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Politicians always like to blame speculators when their attempts to fight the market inevitably end in failure, and this instance is no different. Soros didn't

Politicians always like to blame speculators when their attempts to fight the market inevitably end in failure, and this instance is no different. Soros didn't "break the GBP," it was already broken and the British government's guarantee to prop it up was never sustainable in the first place. Someone was going to a lot of make money when the British government's scheme unraveled. Soros just happened to make a lot more than anyone else. Reminds me of a good Rhett Butler quote: "Opportunists have always been held in disrepute. Especially by those who had the same opportunities and didn't take them."

PhasmaFelis 13y ago
It was going to happen anyway, so there's nothing wrong with benefiting from it, yes? If a man with diamond cufflinks and a fat wallet is passed-out drunk on the sidewalk at midnight in a bad neighborhood, he is definitely going to get robbed. Does that mean I should go ahead and rob him myself with a clear conscience? I guess, according to you and Rhett Butler, I'm just jealous because I didn't pickpocket the last drunk I met.
- CocaKoala 13y ago
  Well, no. Robbing a passed out drunk is a crime; you should feel bad for committing crimes, even if it's clear that if you didn't somebody else would. Shorting a stock (or a currency) is not a crime; it's an acceptable thing to do in a market.
  - PhasmaFelis 13y ago
    I was under the impression that we frown on screwing innocent people because it's a shitty thing to do, not because it happens to be designated as a crime. I'm not saying that what Soros did should be illegal, mainly because overregulation can wind up screwing innocent people in all sorts of different ways that I'm not wise enough to predict. But I surely don't understand why he's being held up for praise.
    - CocaKoala 13y ago
      We do frown on screwing innocent people, and it is a shitty thing to do. Who screwed Britain? If you're going to tell me that it was George Soros, I'd like to hear why you're holding him more responsible than e.g. Helmut Schlesinger, or the reporter who paraphrased Schlesinger's quote and sent the market into a panic? edit: Or as loso pointed out in a comment above mine, is George Soros more responsible than the members of the British government who put the pound sterling in the terrible position to begin with?
      - zacinbusiness 13y ago
        Most (or at least some) of the politicians likely acted in good faith, believing they were doing the best for their country. Soros knew he would leave the people devastated but didn't care.
        CocaKoala 13y ago
        That may be true, but I don't think it's relevant. The politicians still made bad decisions that led the country to ruin; you can say they didn't mean it, but that doesn't make it not their fault, nor does it mean it wouldn't have happened if Soros hadn't shorted the pound. And to rephrase the second sentence: Soros knew that the bad policy decisions of the politicians would leave the people devastated, but didn't care. Again, I'm not convinced that's relevant; Soros didn't make the situation, he just profited by it. That doesn't make it his fault.
        edanm 13y ago
        I agree with CocaKola that this isn't relevant - I'd vote against having people acting in good faith, if the end result is getting screwed. As to your other point, this is how markets are supposed to work. Soros in effect helped show the incompetency of the government, which was a net good. People got screwed, certainly, but the situation was terrible and no one did anything about it until Soros stepped in. You could say that he is similar to Snowden or other whistleblowers in many ways. They through the government into chaos, likely endangered a lot of the economy and possibly lives, and they did it all because exposing the bad things the government was doing was more important. Of course, I'm not arguing that it's the same, as the whistleblowers do this despite the fact that it ruins their lives, and Soros did it to make money. What I am saying is, it's great we've setup a system where people like Soros are incentivized to uncover government screwups, so we can do better next time.
  - bronson 13y ago
    And selling bad credit default swaps wasn't a crime either. So, according to your theory, the perpetrators of the last downturn should have sold as many bogus CDS packages as possible, right? Regardless of the damage? I'm happy most people don't subscribe to the same law-defined morals that you seem to.
    - AndrewBissell 13y ago
      If Soros's bet had gone against him, he would have lost all of his investors' money and been left penniless. There would have been no bailout waiting in the wings. The guys selling CDSs they couldn't pay out had none of their own skin in the game, and were profiting from the presence of then implicit (now very EXPLICIT) government backstops. When they lost money, the public was forced to pay through devices like the AIG bailout, TARP, ZIRP, etc. There's no legitimate comparison between the two.
