If you were a British factory worker, it might have saved your job because British exports became more competitive.
If you were a middle class office worker, it probably made life more inconvenient because imported goods became more expensive, and that Spanish vacation you had been planning might now be out of reach.
If you were a member of the upper class, your wealth was probably already well hedged against GBP risk by using offshore currency accounts, foreign stock investments, etc.
(How well that works is questionable; my completely amateur impression is that this view would force us to legalize insider trading while declaring HFT completely useless, for example.)
I ask because the decision to short the pound was a coordinated attack among many powerful financial institutions. There is a reason collusion in other economic areas is illegal, precisely because it allows a "mispricing" to occur compared to what would happen if their were arms-length, fair competition.
Again, I have no idea if this is a valid criticism of Soros' trade, but the part of the article about him convincing other investors to go along with trade reminded me in a way of the agreement of SV companies not to poach each other's talent, which HN loves to decry as illegal collusion to depress wages.
It's basic game theory, understanding adversarial finance, and applying risk management practices at the sovereign state (central bank) level.
It does seem strange today to bet somewhere in the neighborhood of $7 ~ $8 billions, to only realize a capital gain of ~$1 billion, but it's actually a really impressive ~14% return.
The issue I suppose is where taking that adversarial position, and then being outspoken about the topic, in essence a variation of pump'n'dump for short sellers... proclaim the doom of the British sterling, and the doom becomes real via market awareness.... or, is "market awareness" really just market manipulation?
When economies do not form an optimal currency area, tying currencies together with fixed rate creates all kinds of problems. Having floating exchange rate where central bank only "leans" to reduce volatility is usually the best course of action.
Eurozone is constantly battling against internal imbalances. Moving towards common fiscal policy is one way to fix them.
A nation was pursuing an economic policy towards harmonising their economy with that of another - a very nuanced process. Like two ships lining up so that one could supply the other.
That it makes an economy possibly more vulnerable to external issues (like a giant wave) is true, but it's a necessary condition that ostensibly has future benefits of economic alignment (i.e. ships being resupplied worth some risk).
Soros is a thief, a pirate, like any other - he came a long and created enormous risk, extracted billions into his fat pocket which would otherwise be in public coffers, and didn't create a dime in value for anyone, it's a zero sum game in which he ran off with riches learning everyone else poorer. It's cockroach capitalism of the worst kind.
Such a simple, beautiful and powerful sentence. For some reason I instinctually read it in Morgan Freeman’s voice.
Look at it from a software perspective: there was a huge vulnerability possible. If it hadn't been exploited by this person, someone else would have.
It was the Bank of England fault for not patching the exploit and creating the vulnerability.
See the problem? There's a reason it's illegal to exploit vulnerabilities in software. It's even illegal to exploit them in humans (mostly). It's called fraud.
Lots of society still relies on people behaing well overall with the few outliers being ostracized or outlawed when they don't.
I’ve only ever heard this line of reasoning used to justify something unethical.
And in the case of software, we don’t admire the black-hat hackers that take advantage of exploits, do we? In fact, in that case it’s not even legal…
> The Bank of England was finally forced to give up the fight a few hours after the attack, announcing its exit from the European monetary system with a devaluation of about 15%
Sounds like George Soros just fixed a disequilibrium? How is he the bad guy in this story?
He’s narratively identifiable. Soros didn’t individually break the BoE. Lots of people were in on the trade. But he did so massively, relative to his personal wealth and to the market, and publicly.
So he gets pinned. Had he not traded the peg would have still broken. We’d just discuss it like we do the Asian or Russian Financial Crises [1][2], which happened five years later. Unrealistic pegs that suffered runs. Not a man “breaking” a Western central bank.
[1] https://www.britannica.com/event/Asian-financial-crisis
[2] https://en.m.wikipedia.org/wiki/1998_Russian_financial_crisi...
And to be clear, I'm not saying that short-selling is inherently virtuous. It's a speculative activity like any other in our financial system. But it doesn't make sense that speculation (or even market manipulation) which increases an asset's value is often seen as ok, while the opposite is not.
