Black Wednesday

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Black Wednesday

September 16, 1992. The day that investor George Soros short sold more than $10 billion worth of British pounds, which forced the Bank of England to withdraw from the European Exchange Rate Mechanism and to devalue the pound. He is a noted critic of unfettered free enterprise and believes that reflexivity can change the fundamentals of an economy.
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George Soros made a billion dollars betting against the Bank of England during the sterling - ERM crisis on Black Wednesday, September 1992.
Most, if not all, other major financial market crises I have been through have involved current account deficits: the Plaza Accord in 1985 through to the 1987 Wall Street crash, the ERM crisis from 1989 through 1992, the Mexican tequila crisis in 1994, the Asian crisis in 1997-98, the Russia crisis in 1998.
As with the ERM crisis, the expectation, especially in the eurozone, is that the authorities will eventually act to shore up the indebted countries in a way that will make it too risky for markets to put on pressure.
I recall the dotcom crashes of a few years ago, the early 90s slump and the ERM crisis, the year-long miners dispute of 1984-85, even as far back as the Winter of Discontent exactly 30 years ago.
Eventually an embarrassed Bank of England was forced by the government to step in and rescue Northern Rock, but not before British commentators began drawing comparisons between King's handling of the credit crisis in 2007 with former Chancellor of the Exchequer Norman Lamont's handling of the ERM crisis in 1992, which contributed to the exit of Sterling from the European exchange rate system.
DURING the 1992 ERM crisis, Paxo asked Tory Treasury boss Norman Lamont: "Do you like being Chancellor?
The factors that led to the 1992-1993 ERM crisis are classified into two categories.
After the ERM crisis, the Conservatives lost this reputation and were unable to recover it by the time of the election in June 1997.
Those doubts came to a head with the ERM crisis in September, 1992.
Potential existed for much greater divergence of dollar exchange rates against these currencies as the result of a widening of permitted fluctuation margins following the ERM crisis last summer.
While Britain did not use them at all in 1992, the ERM crisis in September 1992 was the first, since virtually all capital controls in the EC had been removed.
The Spanish peseta was on the rise before the Barcelona Games in 1992 and kept strengthening afterwards until the ERM crisis hit foreign exchange markets.