      - M2Ys4U 13y ago
        > If Soros's bet had gone against him, he would have lost all of his investors' money and been left penniless. There would have been no bailout waiting in the wings. Well, no. This is explained in the article: If Soros' assumption (that the exchange rate would plummet) hadn't been realised Sterling would've stayed at the lower bound of the ERM and Quantum wouldn't have lost much at all.
        gabemart 13y ago
        We can have reasonable confidence in that assessment in hindsight. At the time, I would have been unwilling to gamble my net worth against the possibility of some unforeseen event causing a spike in the value of the pound. It was a non-zero risk.
        VintageCool 13y ago
        Soros clearly had confidence in it. That's why he's the player that won the pot.
  - MarkPNeyer 13y ago
    > you should feel bad for committing crimes, even if it's clear that if you didn't somebody else would i don't think edward snowden should feel bad for what he did, even if it's considered a crime. as for robbing a drunk guy in the gutter, you could argue that you are teaching him a lesson, and that the price of this lesson is the cash he has in his wallet now. it would be a rather aggresive marketing strategy, but hopefully the guy does learn from it. likewise, you could argue that soros breaking the bank of England is him teaching the people of the world a lesson - you can't prop up a currency indefinitely. people like him - folks with lots of money and more desire to earn money than to support practices they think are unsustainable - will prevent governments from pegging rates indefinitely, just as muggers will prevent people from wandering carelessly through parts of town where no one is watching them. i'd like to live in a world where people were more interested in gaining a positive reputation by passing on the chance to profit from destruction, even if it's legal. that wish is exactly like wanting to live in a world where nobody gets mugged: both of those situations are inevitable if omnipresent surveillance takes off. if being caught is a certainty, nobody's going to pick a wallet anywhere. if databases of people's responses to your actions are publicly available, many supporters of government-backed monetary policy - as well as the friends and families of those who suffered from his actions - will shun soros and anyone else who helps knock a tower over because 'it was going to fall anyhow.'
    - CocaKoala 13y ago
      I have no idea what you're saying. You're bringing up Edward Snowden, who has literally nothing to do with the conversation at hand. Then you're proposing some form of defense for the idea of mugging the drunk guy. Then you're shifting right to omnipresent surveillance, which again has nothing to do with what we're talking about. Your comment is utterly incomprehensible to me; I know what all the individual words mean, but I can't put them together into a cohesive thought that's relevant. Can you rephrase yourself in a way that's more understandable?
      - PhasmaFelis 13y ago
        > You're bringing up Edward Snowden, who has literally nothing to do with the conversation at hand. That was pretty clearly a response to the line he quoted directly above, i.e. rebutting the notion that an action's morality is solely determined by whether or not that action is classified as a crime.
- AndrewBissell 13y ago
  Since I don't agree with your premise that successful speculations are morally equivalent to robbery, your entire analogy seems ridiculous to me.
  - efuquen 13y ago
    He was attacking your statement: "Someone was going to a lot of make money when the British government's scheme unraveled." I think the point is clear, morality has nothing to do with whether something is definitely going to happen or not. If you're taking advantage of a situation and you deem it immoral, whether the end result would have been the same even if you hadn't participated is irrelevant, it's still an immoral action. Whether robbery and speculation are equivalent is a different point from the one being made. Obviously analogies aren't perfect, I think most people here realize that from the very definition that analogous situations aren't the same. But it's still a useful tool to make an argument with.
    - fleitz 13y ago
      If trading currency is immoral then the british government is no more moral than Soros, like tango trading takes two.
      - M2Ys4U 13y ago
        To introduce another bad analogy in to the conversation, eating cheese is not immoral but forcing a 10kg block of cheddar into somebody's mouth is. Black Wednesday still has political and economic consequences more than 20 years later - the UK is not a member of the Euro and the Right may potentially pull us out of the EU altogether. The (de)merits of both positions notwithstanding, Black Wednesday certainly still has a huge psychological effect on our relationship with the rest of Europe.
