How George Soros Broke the Bank of England
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- Опубліковано 1 лип 2023
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In The UK, September 16, 1992, is known as Black Wednesday, the day when speculators including George Soros and Stanley Druckenmiller "broke the pound." This expression is used to describe the moment in time where market forces coalesced to force the British government to exit the European Exchange Rate Mechanism (ERM) by removing its currency from that agreement. Joining the ERM was part of Britain's effort participate in a single European Currency.
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Patrick, help me remember. You did an episode on the Crocodile of Wall Street, was she not a contributor to Seeking Alpha or was that instead perhaps Forbes? All said and done S.A. does come across as a rag-tag agglomeration of opinion pieces by freelance finance writers, many younger than my children, and a lot of S.A. articles diametrically contradict earlier pieces by the same publication. I totally understand the need for sponsorship as the time cost of producing such a video is enromous.
@@Griffintheelder They no longer use writers of your children's age. They used to outsource the writing overseas, but now it's mostly A.I. generated.
@@MegaLmaeback when this was a rap channel and we talked about rap and beefs. It was a different time.
Video quality and lighting much improved sir! Excellent video and excellent work!!
Do we have suggested VPN. Please share it if you have it
That’s possibly the most balanced, complete and fair presentation of the relationship story between the ERM, Majors’ Govt and Soros and other traders. Outstanding work
bot comment
Slip 'n' slide, take a ride!
@@gitgudchannelyou're a bot making a comment or you're claiming that op is a bot?
@@somethinglikethat2176 what do you think?
@@gitgudchannelI am certain you lack the faculties to think seeing the comments you are making
Nationalise the losses...privatise the gain. The story of our ages
This is not Second Thought, Hakim, Balkan Odyssey or whatever other dumb ass socialist breadtuber. Go peddle socialism to someone else.
Nationalizing losses is unfortunately necessary if you don't want to become Venezuela. Populist economic policies are what turned Venezuela into the hellhole it is today.
Way to completely miss the point.
@@gamesguy
That doesn't make it wrong.
There is no real capitalism, only corporate socialism.
@@seanpatrick1243 Complete and utter nonsense. It's obvious you have zero clue.
Did you even watched the Video?
Finally somebody spits facts about this trade. Nobody can break a currency with 10B. Pretending that hides the idiotic policies from CBs and governments. He was just betting against mistakes.
We're have ya been the last 10 years? He's only spitting dribble that's been said by so call conspiracy theorists the last decade!
Regardless, he is still evil!
I don't think the claim (at least the one's I've seen) are that Soros's trades on their own were enough to move the market. Rather the claim (as far as I've seen it) is that his actions made other speculators believe that the realignment was going to happen soon causing them to copy him. If this is correct, his actions were a snowball that started an avalanche (though that avalanche was coming in any case and if Soros hadn't been the one to set it off someone else would've). Just to be clear, I'm not myself claiming that this kind of claim is true either. I'm just saying what the claim was as far as I've understood it.
@@alexphilipose1351 I get the impression Soros became evil, decades after all this.
Before that, Soros was just an intelligent trader. Through the 1990s (I am British) most commenters agreed "yeah, Soros made money, but he screwed people who deserved it".
The Major-Heseltine brand of "conservatism" was never going to work.
@@seneca983wouldn't setting it off sooner make it less destructive?
23:31 - Key quote: "today had been an utter fiasco, as interest rates going up and down like a whore's drawers."
that one offended me. we night walkers and chicken heads do not like to be called whores.
That made me laugh. Can you imagine a banker saying that publicly today? Lmao.
Yikes!
I thought it was "a horse's jaws". But the English keep it classy.
Going down faster than $2 hookers at a DNC convention
6:51 "who knows? Maybe she even meant that..." Patrick is killing it😂
Can we call that a British burn? 😂
Oh, she did - that's for sure.
But did Soros collude with the German Central Bank to catalyze the short?
I was there three decades ago in real time watching from a Reuters 2000 screen as the pound got thrashed and all the central banks of the first world came in to intervene to no avail. The market was way bigger than all of them combined.
I was there too working in FX and can confirm it was madness. Seems that Soros lost a lot in a JPY bet which nobody seems to remember. In the meantime and thanks to Options on FX I heard that daily volume grew to $ 5 trillion a day ...
So did Soros collude with the German Central Bank to catalyze the short?
I was watching it too in real time on our live test environment - at the time I was one of the developers building Reuters 2000 😊
BEST explanation ever seen all over the Infosphere! Never heard abot Germany hiking the interest rates to attract the resources for funding the unification costs. Thanks from Ukraine!
