Remember how, not so very long ago, the gamblers and speculators did their very best to wreck the Euro in their greedy attempts to turn a few pennies? We were told often and bluntly at the time that we should count our lucky stars that we hadn’t joined the Euro project, and that it had been doomed to fail from the start.
Since the referendum on June 23rd, those same gamblers and speculators have seen a new chance to turn a few pennies by betting against the pound, and the result has been to drive the value of sterling down. Strangely, those same people who told us when this happened to the Euro that this showed what a disaster the Euro-zone was now seem to be telling us how wonderful this is for the sterling zone.
Of course, the situation is not identical, but there is one clear point of similarity, and that is that the movements in currency aren’t being driven (despite what the news reports regularly say) by ‘investors’ making their wisest guesses as to what the future holds, but by gamblers and speculators who allow their computers to trade autonomously in pursuit of very narrow margins by repeatedly buying and selling the same things. It’s a complete distortion of what ‘markets’ are supposed to be about, namely fixing the price at a level acceptable to both those who want to buy a product and those who want to sell it. It’s gambling, pure and simple – and like all gambles, there are losers as well as winners.And, just as with the problems of the Euro-zone, there’s no need to guess who the losers are.