Edit: Here's a good example - the current Canadian Real Estate Bubble[1]. I wish someone would pop this thing. It's already so big that it's going to hurt a lot of people. The government seems unwilling to do much to restrain it, especially since the pandemic, and as it gets bigger the potential fallout only increases. But I'm willing to bet that if some singular investor/regulator triggers an unwinding they will be blamed for all the consequences. Not the 20 years of policies and decisions that led to the bubble getting this large in the first place.
Note that the article author is a cryptocurrency cultist, so he'll be all in favour of unscrupulous people enriching themselves at the expense of others irrespective of the negative effects this might have on society or the environment or whatever.
Does British monetary policy not get some blame, here?
It was a sudden shock because they were putting their foot on the scale for quite some time.
While this may be true, it is entirely the fault of the dumb UK mortgage market that does not provide for fixed-rate mortgages for the full term of the loan. In the US, 30 year fixed rates are the norm. In the UK you’re lucky to get 5 years fixed.
The ministers in charge didn't want to be in the ERM, it was all Major.
Soros in the heads of lunatics: Big Bad Scary Commie looking to make the capitalist system eat itself so he can usher in a new Global Soviet Socialist Republic with an army of third-world refugees - specifically the scary[0] ones with brown skin or poor English skills - to play the role of Randian moocher class
Soros in reality: Rich banker idiot who made billions of dollars ensuring the UK will never be able to join the Euro while throwing millions of it (0.1%) at random vaguely left-of-center causes to buy the secular equivalent of indulgences[1]
[0] fnord fnord fnord
[1] https://en.wikipedia.org/wiki/Indulgence#Late_Medieval_usage
brexit under the euro would have been all but impossible
I wonder if Soros regrets "breaking the bank", especially given he was a huge remain supporter (donating vast amounts to the campaign)
>brexit under the euro would have been all but impossible
Not necessarily. The Guardian speculated in 2013 (<http://www.theguardian.com/business/economics-blog/2013/jun/...>) that if Britain had joined the Euro:
* The mid-2000s British housing bubble, and its collapse in 2007, would have been even bigger.
* Britain would have had to ask the IMF, ECB, and EU for loans.
* The Tories would in 2010 have promised a referendum to leave the Euro and won a majority. Labour would have won fewer than 100 seats, and UKIP would have "made spectacular gains".
* The anti-Euro side would have won the referendum, and the currency would have collapsed.
* "after a deep and painful recession economic recovery began".
* "Britain would have destroyed the euro on departure, and would now be on the point of leaving the EU altogether. The idea that Farage might be the next prime minister would be quite credible."
Interesting. Any links?
and 1 ECU became 1 euro on 1 January 1999
now that the euro exists: joining ERM (version 2) is phase 1 of joining the euro
I wonder how this wouod be judged with current "insider trading" laws, but since it is a foreign country (even if ally) then probably nothing would be done.
Also the article doesnt seem to mention that Bank of England could stop their losses and stop trying to save the pound.
I have a feeling that actions of central banks are poorly discussed - in many ways those banks seem to be a source of recession (UK, Japan) or method of transfer of wealth to the rich (quantitative easing... seriously it is just pure evil).
As for your last point, yes, if the Bank of England had surrendered earlier they would have lost far less money and Soros and his allies would have made far less profit.
You and I have very different definition of “poorly discussed”.
We still barely have any sources about what happened in Japan.
This wouldn't pass high school English.
Someone who explicitly says that as a teenager, he enjoyed his time working for the Nazis while they were looting those targeted, is not going to be shamed over taking $1 billion in a trade.
See: https://www.youtube.com/watch?v=SGWizajL7tA compilation of clips from 60 Minutes interviews, etc. (from 3m45s he talks about his time helping to confiscate property from Hungarian Jews)
Stop lying.
In that video, he seems like a logical and emotional person who can keep emotions in their proper perspective. Everything is nuanced, and he can navigate it. It looks like he has a high emotional IQ and intelligence IQ.
Regarding the last segment of the video that contains an audio clip, it talks about personal development. Personal development can happen in terrible enviornments like the German occupation and Nazi confescation of Jewish assets. He was glad that he developed as opposed to not developing.
