Leading Article: Money, myth and hard reality

Wednesday 16 September 1992 - the day that Britain was driven out of the ERM - is Black Wednesday to anyone who thinks that the loss of about pounds 4bn spent trying to defend sterling when it was a lost cause is an intolerable failure of economic management. But those who call it the day the economic recovery began colour it White. A good case can be made for both; perhaps we should call it Black and White Wednesday. It is also remembered as the day a Wall Street financier named George Soros made a killing. Thus the Guardian yesterday wrote of Soros that he "is famously credited with forcing Britain out of the ERM ... making pounds 1bn".

It's not true, of course. Soros made money because he saw that the die was cast and sold sterling short. On that Wednesday a great myth was born. Soros arose from the ashes as mighty speculator, an unstoppable force in currency markets, and since then the myth has provided an easy explanation for complex events in currency markets. Most recently, Dr Mahathir Mohamad, the prime minister of Malaysia, has blamed Soros for the fall in the value of Malaysian dollars. And that's not true either: the reason currencies in the Asian tiger economies are sinking now is that people like Dr Mahathir began to believe their own publicity. But they can't borrow as if there were no tomorrow, and they can't blame George Soros if currency markets fail to take them at their own estimation of themselves. If they really want to understand what has gone wrong they should consult the real architect of Black and White Wednesday. Step forward Norman Lamont. There may be a proper job for you here.