WORD
It's starting to seem like Germany has been intentionally joining every single union and refusing to play ball at the expense of the other E.U. countries since WW2... Of course that wouldn't make sense, considering they are the only ones with an economy that is 80% Russian oil...
"Who knows, maybe she even meant that."
This is the content I come to this channel for.
Yeah, what she actually meant was "I wish upon you all results that arise from your stupidity, and the realities that will prove it as such."
I think she would have still managed a smile while saying it...
"Good luck mate, let me know how that goes!" 😂😂
I was only 11 when this happened, but it was mental.
Even at that age, the sense of panic was palpable. And it kept up for a while, with the early 90s being very lean in Ireland.
“All the luck in the world” an all time classic quote.
This is why I love Patrick's channel. No Soros conspiracy BS, just hard facts. Great video 👍
hmmm yeah that all came later once he had the money to play god.
He just likes to break countries to make money.
And he does not like the fact there are too many humans on earth.
@@dan77773 he helped Eastern Europe oin the democratic world away from Kremlin? That was the best thing Soros did. Conspiracies were produced by Kremlin to de-legitimize Eastern Europe's escape to West.
@@dan77773 There's so many others who have the money to play god.
It's not a conspiracy theory to say that Soros, Rothchilds, Rockfellers, Larry King and so on control the banks and the market.
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What are the chances that Soros colluded with the German Central Bank to catalyze the short?
This video was honestly impressive both the quality of the video and its content. The short clips and interviews made it even more complex. Great work patrick!
These financial/economic events and histories are so good! Thanks Professor 👍
How is countries struggling to stay afloat, businesses and millions of people losing their livelihood, 'good'❓️
It's not because you might not have been directly hit, and you may find 'good' knowing about those who were.
This is not a game: this is real life❗️
@@njiomonansichristianfreder6374jeez, no one was claiming that what happened was good ffs. Way to be a pessimistic ass!
OP just said that the video is good smh
@@njiomonansichristianfreder6374 he meant the documentation of events has been done well. Nothing about the event themselves.
Jesus dude, this is such an old subject but you are so right in re-evaluating it in this time juncture of fluctuating interest rates (yes, they will fluctutate) and a lucid example of how the power of central banks cannot in the end overcome the preponderance of professional market sentiment.
Blasphemy is never a good idea dude.
Oy Vey
I would say that is then and this now. Traders have been tamed by CB since about 2012 when Mario Dragi gave his whatever it takes speech. I guess the market believed Dragi but not Lamount.
@@ddawson8069esus Jesus Jesus Jesus Jesus Jesus Jesus. Come and get me Jesus! I blaspheme your name and God's too. Go cry to your preacher. Blasphemy is always a great idea!
@@extramild1Exactly, the structure of the financial markets & regulatory environment today is completely different now compared to the heyday of Soros. You can thank 2008 and Euro debt crisis for that. A lot more risk and leeway was allowed then than what is possible today.
I remember this!! It's what made me choose a career in Finance. Thank you for all the background information.
You want to break a Central Bank too? Good luck , I'll try to do it too once I'm worth billions, only issue is in FX trading these days even with 10 Billion $ you might not be able to move a currency by 3-4 pips , that's how humongous it is.
Been wanting a comprehensive break-down of this for years. Another excellent video by Patrick.
I love that you dug up this accurate historical footage.
More often than not a currency is pegged because it lacks stability, the precise stability needed for the peg to be realistic over the long term
True, but these pegs only work if they are credible, as in there is a public belief that (usually) the central bank of the currency is willing and able to maintain that peg. This belief was shaken enough in this case for the peg to fall apart.
@@SirMatyas It also depends on economic activities which creates supply and demand for your currency
"Going up and down like a wh*res drawers" has to be the wildest statement I"ve heard on this channel. 23:30
Thanks Patrick. Always pleasure to watch your videos.
Instead of saying that Soros broke the Bank, I think it's safe to say the Bank and the politicians broke the Bank. There's just too much money in the world economy for any Bank to maintain a peg in the face of currency traders.
I think of it like companies who don't patch or release software with obvious vulnerabilities... if it exists long enough in the open, someone with resources will exploit it.
Jorge SoreAss prefers to peg, without lube.
black rook
@@highbread817 As Patrick said, the money that Soros made was a drop in the ocean of all the money that bet against the Pound at the time. Trying to defend a currency is just absurdly stupid and many a central bank has pissed away billions or trillions doing it.
