The American Spectator

p> strong> The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means br> By George Soros br> (Public Affairs, 208 pages, $22.95) /strong> /p>

“All progress is based upon a universal innate desire on the part of every organism to live beyond its income.” — Samuel Butler

I’m frankly worried not just about the financial meltdown but about how the increasing polarization in this country. It’s not just that the Internet has allowed people to live only within their affinity groups. Even the mainstream media are losing their perspective.

Last week, for example, while every paper in the country had the bailout settlement across its front page, the New York Post, New York’s only conservative newspaper, ran the story on page 5. Apparently it was too embarrassing for President Bush and therefore not worth reporting. Meanwhile, from the Post’s vice presidential debate coverage, you’d think Sarah Palin walked off with a knockout victory.

Therefore I wasn’t at all disappointed the other day when I was walking out of the library and spotted George Soros’s new book on the “Just Arrived” shelf. Why not give it a try? I grind my teeth over Soros just as much as any other conservative. After all, he’s the man who helped pass McCain-Feingold to “take the money out of politics” and then turned around and spent $25 million to defeat George Bush in 2004. It turned out he only wanted everybody else’s money out of politics. Still, Soros has made billions playing the international currency markets. He must know something.

p>Soros, it turns out, has a very good perspective on the current meltdown. He says it’s a system-wide overextension of credit, mainly through novel financial instruments and the housing market. Conservatives may fret that it all comes down to Fannie Mae and Freddie Mac and their subprime mortgages for low-income minorities, but it was a universal phenomenon. br> /p>

Martin Feldstein, a former chairman of the Council of Economic Advisors [under Ronald Reagan], estimated that from 1997 to 2006, consumers drew more than $9 trillion in cash out of their home equity. A 2005 study led by Alan Greenspan estimated that in the 2000s, home equity withdrawals were financing 3 percent of all personal consumption. By the first quarter of 2006, home equity extraction made up nearly 10 percent of disposal personal income.