Today marks the 20th anniversary of Black Wednesday, the day when the UK was forced to withdraw from the European Exchange Rate Mechanism (ERM) following the Bank of England's futile effort to prop up the pound against the Deutsche Mark. Looking back, there is good reason for the British view Black Wednesday as a blessing in disguise.
Admittedly, to paraphrase Churchill, if it was a blessing, then it was very well disguised indeed. The debacle reportedly cost the UK treasury some 3.3 billion Pounds, on top of slower economic growth and lasting damage to the reputation of the Tories.
But the debacle did demonstrate the folly of monetary union, and in doing so likely helped keep Britain from joining the Euro. A few billion Pounds is a small price to pay to be clear of the Eurozone's ongoing implosion. Not for nothing does Norman Tebbit call it "Bright Wednesday."
Black Wednesday should stand as a lesson for central planners everywhere that markets can only be subverted for so long. They eventually clear, and that is every bit as true for Barack Obama and Ben Bernanke as it was for John Major and Norman Lamont. And it is every bit as true for Dollars, Treasury Bills, health insurance and electric cars as it was for Pounds.
George Soros was widely villified for making such large bets against the Pound, on which he reportedly made over $1 billion in ,profit on Black Wednesday. Considering the costs the UK would be facing had it adopted the Euro, perhaps the British should be arranging parades in his honor.