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The Day George Soros Broke the Bank of England to Make $1.1B (2021)

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Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#51

Earlier quoted context omitted.

On a related note, I wonder why glorified investors like Michael Burry aren’t instead demonized for contributing to, and profiting from, the near collapse of the American economy in 2008 (obviously it’s not Burry’s fault that banks gave out shit mortgages, nor is it Soros’ fault that the pound sterling was overvalued. They both took large positions to profit off these events as economies crashed)

Because Burry et al helped collapse it sooner and softer, and their profits came from the banks’ losses.

> Because Burry et al helped collapse it sooner and softer

Could you not make the same argument for Soros?

> their profits came from the banks’ losses.

Where do you think that money came from?

When mortgages go bad, the banks foreclose the property and sell it.

When the banks go bad, the government props them up (in 2008) by buying their toxic assets

The sale of those toxic assets let banks cover their bad positions, including those with Burry

Burrys profit came from foreclosures and the American government (in the narrative sense that Soros’ money came from the people of England)

Which again begs the question of why Soros is the villain and not also Burry

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#52
post #7

Earlier quoted context omitted.

He's the bad guy of the story because he's a billionaire who made a $1.1Gb at the expense of the ordinary people living in the UK at the time. He forced mortgage rates, for example, to shoot up to 15%, with crippling monthly payments for a large chunk of the population. 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 oth…

> He forced mortgage rates, for example, to shoot up to 15%, with crippling monthly payments for a large chunk of the population. 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.

Another commenter mentioned this was part of the process to standardizing the UK on the Euro.

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#53
post #6

if this hadn't happened then the UK would have joined the euro 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)

Yeah, if not for this there's a good chance the UK would be part of the Euro and much more closely tied to the EU. I doubt this would've worked out well overall for the country though; there were other European countries which had similar issues maintaining their exchange rate and the underlying economic mismatches continued to cause economic crises once they joined the Euro.

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#54
post #2

It's great to talk in terms of indices and devaluations and of "breaking the bank of England". The lives affected are not even spared an afterthought.

> The lives affected are not even spared an afterthought.

Such a simple, beautiful and powerful sentence. For some reason I instinctually read it in Morgan Freeman’s voice.

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#55
post #28
post #7

Earlier quoted context omitted.

He's the bad guy of the story because he's a billionaire who made a $1.1Gb at the expense of the ordinary people living in the UK at the time. He forced mortgage rates, for example, to shoot up to 15%, with crippling monthly payments for a large chunk of the population. 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 oth…

> He forced mortgage rates, for example, to shoot up to 15%, with crippling monthly payments for a large chunk of the population. 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.

[deleted]

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#56
post #41

Earlier quoted context omitted.

The UK was already in recession by time. Soros most definitely did not cause it. The British economy rebounded sharply afterwards, helped at least in part by the fact that British labour was suddenly more price competitive.

> that British labour was suddenly more price competitive That seems to translate to "workers were getting paid less and their savings were devalued" to me. Am I mistaken?

> That seems to translate to "workers were getting paid less and their savings were devalued" to me. Am I mistaken?

Sure, that's one way to look at it. But then you have to ask yourself why countries deliberately try to devalue their currencies and why other countries get mad when that happens.

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#57
post #2

It's great to talk in terms of indices and devaluations and of "breaking the bank of England". The lives affected are not even spared an afterthought.

> The lives affected are not even spared an afterthought. Such a simple, beautiful and powerful sentence. For some reason I instinctually read it in Morgan Freeman’s voice.

Thank you.

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#58
post #28

Earlier quoted context omitted.

> He forced mortgage rates, for example, to shoot up to 15%, with crippling monthly payments for a large chunk of the population. 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.

Interesting. In Canada you can only get up to 5 years fixed typically. Mortgage itself is 25 years but terms change every 5 usually. 30y fixed feels... Crazy. How much above market does it have to be for banks to take that risk??

The banks don't take the risk of offering such long-term fixed rates. The US government does through Fannie Mae and Freddie Mac, effectively subsidising the mortgage market. Other countries don't do this and don't have the same kind of long-term fixed mortgages as a result.

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#59
post #21

Earlier quoted context omitted.

The Bank of England which was responsible for artificially pumping up the value of sterling is a more appropriate target for blame.

You might even say forcing the prices of things to be accurate and exposing departures from reality is the purpose of financial markets and the thing an investor gets paid for. (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.)

It forces prices to be what people believe to be accurate, where that belief is strong enough for them to put down money on it. I think that may be the closest we're ever going to get.

The bit about belief above is why insider trading is illegal. If people can't trust the information they have, and at least importantly that they have fair access to accurate information, then they won't have faith in markets and won't put down their money. Belief implies trust.

Re: The Day George Soros Broke the Bank of England to Make $1.1B (2021)

#60
post #41

Earlier quoted context omitted.

The UK was already in recession by time. Soros most definitely did not cause it. The British economy rebounded sharply afterwards, helped at least in part by the fact that British labour was suddenly more price competitive.

> that British labour was suddenly more price competitive That seems to translate to "workers were getting paid less and their savings were devalued" to me. Am I mistaken?

Another way to translate it would be “the cost of British labour was reduced, pushing down the artificially high unemployment rate,” but the best way would probably be both of the above at the same time, and some other more complicated stuff I don’t know or understand. My point isn’t this was actually a really good thing, but it’s not as straightforward as you’re making it out to be.
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