Betting History: George Soros' White Wednesday Story
George Soros wrote himself into history in 1992 as ?The man who broke the Bank of England“. Since then, he has been regarded as a financial genius and one of the most successful investors of our time.
However, if you look at the facts, he didn't break the Bank of England, but was only part of a larger group of investors and not even the head of it: months before, numerous financial experts had already published warnings to the British government, demanding in it that the British pound should be unpegged from the German mark and left the European Exchange Rate Mechanism (ERM). The competitiveness of the ailing British economy would be too severely impaired as a result; Prime Minister John Major's dream of a united Europe with the UK as a crucial part of it would jeopardise too many national economic interests (Beattie 2024; Slater 2009: 157-160).
When Soros placed his ten billion bet against the British pound, Caxton Associates , Tudor Investments, Citicorp, J.P. 摩根 and Chemical Bank had also bet big against the British pound; Soros only wagered the largest sum by far. Furthermore, he was the only one who went public with his success afterwards and let himself be celebrated for it (Slater 2009: 177-180; ibid. 182f.).
Which stratagem did George Soros use?
Number 7: “Create something from nothing”. Initially, a rumour is spread that later turns into the truth (Senger 1993: 85-108).
George Soros' theory of reflexivity states that facts are irrelevant to people. The only important thing is how they perceive them and thus create new facts (Leonhardt 11.05.2024).
His most famous work, 1992, is the perfect example of this: he wasn't the only one who had done his homework and recognised the signs of the times. A considerable number of other hedge funds were also involved. And, most importantly, all of them acted independently of him.
The difference between them and him was that he was the only one who had taken on massive debt to finance his bet. His Quantum Funds used a total of $3 billion in equity and $7 billion in loans to short the pound (Slater 2009: 164f.).
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After Britain's ‘Black Wednesday’, which brought his funds a profit of around USD 1 billion, he went public and started a rumour that he had broken the Bank of England. When asked directly, he corrected the ambiguities and gave an exclusive interview to ' The Times ’, but the ‘ damage’ from the previous reporting had already been done and the fairytale took over the world (Slater 2009: 177-179).
After that, he had the necessary reputation as a financial genius and was able to use his sniper theory to independently attack national currencies (Slater 2009: 182f.), for example Thailand, Malaysia, the Philippines, Myanmar, etc. (Leonhardt 12.05.2024). In the end, he took on Hong Kong and got a bloody nose from the Chinese (Shen 2018).
Conclusion
Soros' story shows how powerful perception and control over narratives can be. The investor skilfully used the success of his bet for his own purposes and was subsequently at the centre of public perception. Only this allowed him to become a master of manipulation on a global scale. His one billion profit before was just bonus.
Sources
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