Been watching futures lately. Someone is buying all the bids.
It is really hard for me, without deep knowledge in economics to understand your video. I will need to rewatch it multiple times. Thank you for your work!
I am in the same boat
Omg same mate
keep them dumb and blind
it is hard for me, too, but try and simplify the whole mess and you might get the idea. The british pound is an artificially inflated currency that owes its position to careful financial protection mechanisms. on the other hand, you have the deutsche mark and the french franc that are valued one real national product output. speculators realized the pound joining these currencies under the ERM wont go without a bit of value adjustments. now, with the stage set all you need to make lots of money is people inside the central bank of britain to give you a simple heads up.
A great in-depth analysis, thank you! Brings back memories too: a couple of days after the Black Wednesday a group of exchange students met with Soros in his office in New York, not far from Carnegie Hall if my memory serves me well. I was one of these students.
Thank you for the history lesson. I'd forgotten a lot. This podcast was very informative.
Patrick I was waiting for this video for a loooong time!
Brilliantly and clearly explained. Thanks! 👍
I went in with no knowledge of this event, and the whole video was fascinating. Thank you!
When I first read the title my brain misread it as "George Santos" and the video was definitely much funnier sounding
I'm sure he claimed it at some point.
FANTASTIC reporting of history, thank you for the great research and wonderful use of primary sources throughout! ❤
Brilliant stuff, thank you Patrick!!!
This was a very enjoyable upload, nice one
Patric is on a roll with awesome content.
Fantastic job sir.
Fabulous! My interest in finance began with a study of George Soros. You provided details here I did not know about. I would love it if you would do a little more about Soros and Druckenmiller. Perhaps you could name it "Soros II: How I got Thailand to Hate Me Too." As an epilogue you could mention that after their British and Thai wins, Soros et al lost their shirts trying to game the Indonesian rupiah in a similar fashion. Love your content Sir, thank you.
Soros failed against Indonesia because
An unstable Indonesia is a bigger mess than Thailand would be, the 4th president is foreign visits for diplomacy strengthens foreign goverments faith on the Indonesian goverment. This means better loan payments reschedule
The anti corruption commission made by President No.5 paved the way for increased tax compliance during No.6's reign. The faith of corrupt politicians being punished reignited the people's lost faith om the goverment
The tsunami of 2004 made the scalimg down of the military budget a possibility. As there is no need for military operations. The fact that after 2004 the Indonesian govermemt chose to let ethnic conflict happens only stepping in after all sides are worn out on killing each other makes funneling less funds to the military and more to development possible
In short, Soros thought the Indonesian goverment is in its last legs and mind its people killing each other. He's wrong, Indonesian corruption also works against him. As making a post election coalition is easy here, as the democracy here is more focused on figures rather than ideology. Every party is as corrupt as the other, almost all parties can be bought for the right price but this means instability in the system is almost nil
0:35 I listen from the very first second - then a second time. You make money history amazing. Ty
This is really high quality, informative content. Thank you, it's much appreciated.
Thatcher really said, "Good luck with that. Let me know how it works out for you." 😂😂😂
really cool documentary with lots of videos and interviews, which add visuals and context. big up to my favourite professor!
So few know / remember this. Great coverage.
Patrick never stop making your videos!
Thank You for this one 👍
'Maybe she even meant that' classic
this might be your best video yet Patrick thank you!
Great video! I really enjoyed that and learned a lot.
23:30 What a great expression
That was an epic one Patrick, really puts the trade's weight into perspective!
Wow. Knew nothing about this. Fascinating, thanks.
Great summary of this trade 😊 thanks Patrick
Although I don't understand everything you've described here ..I do understand enough to appreciate your report and insights. Thanks Patrick
Patrick, please do a 100% serious analysis of the financial implications of the Musk vs. Zuckerberg cage match.
inb4 sultry wood-nymph ring girls
God, no. Only 90% serious, please!
Two of your great videos in a row.
I think I may be having a Boyle-Binge!
very good patrick, thanks so much
Classic topic of video just come at right time given the current situation
Fantastic video, really balanced insight into what happened. Would be very interested to see a similar video about Soros' role during the Asian Financial crisis.
This was great compilation. 🎉
Thanks Patrick , I can see a lot of work went into this , well done
Incredible video keep up this amazing job
I love how Kenneth Clarke's bit aligns with the brilliant Yes Minister series.. the ministers' chauffeurs were always much better informed than their passengers :D
Very interesting, I'm just about old enough to remember this as a child.
