It was the height of 1992 European currency crisis.
Like today, the Euro zone’s politicians, especially the Germans, were standing pat refusing to prop up the value of the pound. Currency traders had already forced the devaluation of the Italian lira and Stan Druckenmiller, the chief PM of George Soros’ Quantum Fund, already had a $1.5 billion bet against the pound. But, he was ready to go further, based mostly on unofficial comments from Helmut Schlesinger, the president of the German Bundesbank, who indicated that a devaluation of the pound was in the offing.
Druckenmiller was thinking about slowly adding to his position. But Soros said “go for the jugular.”
From More Money Than God, Hedge Funds and the Making of a New Elite. Sebastian Mallaby’s new book about the history of hedge funds:
Druckenmiller could see that Soros was right: Indeed, this was the man's genius. Druckenmiller had done the analysis, understood the politics, and seen the trigger for the trade; but Soros was the one who sensed that this was the moment to go nuclear. When you knew you were right, there was no such thing as betting too much. You piled on as hard as possible.
For the rest of that Tuesday, Druckenmiller and Soros sold sterling to anyone prepared to buy from them. Normally they left it to their traders to execute orders, but this time they got on the phones themselves, searching for banks that would agree to take the other side of their orders. Under the rules of the exchange-rate mechanism, the Bank of England was obliged to accept offers to sell sterling, but this requirement only held during the trading day in London. With the Bank of England closed for business, it was a scramble to find buyers, particularly once word got around that Soros and Druckenmiller were selling crazily.
We all know what happened after that.
Go for the Jugular [Atlantic Monthly]