        SixSigma 13y ago
        Just a FYI, some of us feel that eating cheese is immoral.
- ropman76 13y ago
  If a person leans up against a well and it falls over, do you blame the person or the people who built the wall so shoddy?
  - millstone 13y ago
    Any wall will topple with enough force. And Soros's $10 billion bet was a hell of a lot of force.
  - zacinbusiness 13y ago
    If the person is actively pushing the wall over, knowing full well that the wall is structurally unsound, and that there are innocent people behind the wall...yeah, I'd blame the pusher.
  - PhasmaFelis 13y ago
    If someone takes out a concrete wall with a five-pound sledge, I'm gonna have harsh words for the guy who build the shoddy wall and the guy who deliberately vandalized it.
- nichtich 13y ago
  People always underestimate how valuable information is. When you short a stock or a currency, you are not "screwing" someone, but providing information to others saying "this thing is screwed". If you believe something is wrong, you should announce that to everybody, loud and clear. In a marketplace this "announcement" is carried out by a big short, because that's the only kind of message people are able to hear. And borrowing from your example, if there is a big group of drunk men marching to an abyss and no one would listen to a word you say ( well they are drunk), then maybe the moral thing to do is punch them in the face and run the other way.
- zacinbusiness 13y ago
  I think the just behavior would have been to explain to the government what was going to happen, and then to leverage the fund's wealth and financial influence to help solve the greater problem. I know, businesses exist to make money. But I can't help but feel like these people who profit off of the missery of the people are just awful, awful humans.
fred_durst 13y ago
You do realize that most people do not take the same opportunities because they consider them ethically and morally disgusting? That maybe we're not just a bunch of fools floundering around bumping into just enough money to survive? I'm always amazed how opportunists think they are the only ones who thought of their schemes.
- GigabyteCoin 13y ago
  What was morally or ethically disgusting about Soros profiting greatly at the expense of the British Government? Do you think it's morally or ethically wrong that you paid $3 for a hamburger that McDonald's only paid $2 to produce? Opportunities and tradeoffs exist all around us. It's simply how our world works.
  - fred_durst 13y ago
    I'm not going to debate whether there is a general morality to his actions or many actions of those in finance. What I was stating was that many people do not go into these lines of work and/or do things, not because they are incapable or because they do not see the same opportunities but because they think they are unethical and immoral. This may help you, and the original gentleman I responded to in understanding that its not necessarily a case of having the stronger ability but sometimes a case of having a weaker conscience.
  - norswap 13y ago
    The thing about McDonals, a company making profits in a consensual trade is a total non-sequitur. What I assume is disgusting is that the British Government's money actually belong to British taxpayers, who contributed it in the first place. Those taxpayers have reasonable expectations that this money will be used to indirectly benefit them or for the good of the British people at large, and not end up squandered. Now other people correctly pointed out that the pound would have devaluated with or without Soros, so I don't think his actions where all that unethical. But as it happened so suddenly instead of the usual drawn-out game of rumors, some politicians clearly felt the burn.
morsch 13y ago
Don't hate the player, hate the game?
- fleitz 13y ago
  Love the game, the sheep handed it to the wolves that day. The british people made a huge bet and lost, if you don't like losing on trades don't make trades. They blinked to a guy who didn't even have a bank, let alone an army or a navy. Soros simply had more gumption than the British Empire.
  - spikels 13y ago
    Whenever I hear the word gumption I think of old people with dentures. Great word!
  - iand 13y ago
    The British people didn't make any kind of bet, the few politicians in power at the time took it, lost hard and still ended up as Lords.
    - guard-of-terra 13y ago
      Well, why don't British people do something about those Lords? It's up to them.
      - tragic 13y ago
        Believe me - plenty of us have choice opinions about the Lords. It is difficult to do much about them when you have a duopoly on elected government, and a big part of both parties' power-broking is doling out lordships to a) their former notable MPs/ministers and b) their mates. The lords suit the commons just fine. Even more so since Blair's reforms, which increased the number who were purely cronies, relative to the decrepit remnants of the landed aristocracy (which only benefited the Tories).
        13y ago