Thank you for the thorough research and presentation.
I think this is the first video you have made that goes completely over my head. That is perfectly okay because I don't think many people truly understand all of the mechanisms involved in that historical situation.
What matters is not whether you understood everything perfectly, but if you learn something from the video that will be helpful to you in understanding economics later.
If you want to understand this more, look up the Impossible Trinity
en.wikipedia.org/wiki/Impossible_trinity
It goes more into how exchange rates and monetary policy are related
@@arrell1xyz But ERM didn't work in the end ! Do you think the Euro will collapse in the same way in the future ?
And that's why many people stop taking their meds, put their tinfoil hats on, and go spreading conspiracy theories about (((them))) and Soros.
The countries of the European Community (later European Union) introduced a system called the exchange rate mechanism (ERM) in anticipation of the introduction of the euro. This system required all countries that signed onto the ERM to have monetary policies that kept the exchange rates of their currencies to a near constant level. No matter what happened in capital flows, the central banks of these countries would intervene to maintain their peg. The issue with this is that if anyone starts to strengthen or weaken their currency and refuse to change course, everyone else would be forced to follow that same monetary policy despite it not being appropriate for their own economies.
And that's exactly what happened. Germany decided to strengthen its currency to prepare for the large cost of integrating East Germany into the rest of the country. Other countries in the ERM then had to follow suit to maintain their currency's peg to the German mark despite that not being great for their own economies. What Soros and other forex speculators bet on was that the economic costs of these countries overvaluing their currencies to maintain their pegs to the German mark would be too high, the ERM would collapse, and thus all the currencies that got overvalued would drop in price. They saw an opportunity to profit by taking loans in the overvalued currencies, such as the Italian lira or British pound, exchange that cash for German marks, and then wait for those other currencies to fall in value. Once they did, they would then exchange their marks back into those currencies at a much more favorable exchange rate, thus have enough money to repay their loans and keep a healthy profit for themselves.
I recall those days, my office was on 2 Broadway till I went to WTC, the rumors of his trading were beyond legendary. I love how you bring truthfulness and fact's to the history of trading.
What was it like when ppl found out the trade he pulled off?
@@RajaKhan-ol8lx no one really was that surprised. Obviously we all knew that he was just on the right side of the trade. The reputation that came from doing what he did most likely hurt his ability to trade then to help his ability to trade. Think of it from this view. You get a call from his office to do a trade, do you really want to be on the other side of that trade, and your boss just might get pissed at you when the trade goes south. So it was a double edge sword for him and his firm
Great coverage thanks
Thank you very much for this insightful episode. I can feel my inner Gordon Gekko starting to emerge😅
23:32 lol. I love that classy British wit.
Thanks Patrick for the high quality informative video! Could you make an episode about Soros' similar operation on various Asian countries in 1997-1998 too? and specially the war with the HK stock market? Thanks
Bravo Patrick Thank You!
I had heard of the infamous event but it is far more interesting than I had imagined. This video was an excellent explanation of one of the Great Speculator's most famous trades. Thanks for the video.
So, there was economic growth for more than a decade after this mess, but it also sewed the seeds for brexit. Lots of businessmen (and women) who were in their prepolitics careers and positioned to do well in that leaving the currency train before it got to the euro then went on to grander things in their 50's and 60's and looked back fondly at that departure from the ERM and tried to recreate it with brexit, which has not thus far shown itself to have been a wise decision.
Not true at all. The roots of Brexit lie in the need to protect the UK's Tax Haven business threatened by the EU Tax Evasion directives. The UK directly or indirectly controls over 50% of the global trade.
After three years, the benefits of leaving have not shown themselves yet, but the consequences were immediate and have been particularly cruel on the poor and underpriviledged, The current plan to reduce further the amount of money that the poor have available, due to higher prices and raising the borrowing rates, begs the question, do the people in charge know what they are doing, or do they just not care? The value of the pound and the current gilt levels are approaching Truss levels, so another question to ask, are we approaching another Black Wednesday moment? With the pound in freefall and interest rates continuing to rise, some people are making lots of money and compounding the problem.
@@wolfen210959Malice or incompetence? I think both.
Thad videos simply was excellent. Thank you.
Excellent job dude. Loved it!
Thank you for this video essay. Since you mentioned countries that were in the process of absorbing a former socialist state economy (referring to East Germany), I wonder if you would want to make a video on other countries that needed to do the same, and some of them would even join the EU later, e.g., Croatia, Slovenia, Slovakia, Hungary.
