Treasury Secretary Scott Bessent talked about the beauty of being the world’s biggest borrower.
“If you take a bank loan, the bank is in charge, they can repossess whatever you borrowed against. But if you take a big enough loan, you’re kind of in charge of the bank,”
https://englundmacro.blogspot.com/2025/04/china-weaponize-its-760-billion.html
Jamie Dimon, JPMorgan chief , who has been floated for years as a potential pick for Treasury secretary, expressed optimism that Scott Bessent, the current holder of that job, could steer the US economy through choppy waters.
“I hope so,” Dimon said. “I know him a little bit. I think he’s an adult. I don’t agree with everything the administration is doing. So I’m not arguing that point. But I think he’s the guy who should probably be negotiating these trade agreements.”
Financial Times 15 April 2025
https://www.ft.com/content/260dbc93-9fc2-4434-ac24-4dfc1cc926a6
Played down the recent selloff in the bond market, rejecting speculation that foreign nations were dumping their holdings of US Treasuries, while flagging that his department has tools to address dislocation if needed.
The former hedge fund manager said one lesson from his career was “not to look at what happens over a week.”
Bloomberg 14 April 2025
Bessent Emerges as Wall Street Man-of-the-Hour Trade Negotiator
Every so often, extreme policy moves designed to shock the market into submission fail. They have to be credible to work.
The classic example is sterling’s Black Wednesday exit from the European exchange rate mechanism in 1992. The pound was obviously overvalued and under intense attack, so on the fateful day the Bank of England raised its target rate to 12% from 10% and then, at lunchtime, to 15%.
The selling continued, because traders saw that the stance wasn’t credible. The great majority of British mortgages were on a variable rate, and would immediately follow the BOE’s changes. That higher rate meant that homeowners’ mortgage payments would rise by 50% from one month to the next.
Brilliant traders skillfully (jag anar ironi) saw that the threat was empty.
One of those traders was Scott Bessent, then employed by the hedge fund manager George Soros and now the US Treasury secretary.
John Authers 9 april 2025
Som bekant fortsatte Sverige med sin fastkurspolitik även efter det att England och Finland hade givit upp.
A Young Scott Bessent did the U.K. a favor in 1992 by forcing a change in monetary policy.
Maybe he can do the same on tariffs. He is the man who, under the tutelage of George Soros (different times!), broke the Bank of England.
Soros Fund Management bet heavily against the British central bank as it was trying to defend a currency peg in 1992. They won, it lost, and the rest is history.
Margaret Thatcher, had reluctantly agreed—membership in the exchange-rate mechanism of the European monetary system, precursor to the euro, to keep the notoriously volatile pound stable.
It required governments to keep their currencies within a tight range against each other.
By the summer of 1992 the policy was wilting. Divergent economic conditions between Britain and Germany meant the pound was punishingly overvalued.
As pressure mounted, the government told the bank to spend billions of its reserves to defend the peg. On Black Wednesday, Sept. 16, the selling intensified. Massive currency intervention failed, and in a day of increasingly erratic policy shifts, the panicked government raised interest rates from 10% to 12%. When that failed, it announced a planned further increase to 15%.
Nothing worked. By nightfall the government surrendered, exiting the exchange-rate mechanism.
The parallels to today’s mess are imprecise. But there are still significant lessons. First, markets rule.
Mr. Bessent made millions for himself, but he did the British people a big favor too.
Gerard Baker Wall Street Journal 14 April 2025
Copilot: George Soros, through his Quantum Fund, was one of the key players speculating against the Swedish krona in 1992. While the exact amount he profited isn't widely documented, his actions contributed to the pressure that led Sweden to abandon its fixed exchange rate and allow the krona to float.
Soros is more famously known for his speculation against the British pound in the same year, earning over $1 billion in that instance.
Medan Finland lät marken flyta den 8 september, bedrev Sverige sitt eget valutakrig i ytterligare drygt två månader.
Under den tiden plågades hushåll och företag av extrema räntor. En marsch mot Poltava, som finansmannen Tomas Fischer uttryckte saken.
Peter Wolodarski, signerat, DN 9 september 2012
https://www.nejtillemu.com/wolodarski.htm#0912fischer
Tomas Fischer: Med Bildt mot Poltava
Aftonbladet 22 december 1991
https://www.internetional.se/fischerpolt.htm#motpolt
Det var detta intervenerande, att man stödköpte kronor, som enligt Hans Tson Söderström och Nils Lundgren blev det kronförsvaret som kostade skattebetalarna mest, frånsett de svårberäknade följderna för hela samhällsekonomin.
I den läsvärda boken Ekonomisk Politik. En vänbok till Assar Lindbeck (SNS Förlag 1995) bidrar de båda ekonomerna med ett intressant kapitel kallat Kronförsvaret hösten 1992- var det värt sitt pris?
Om kostnaderna skriver de:
Kostnaderna utgörs av valutaförluster och produktionsbortf all. Båda är svåra att kvantifiera av både begreppsmässiga och datamässiga skäl. Den svenska staten försämrade via riksbanken och riksgälden sin nettoställning i utländsk valuta med omkring 250 miljarder kronor under hösten 1992.
https://www.internetional.se/hurmycketkostade.htm
"Strax före klockan 14.00 växlades Luxonens jumbolån. Sedan stängde Riksbanken"
Den 18 november 1992 åt jag middag med Jan Stenbeck och några vänner i Gröna huset.
"I morgon håller Riksbanken stängt och kronan devalveras", sa Jan. Men Jan fick bara delvis rätt. Var man kund i SE-banken kunde man fortfarande komma ur sina utlandslån.
Strax före klockan 14.00 växlades Luxonens jumbolån. Sedan stängde Riksbanken
Tomas Fischer, Fokus, 5 september 2008
Var man kund i SE-banken kunde man fortfarande komma ur sina utlandslån. Strax före klockan 14.00 växlades Luxonens jumbolån. Sedan stängde Riksbanken Tomas Fischer, Fokus, 2008
Copilot: Luxonen spelade en roll i den svenska finanskrisen 1992. Bolaget hade stora positioner i svenska kronor och växlade 15 miljarder kronor till utländska valutor, vilket bidrog till pressen på kronan innan den släpptes fri den 19 november.
Enligt Bengt Dennis memoarer bidrog finansbolaget Luxonen till pressen, dock inte med blankning.
Luxonen hade mycket stora positioner i den svenska kronan, som man lånat upp till i utländsk valuta. Ett kursras i kronan hade inneburit stora förluster och den 12 november växlade Luxonen 15 miljarder kronor mot utländska valutor. Detta som exempel på hur valuta forsade ut ur landet.
RE på Facebook 15 april:
Luxonen löste in utlandslån på 15 miljarder kronor, har jag inhämtat via Copilot i den uppdaterade versionen.
Luxonen hade naturligtvis inte några 15 miljarder i eget kapital, utan hade lånat upp det allra mesta i första hand nog SEB. Luxonens förluster hade således drabbat SEB.
Det kan ha varit fler banker inblandade. Det kan nog SEBs tidigare Seniorekonom Klas Eklund, ping Klas Eklund, reda ut, om han vill och törs.
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Skulle Sverige kunna ändra sig lika snabbt om euron som med Nato? Timbros vd tror att det kan ske redan i år. Hur troligt är det, och hur snabbt kan det gå?
Ekonomen Klas Eklund ger sin analys.
Programledare: Katherine Zimmerman
Bisittare: Jonas Bonnier
Tillbaka till Rolfs länktips 15 april 2025
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