early trades.

Said Luskin, "With this strategy you only lose at the bottom." However, Soros could lose big when markets turn, as he did in October 1987.

Klima believes that Soros would stick with currency markets because he is most familiar with them.

"By playing the futures market, he could win whether the dollar slides further or whether it recovers," Klima told Insight. However, he could do the most harm to the U.S. economy if he bets the dollar higher, not lower, Klima explained.

"A dramatic rise in the price of the dollar would dramatically hurt U.S. exports," said Klima.

Writes Timmerman, "These advisers say concerned investors should be watching for increased market volatility, starting in the futures pits, and for futures trading at a discount."

However, despite his anti-Bush rhetoric, Soros will likely consider all options before throwing a great deal of money at that market, Timmerman says.

"George Soros has gotten his tail burned badly in the U.S. market when he's been a big seller," Luskin said. "If he's wrong, it could cost him several billion dollars."

If he's correct in his bid, though, even Vermont's wild-card former governor, Howard Dean, could be elected in a panic. And if that happens, writes Timmerman, "his doomsday trading could become a self-fulfilling prophecy as U.S. financial markets collapse."

That would leave Soros even richer than he is today. "In the end, it could be a pure financial play, not a political play," says Luskin.

There is no evidence that Soros is planning a financial attack on U.S. markets. But with a bankroll of $7 billion and a passionate hatred of George Bush, Soros has many people worried.


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Soros did not make this comment glibly, telling the Washington Post it would be a real consideration "if someone could guarantee" Bush's defeat. The billionaire's zeal to unseat Bush has caught the notice of top policy-makers in Washington who worry that Soros would not...
Sunday, 01 February 2004 12:00 AM
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