As I write about the darkness overtaking the European financial system, I am naturally coming across a lot of indignant condemnations of the ratings agencies, and the greedy, vicious speculators who are targeting these currencies. Speculators are never popular--just look at the scorn that is still heaped on George Soros for knocking Britain out of the European Exchange Rate Mechanism (ERM), the predecessor to the euro.
But it occurs to me that today, Britain ought to be sending George Soros a heartfelt thank you note, along with maybe a complimentary fruit basket and a really nice bottle of wine. If Britain had managed to muddle itself along into the euro, it would now also be lashed to the fate of the PIIGs. I bet there are some other European finance ministers who now wish that Soros had fixed his beady eyes on their currency back in the early 1990s.
More broadly, while speculators do cause problems, they are also an early warning system for unsustainable policies. For various reasons, Britain was a bad fit for the euro. Speculators prevented them from digging themselves into a deeper hole.