Re: Soros & immiseration

[Daniel Davies <dsquared@xxxxxxxxxxxxxxxx>]

It's the most unconscionable waste of money (I would suggest that the
incidence of the losses is taxpayers, to the tune of the interest which
would have been earned on the reserves).  But I think that regarding the
flaw in central bankers which leads to these fiascoes as machismo is the
wrong psychology.  It's more like Nick Leeson syndrome (btw, "Rogue Trader"
was on telly in the UK a couple of weeks ago and confirmed me in my view
that it's a fantastic and wholly underrated movie; definitely better than
"Wall Street" and much truer as a picture of what life's like in financial
markets).  You start out believing that the peg can be defended, then things
start going against you, but by now the position you've built up is so big
that you can't countenance failure, so you keep on buying in the hope that
you can drive the speculators away, and so on ... it's a psychology of fear
of being found out rather than defiant belief in one's abilities.

dd

-----Original Message-----

Defending overvalued currencies with reserves seems mostly like a
waste of public funds - a reflection of central bankers' macho more
than a rational economic policy.

Doug