The Dean

16th September (or Wonderful Wednesday, as we all soon came to know it), the day certain people in the financial markets saved the UK economy by forcing the UK government to withdraw from the ERM.......... ah, happy days........

Meow

That long ago? I remember that night well.

hnd

Yes, really - it is that long ago. Now I'm really feeling my age - but wasn't it called Black Wednesday back then?

The Dean

Yes - until people realised that the common sense of the market had saved the UK economy from annihilation........

flares

from the erm...what?

spit it out Deano...suspence is killing me

oh the E R M

scrubbedexpat141

Didn't Gordon Brown flogging gold at it's cheapest technically cost the government more than that Wednesday (which I don't remember because I was 4 years old....just to remind you pensioners.)

soukie

I was in Doha when all that happened....

typical

Only in retrospect. The gold sale has also seen some revisionism though (if much more quietly than Black Wednesday) - the point being that the gold dumping was part of a bank bailout triggered by a nasty unwinding of the gold carry trade.

No idea how true that actually is.

The Dean

The basic cock-up was the fact that Chancellor Brown told the market in advance when he was going to sell the gold, and how many ounces.........

typical

... and then sold by auction.

But it was only a cock-up if he wasn't trying to sell low - and some people are now claiming that he was, because the gold carry trade was in serious danger of collapsing horribly as the price of gold started to pick up.

It was a lack of gold that brought down LTCM finally, as I understand it...

The Dean

Interesting............... wasn't aware of most of that - will do a bit of research..... why would he try to sell low?

typical

Lots of banks with short positions on gold based on stability of gold price... gold price now starting to rise... banks starting to wonder how they're going to cover their positions. Tell Brown, basically, "sell or the economy gets it" (not unlike they did nine years later).

Lots of rumours swirling around now. American news starting to speculate that gold was being manipulated alongside LIBOR, and that several banks were highly short gold in '99...