PhasmaFelis 13y ago

It was going to happen anyway, so there's nothing wrong with benefiting from it, yes? If a man with diamond cufflinks and a fat wallet is passed-out drunk on the sidewalk at midnight in a bad neighborhood, he is definitely going to get robbed. Does that mean I should go ahead and rob him myself with a clear conscience? I guess, according to you and Rhett Butler, I'm just jealous because I didn't pickpocket the last drunk I met.

CocaKoala 13y ago
Well, no. Robbing a passed out drunk is a crime; you should feel bad for committing crimes, even if it's clear that if you didn't somebody else would. Shorting a stock (or a currency) is not a crime; it's an acceptable thing to do in a market.
- PhasmaFelis 13y ago
  I was under the impression that we frown on screwing innocent people because it's a shitty thing to do, not because it happens to be designated as a crime. I'm not saying that what Soros did should be illegal, mainly because overregulation can wind up screwing innocent people in all sorts of different ways that I'm not wise enough to predict. But I surely don't understand why he's being held up for praise.
  - CocaKoala 13y ago
    We do frown on screwing innocent people, and it is a shitty thing to do. Who screwed Britain? If you're going to tell me that it was George Soros, I'd like to hear why you're holding him more responsible than e.g. Helmut Schlesinger, or the reporter who paraphrased Schlesinger's quote and sent the market into a panic? edit: Or as loso pointed out in a comment above mine, is George Soros more responsible than the members of the British government who put the pound sterling in the terrible position to begin with?
    - zacinbusiness 13y ago
      Most (or at least some) of the politicians likely acted in good faith, believing they were doing the best for their country. Soros knew he would leave the people devastated but didn't care.
      - CocaKoala 13y ago
        That may be true, but I don't think it's relevant. The politicians still made bad decisions that led the country to ruin; you can say they didn't mean it, but that doesn't make it not their fault, nor does it mean it wouldn't have happened if Soros hadn't shorted the pound. And to rephrase the second sentence: Soros knew that the bad policy decisions of the politicians would leave the people devastated, but didn't care. Again, I'm not convinced that's relevant; Soros didn't make the situation, he just profited by it. That doesn't make it his fault.
      - edanm 13y ago
        I agree with CocaKola that this isn't relevant - I'd vote against having people acting in good faith, if the end result is getting screwed. As to your other point, this is how markets are supposed to work. Soros in effect helped show the incompetency of the government, which was a net good. People got screwed, certainly, but the situation was terrible and no one did anything about it until Soros stepped in. You could say that he is similar to Snowden or other whistleblowers in many ways. They through the government into chaos, likely endangered a lot of the economy and possibly lives, and they did it all because exposing the bad things the government was doing was more important. Of course, I'm not arguing that it's the same, as the whistleblowers do this despite the fact that it ruins their lives, and Soros did it to make money. What I am saying is, it's great we've setup a system where people like Soros are incentivized to uncover government screwups, so we can do better next time.
- bronson 13y ago
  And selling bad credit default swaps wasn't a crime either. So, according to your theory, the perpetrators of the last downturn should have sold as many bogus CDS packages as possible, right? Regardless of the damage? I'm happy most people don't subscribe to the same law-defined morals that you seem to.
  - AndrewBissell 13y ago
    If Soros's bet had gone against him, he would have lost all of his investors' money and been left penniless. There would have been no bailout waiting in the wings. The guys selling CDSs they couldn't pay out had none of their own skin in the game, and were profiting from the presence of then implicit (now very EXPLICIT) government backstops. When they lost money, the public was forced to pay through devices like the AIG bailout, TARP, ZIRP, etc. There's no legitimate comparison between the two.
    - M2Ys4U 13y ago
      > If Soros's bet had gone against him, he would have lost all of his investors' money and been left penniless. There would have been no bailout waiting in the wings. Well, no. This is explained in the article: If Soros' assumption (that the exchange rate would plummet) hadn't been realised Sterling would've stayed at the lower bound of the ERM and Quantum wouldn't have lost much at all.
      - gabemart 13y ago
        We can have reasonable confidence in that assessment in hindsight. At the time, I would have been unwilling to gamble my net worth against the possibility of some unforeseen event causing a spike in the value of the pound. It was a non-zero risk.
        VintageCool 13y ago
        Soros clearly had confidence in it. That's why he's the player that won the pot.
- MarkPNeyer 13y ago
