George Soros, the billionaire who earned fame by betting against the pound in 1992, said that a British vote on Thursday to leave the European Union would trigger a bigger and more disruptive sterling devaluation than the fall on Black Wednesday.
Soros used Quantum Fund in 1992 to bet successfully that sterling was overvalued against the Deutsche Mark, forcing then-Prime Minister John Major to pull the pound out of the European Exchange Rate Mechanism (ERM).
Soros, in an opinion piece in the Guardian newspaper, said that in the event of a British exit, or Brexit, the pound would fall by at least 15 per cent, and possibly more than 20 per cent, to below $1.15 from its current level of around $1.46.
Black Wednesday was the start of a decade long period of growth in the UK. Before Black Wednesday, having to keep in ERM, was a disaster involving high interest rates and people losing their homes.
So why would a repeat of Black Wednesday be a bad thing? It is only called Black Wednesday because on the day experts thought it was bad. It turned out to be a great thing. Remember, an anti-communist hedge fund manager who pulled off one of the greatest acts of pure capitalism in history is secretly a socialist oligarch. So the raw greed of hedge fund managers is good now? Man, things change quickly these days. I’m old enough to remember when rent-seeking capitalists funneling money into politics to steer them in their favor was seen as a bad thing.
As a former UK resident who would love to move back some day, I keep thinking Brexit would improve my chances of being able to legally emigrate.
Then I remember how little British people like foreigners, and I resign myself to the fact that nothing that happens in the UK will change that.
Guess I’m staying here in “Guns ‘n’ Obesity Land.”