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The Rise of Supranational Investors.

Is Exxon Mobil larger than a number of Third World countries? Is Goldman Sachs more powerful than most countries? How about Warren Buffett? And it was a single hedge fund manager, George Soros that broke the British pound, right?

Countries like Malaysia inveigh against "speculators" like Soros. As misplaced as I believe most of the rhetoric to be, I believe that Malaysia has a point vis-a-vis someone like Soros. The "ordinary" speculator takes his or her chances in the market, and stands to make or lose a "small" amount of money in the global scheme of things. It's just a living, after all. But Soros (or the others mentioned above) are no ordinary operators. They are conducting their business on a scale that could potentially involve whole countries

It is the SCALE, and not the bet that shocks people. Most people have won or lost bets of say, $10 or $100.  But Michael Lewis shocked the world in Liar's Poker when he revealed that John Gutfreund, chairman of Salomon, was willing to bet $1 MILLION in a game against his subordinate. What's more, that subordinate, John Meriwether of future Long Term Capital Management (in)fame "raised" the bet to $10 million, half of his net worth, to get the boss to back down. These are amounts that many will not see in their lifetimes.

The problem with Soros-style billion dollar bets is that the loser of such a bet could be a whole COUNTRY. In the end, it might come down to a modern equivalent of the David and Goliath battle. That was NOT a battle between two warriors. The challenge, as originally posed by the Philistine Goliath, was that the COUNTRY, Israel or Philistia, whose champion lost would become the slave of the victor. David won, and eventually conquered the Philistines, but not until after many more battles.