  > you should feel bad for committing crimes, even if it's clear that if you didn't somebody else would i don't think edward snowden should feel bad for what he did, even if it's considered a crime. as for robbing a drunk guy in the gutter, you could argue that you are teaching him a lesson, and that the price of this lesson is the cash he has in his wallet now. it would be a rather aggresive marketing strategy, but hopefully the guy does learn from it. likewise, you could argue that soros breaking the bank of England is him teaching the people of the world a lesson - you can't prop up a currency indefinitely. people like him - folks with lots of money and more desire to earn money than to support practices they think are unsustainable - will prevent governments from pegging rates indefinitely, just as muggers will prevent people from wandering carelessly through parts of town where no one is watching them. i'd like to live in a world where people were more interested in gaining a positive reputation by passing on the chance to profit from destruction, even if it's legal. that wish is exactly like wanting to live in a world where nobody gets mugged: both of those situations are inevitable if omnipresent surveillance takes off. if being caught is a certainty, nobody's going to pick a wallet anywhere. if databases of people's responses to your actions are publicly available, many supporters of government-backed monetary policy - as well as the friends and families of those who suffered from his actions - will shun soros and anyone else who helps knock a tower over because 'it was going to fall anyhow.'
  - CocaKoala 13y ago
    I have no idea what you're saying. You're bringing up Edward Snowden, who has literally nothing to do with the conversation at hand. Then you're proposing some form of defense for the idea of mugging the drunk guy. Then you're shifting right to omnipresent surveillance, which again has nothing to do with what we're talking about. Your comment is utterly incomprehensible to me; I know what all the individual words mean, but I can't put them together into a cohesive thought that's relevant. Can you rephrase yourself in a way that's more understandable?
    - PhasmaFelis 13y ago
      > You're bringing up Edward Snowden, who has literally nothing to do with the conversation at hand. That was pretty clearly a response to the line he quoted directly above, i.e. rebutting the notion that an action's morality is solely determined by whether or not that action is classified as a crime.
AndrewBissell 13y ago
Since I don't agree with your premise that successful speculations are morally equivalent to robbery, your entire analogy seems ridiculous to me.
- efuquen 13y ago
  He was attacking your statement: "Someone was going to a lot of make money when the British government's scheme unraveled." I think the point is clear, morality has nothing to do with whether something is definitely going to happen or not. If you're taking advantage of a situation and you deem it immoral, whether the end result would have been the same even if you hadn't participated is irrelevant, it's still an immoral action. Whether robbery and speculation are equivalent is a different point from the one being made. Obviously analogies aren't perfect, I think most people here realize that from the very definition that analogous situations aren't the same. But it's still a useful tool to make an argument with.
  - fleitz 13y ago
    If trading currency is immoral then the british government is no more moral than Soros, like tango trading takes two.
    - M2Ys4U 13y ago
      To introduce another bad analogy in to the conversation, eating cheese is not immoral but forcing a 10kg block of cheddar into somebody's mouth is. Black Wednesday still has political and economic consequences more than 20 years later - the UK is not a member of the Euro and the Right may potentially pull us out of the EU altogether. The (de)merits of both positions notwithstanding, Black Wednesday certainly still has a huge psychological effect on our relationship with the rest of Europe.
      - SixSigma 13y ago
        Just a FYI, some of us feel that eating cheese is immoral.
ropman76 13y ago
If a person leans up against a well and it falls over, do you blame the person or the people who built the wall so shoddy?
- millstone 13y ago
  Any wall will topple with enough force. And Soros's $10 billion bet was a hell of a lot of force.
- zacinbusiness 13y ago
  If the person is actively pushing the wall over, knowing full well that the wall is structurally unsound, and that there are innocent people behind the wall...yeah, I'd blame the pusher.
- PhasmaFelis 13y ago
  If someone takes out a concrete wall with a five-pound sledge, I'm gonna have harsh words for the guy who build the shoddy wall and the guy who deliberately vandalized it.
nichtich 13y ago
People always underestimate how valuable information is. When you short a stock or a currency, you are not "screwing" someone, but providing information to others saying "this thing is screwed". If you believe something is wrong, you should announce that to everybody, loud and clear. In a marketplace this "announcement" is carried out by a big short, because that's the only kind of message people are able to hear. And borrowing from your example, if there is a big group of drunk men marching to an abyss and no one would listen to a word you say ( well they are drunk), then maybe the moral thing to do is punch them in the face and run the other way.
zacinbusiness 13y ago
I think the just behavior would have been to explain to the government what was going to happen, and then to leverage the fund's wealth and financial influence to help solve the greater problem. I know, businesses exist to make money. But I can't help but feel like these people who profit off of the missery of the people are just awful, awful humans.

