BBC News
September 15, 2011
It may be a heuristic rather than a cast-iron rule, but when markets turn against you, normally the best way to minimise losses is to cut and run as early as possible.
Hanging on in the hope that something will turn up is frequently the road to ruin.
So I was not surprised by the frustration and even despair I encountered when talking to bankers about last night's statements by Chancellor Merkel and President Sarkozy following their meeting yesterday with George Papandreou, the prime minister of Greece.
Their joint conviction that "the future of Greece is in the eurozone", unaccompanied by any new plan to make it so, was chillingly reminiscent of those statements we in Britain repeatedly heard from the then Prime Minister John Major in 1992 that the future of the British pound sterling was in the European Exchange Rate Mechanism (ERM).
And as luck would have it, tomorrow will be the 19th anniversary of the day that markets defeated politics, and the UK was forced to withdraw from the ERM - when the financial and economic costs of staying in the ERM became unbearably huge.
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