It's a little odd that he called it a happy time though, and I am disappointed that he does not believe in God, but that doesn't mean he should be made a scapegoat for unwinding of financial problems started by others.
And how can you congratulate someone for being logical, high IQ/EQ while being disappointed that they don't believe in God, which is an illogical idea and emotional crutch?
Connection being the authoritative right sees Soros as the analog to the Koch bros.... not quite understanding we don't like capitalists anymore than the right likes socialists. But hey Soros === bad, leftist === bad so to the top of HN it goes. (please prove me wrong)
It's a bit bizarre.
But yeah the right always tries to portray him as leftist to try to connect him with "antifa" as part of antisemitic conspiracy theories.
He went on to create the Open Society Foundations, which supported and co-ordinated aspects of the (then) progressive anti-globalization movement of the 90s I was involved in. At the time the movement was mostly anti-capitalist, uniting labor and civil society against (neo-liberal) trade agreements designed to exploit the poverty and authoritarianism of other countries and to hollow out western economies by exporting manufacturing jobs, and against exploitative policies by the IMF, who used loans to indebt and subordinate elected governments and force privatization and sale of their infrastructure to transnational corps and roll back environmental protection. (see, confessions of an economic hitman, nologo, etc.) Ostensibly noble causes.
It almost seemed like a billionaire's noblesse oblige. Soros was the "good capitalist." The movements themselves failed after 9/11, and Occupy was a whimper in comparison to the battles of Seattle, Quebec City, Turin, and others. The US rust belt was exported destroyed in the 90's and 2000s, laying the ground for the populist revolt that created 2015 election result. However, his OSF foundations and network of NGOs flourished, installing progressive activists from the era in colleges and political parties, and other key institutions.
Trouble is, these weren't working class labor organizers and anarcho-anti-capitalists, they were technocrats, equipped with an ideology whose specific endgame is central economic co-ordination, and it was nominally anti-capitalist in the sense that it is against the individualistic cultural aspects of smallholders and the autonomy and values small business provides, and that it uses critical theory as a tool to dissolve the bonds of societies. This is the kernel of truth beneath the layers of hallucinatory conspiracy theory.
To me, Soros is just a visionary criminal who learned about totalitarianism from the inside during his youth, and has funded his own vision of that technocratic system. That's not a conspiracy theory, that's just what any billionaire criminal with a will to power seeking to build a empire would do, and imo, he has.
But if you equate "wealthy" with "totalitarian", you are too far gone to debate with.
As far as being supposedly ‘evil’, I don’t see how anyone in his position could not be. Look at the world around us. We are ruled by psychopaths, shysters and ghouls at multiple levels; middle management to heads of state.
I’ve always had a chip on my shoulder about decency, humility and fairness, but the older I get and more money/power I accumulate, I’m starting to see that the monsters of the world will only be beaten by a bigger monster. So if I set out to right the wrongs I see, I too would necessarily need to become monstrous.
I think what we now recite as Popper's paraphrase is just a cheap slogan for organizing banal minds, and not a model for reflection. My objection isn't to Popper and so-called open socieites, it's to the belief that the "problem," is the lack of a sophisticated plan with a system guided by ideology to run them in the first place. It's a technocratic presumption, that if we just come up with a system, we can impose it on reality and human desire, and we will "fix the problem."
What Popper has been used for (regardless of what he may have written), and the viral idea that critical theorists today have made that people fundamentally want was this very justification for their own monsterousness. This is the liberation they're offering. When you revisit the idea of being a victim or being oppressed as just an infinite will to power, moralized by an ideology designed to dissolve truth and inconvenient perceptions of reality, it's pretty obvious that the OSF and its appendant bodies in the WEF and other networks are just recycled totalitarian junk from a new generation of demagogues.
Maybe I'm wrong. Maybe a bunch of billionaires and bureaucrats have had Damascene conversions and are really just self sacrificing martyrs and saints.
https://gist.github.com/bluechoochoo/a034da52c64ac6fcb637
where he talks about his and Soros' respective roles in the infamous trade.
[1] https://en.wikipedia.org/wiki/Black_Wednesday#:~:text=In%201...).