fred_durst 13y ago

You do realize that most people do not take the same opportunities because they consider them ethically and morally disgusting? That maybe we're not just a bunch of fools floundering around bumping into just enough money to survive? I'm always amazed how opportunists think they are the only ones who thought of their schemes.

GigabyteCoin 13y ago
What was morally or ethically disgusting about Soros profiting greatly at the expense of the British Government? Do you think it's morally or ethically wrong that you paid $3 for a hamburger that McDonald's only paid $2 to produce? Opportunities and tradeoffs exist all around us. It's simply how our world works.
- fred_durst 13y ago
  I'm not going to debate whether there is a general morality to his actions or many actions of those in finance. What I was stating was that many people do not go into these lines of work and/or do things, not because they are incapable or because they do not see the same opportunities but because they think they are unethical and immoral. This may help you, and the original gentleman I responded to in understanding that its not necessarily a case of having the stronger ability but sometimes a case of having a weaker conscience.
- norswap 13y ago
  The thing about McDonals, a company making profits in a consensual trade is a total non-sequitur. What I assume is disgusting is that the British Government's money actually belong to British taxpayers, who contributed it in the first place. Those taxpayers have reasonable expectations that this money will be used to indirectly benefit them or for the good of the British people at large, and not end up squandered. Now other people correctly pointed out that the pound would have devaluated with or without Soros, so I don't think his actions where all that unethical. But as it happened so suddenly instead of the usual drawn-out game of rumors, some politicians clearly felt the burn.

morsch 13y ago

Don't hate the player, hate the game?

fleitz 13y ago
Love the game, the sheep handed it to the wolves that day. The british people made a huge bet and lost, if you don't like losing on trades don't make trades. They blinked to a guy who didn't even have a bank, let alone an army or a navy. Soros simply had more gumption than the British Empire.
- spikels 13y ago
  Whenever I hear the word gumption I think of old people with dentures. Great word!
- iand 13y ago
  The British people didn't make any kind of bet, the few politicians in power at the time took it, lost hard and still ended up as Lords.
  - guard-of-terra 13y ago
    Well, why don't British people do something about those Lords? It's up to them.
    - tragic 13y ago
      Believe me - plenty of us have choice opinions about the Lords. It is difficult to do much about them when you have a duopoly on elected government, and a big part of both parties' power-broking is doling out lordships to a) their former notable MPs/ministers and b) their mates. The lords suit the commons just fine. Even more so since Blair's reforms, which increased the number who were purely cronies, relative to the decrepit remnants of the landed aristocracy (which only benefited the Tories).
      - 13y ago