George Soros vs. the Bank of England
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In the recent flurry of cabinet nominations Donald Trump has been proposing, one name stood out to us, Trump's pick for Treasury Secretary Scott Besant.
And that's because Scott Besson has worked in finance for decades, including for George Soros' hedge fund back in the 1990s. And it just so happens that when the announcement came out, we were most of the way through making an episode about George Soros' hedge fund back in the 1990s.
Our show about something that happened three decades ago turned out to be way more topical than we thought it would be. What we made is not exactly the Scott Besson origin story, but, you know, come for the Treasury Secretary backgrounder. Stick around for the epic finance story.
Or just come for the epic finance story.
Either way, here is the show.
This is Planet Money from NPR.
The name George Soros means a lot of different things to a lot of different people. For some folks, he is primarily known as a philanthropist for his support of human rights and democracy around the world. Here is Soros on Fresh Air in 2006 talking about the foundations he funds.
Basically, the function is to support civil society in holding governments accountable.
Soros has also become kind of a boogeyman and scapegoat to folks on the right for his support of progressive policies. Often this has a fairly overt anti-Semitic tinge. For example, this 2010 clip from Glenn Beck. You have to see who's behind the puppets. Who is choosing the puppets and the players?
who's the puppet master, George Soros. Today, we are going to go back in time before all of those versions of Soros to the story of how George Soros made his name in the first place, which was in finance. In particular, we are going back to this one trade that his hedge fund made that was so big and so bold that it became the stuff of legends.
And while we did not finagle an interview with George Soros himself for this show, we did get to talk to one key member of his team who was right at the center of the whole thing. Go ahead and just say your name.
A.B.C.D. Robert Johnson. Time and time again.
Hey, you're sounding good. All right. This story takes place in 1992. At the time, Rob Johnson was in the process of leaving his job at an investment bank to join Soros' hedge fund as a managing director. Back then, Soros was running his fund out of an office in midtown Manhattan, which Rob remembers as surprisingly unimpressive.
It had a nice view of the Central Park, you know, the foliage and that kind of stuff. But it wasn't set up to be intimidating and glorious and grandiose at all.
Boxy 1990s computers, piles of paper everywhere.
There's like duct tape on the floor where the carpet's worn out. It was like... You know, how do you say, the elbows are worn out on the sweaters and people were just working hard.
What was impressive to Rob were the people who worked there, in particular, George Soros and the man in charge of running the hedge fund day to day, Stan Druckenmiller. Every now and then, the two of them would invite Rob over to pick his brain about Rob's area of expertise, which was foreign currency markets.
I felt like I was going to piano lessons and listening to Beethoven and Mozart. These two guys were really, really extraordinary.
Earlier that year, Druckenmiller had been talking to the analyst who covered Europe for the fund, Scott Besant. Besant had told Druckenmiller about all this trouble the British economy was having. And Druckenmiller had realized that this trouble had created an opportunity to go against the British currency, to essentially short the pound, which he thought was overvalued. And he put down some big bets, over $1.5 billion of the $5 billion the fund managed.
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