51–60 of 277 posts
There seems to be an abundance of posts about Soros himself getting flagged killed in this thread. Why is that? Are his character and his political ambitions not relevant to a discussion about his demonstrated ability and intent to cause massive financial disturbance in the global economy?
I don’t understand why it is that the hike in interest rates had to fail. Had the speculators bought tied up so much liquidity that nobody had pounds to sell to the UK’s central bank?
[Edit: Per the article, they did try raising the interest rates, but by then everyone knew that the outcome would be devaluing the pound, so it didn't work.]
What I would like to see is what led to the pound being so badly mispriced in the first place. Did they just price it at whatever was the prevailing price? And was that why the Bank of England ended up with such small reserves? Presumably they could have priced it lower and bought up Deutschmarks to bring down the price of pounds and build up reserves to start with when they decided to fix it. There is also the quest…
I don’t understand why it is that the hike in interest rates had to fail. Had the speculators bought tied up so much liquidity that nobody had pounds to sell to the UK’s central bank?
And, well, no one else would buy pounds in the fixed range:
* The currency spent the morning dropping in value. * This despite the government buying up pounds. * There had been news stories about possible devaluation of currencies in the ERM, and suggestions it will be the pound * The country was in recession - the government has limited flexibility with interest rates.
Against this backdrop, who would buy pounds?
Essentially, as the article notes, it was already a matter of when the pound would drop, not if. Soros' Quantum Fund and other funds might have made it happen a bit sooner, but it was pretty clear that the pound was overvalued.
I don’t understand why it is that the hike in interest rates had to fail. Had the speculators bought tied up so much liquidity that nobody had pounds to sell to the UK’s central bank?
Which is exactly what happened in this case. Anyone who bought pounds in order to lend it at 15%, would have taken an immediate 15% loss over the next week instead.
Unless you want to speculate, you're better off waiting for the market to settle instead of diving in during turbulent times.
This wonderful BBC documentary explains everything on detail.
There seems to be an abundance of posts about Soros himself getting flagged killed in this thread. Why is that? Are his character and his political ambitions not relevant to a discussion about his demonstrated ability and intent to cause massive financial disturbance in the global economy?
The "Soros broke the bank" framing I tend to see in discussions of this is really quite odd, as if it were some sort of illegal Oceans 11 style heist. He didn't break the bank. The bank broke itself. > What kept the pound from plummeting in value was the British government’s guarantee that it would keep the value propped up, and the market believed that it would. As long as everyone believed that England would stay i…
Earlier quoted context omitted.
Except that Soros did not hurt UK economy. Just bruised some egos at the Bank of England by showing their stupid mistakes.
Huh? He gained billions of dollars (pounds, Deutschmarks, whatever), the UK government lost billions. That clearly hurt their economy. Letting the currency float was better in the long term, and his actions made that happen, but I'd like to think there were other ways. And I doubt helping the UK was his goal; I can think of billions of other more likely reasons. Many people would say he stole this money from the gove…
What I would like to see is what led to the pound being so badly mispriced in the first place. Did they just price it at whatever was the prevailing price? And was that why the Bank of England ended up with such small reserves? Presumably they could have priced it lower and bought up Deutschmarks to bring down the price of pounds and build up reserves to start with when they decided to fix it. There is also the quest…
Market prices for currencies reflect what you can buy with them. If a country's economy is strong, they're exporting a lot of things that the world wants to buy from them, and the world wants to invest in a bunch in a number of securities denominated in their currency, the currency will be strong. If the country's economy weakens (relative to other countries in the global economy), the currency will weaken. There cou…
I am sorry for derailing, but how does that happen, did they come out like a faulty batch from a factory?
The mantra of "It's important to work hard" needs to die. Today we have fewer friends than ever, population is unhealthy and the biggest killer of young men is suicide.
Please don't perpetuate this nonsense. It should be: "Work smart, and look after yourself/ your family"