Does anyone know where Patrick got the interviews he used for this? would be interested in watching the full ones
Agreed!!
i just feel like I have just finished reading a book in 25 minutes ! Thank you for your beautiful insight !
Very good video, really enjoyed this one, thank you very much!
Best finance channel on UA-cam.
A brilliantly composed and informative video.
This is a golden source of information. Hats off.
Awesome details and analysis, Patrick. Thanks for the insight and keep it rolling!
Excellent video! I learned a lot - thanks! I remember that throughout the 1990s these speculative attacks became commonplace specially against developing economies. I see an imbalance against the central banks since they have to answer to the peope while the speculators don't have that kind of moral responsibility. If that is really a problem, how can we fix it?
Also, have you ever done research about the Brazilian economic plan, Plano Real, implemented throughout the 1990s? At some point the BCB had to set interest rates above 40% to keep the currency stable. The then President F.H. Cardoso decided to kill any possibility of his party reaching the presidency by devaluing the currency. He was the last Social Democrat in the presidency and they haven't elected another one for 20 years even though they revolutionized the economy and got a near hyperinflation to bellow 2 digits/year. The plan was actually started by the late former President Itamar Franco who appointed Cardoso to the Ministry of the Economy.
Thanks!
*George Soros:* let me introduce you to my future successor.
*Miller: Oh* 😯
*Soros Jr:* That actually means he believes you have no future in this company.
*Miller: Oh* 😞
Great mini documentary Patrick. Lived through those high interest rates with may first house.
Great work. Thanks
So Margaret Thatcher was right.
exchange shouting in a working class accent is not something I expected to hear today
Howya Patrick! Great stuff ! 🇮🇪
Really enjoy your thorough analyses on financial issues.
The comments are going to be wild. I am too early to find the schizo posts. I'll be back in an hour.
Strap in, its gonna be wild lol
Hour in, nothing too crazy yet. Puzzled.
Soros is bae
I would give it a day, thats when the vids go through a full algo cycle and the smoother brained nutbags will have this recommended to them.
@@TheNaldiin The schizos I've met all know about this and don't care about how he made the money. They care about how he spends it.
Great documentary of an event that I, as a young graduate was aware of but knew so little actual detail about.
In today’s more open accessible world where I now do trade in FX this event could be a great opportunity for even the masses to have profitable day, rather than just Soros and the big banks.
I recall also in that period Mrs Thatcher saying that you (the govt) can’t buck the markets.
Finance should be taught in schools because almost every major decision you make after schooling is directly impacted by the Financial markets.
Very informative!
You could turn these into hour long docs if you went into descriptive detail about terms like short squeezing for the casuals. Good work
So our financial systems are reliant on the egos and whims of some idiot politician? What could go wrong?
haha you're not wrong, tho the balance between popular oversight (which by definition has to come though politicians) vs technocratic "let the experts call the shots" structure is hard to strike.
I actually think this shows that it's not and it's ultimately the markets that decide
Well thats why it's good the central bank has independence to intervene, earlier everything needed to be approved by politicians
@@JustSomeGuy496
If anything, popular oversight leads to this exact situation. Given that most people don't understand economics, allowing public oversight is the blind leading the deaf.
This is more true the more an issue requires special education, ranging from finance and taxation all the way to health.
Invest in lead.
I studied this topic 7 or 8 y ago and have to say that this guy nailed this right in the target.. Extraordinary analysis! And by looking at all this again, one can only be appalled by the current financial system and the way it does not act by any apparent logic as it did before because it got so anchored and hijacked by the big players. The whole finacial but also economic system, is nothing but a county club game for the rich. Poor people do not play but are distracted by climate change, false wars or diseases, pop culture, new religions...
In defense, climate control is what’s going to keep the game alive
@@khalilfuller4939😂😂😂
well done Sir, very good video ;)
John Major is the one to blame!
They should have listened to John Major - they might actually be in the EU still.
Problem is, the medicine would have killed the economy and that was politically unsustainable, for both John Major as PM and the Conservatives backing him as party leader.
@@wlee9888 Brexit was just as disastrous, yeah...
Rates going up and down like a what!?!?!? 😅
I believe the gentleman said "...a whore's drawers."
😉
Not going to hear that line on the news anytime soon!
Somebody let me know if Jim Cramer starts using that expression😅
Absolutely great video.
Thanks for yet another excellent, informative, entertaining video.
Ahh, here's the problem with premieres... can't skip ads!
Everyone bring popcorns!
Let's get ready to rumble.