America's Road to Wealth

Chapter 348 Combine Vertical and Horizontal Smith

The financial crisis that occurred in 1997, to be precise, should be the Asian financial crisis.

That crisis started in July 1997.

The first country to suffer was Dai, and then quickly spread to Malaysia, Singapore, Nihong and Han.

The currencies of Dai, Indonesia, Han and other countries depreciated sharply during this period, and at the same time caused a sharp drop in most major stock markets in Asia.

At the same time, this crisis has also impacted the foreign trade enterprises of Asian countries, causing the closure of many large enterprises in Asia, unemployment of workers, and social and economic depression.

Reflected on the economic level, it broke the previous scene of rapid economic development in Asia.

Basically, it is actually headed by American financial capital and supplemented by European financial capital.

Initiated by them at the same time, a blow and plunder aimed at the economies of emerging countries.

It can be said that it is their old line.

It's just that they replaced the blatant robbery of their ancestors with the financial plunder that now looks more technical and modern.

But essentially they are the same. .

The consequences for Asia are similar to those of 100 years ago.

At most, it's just that so many people don't have to die.

That is to say, from the beginning of this crisis, the economies of some Asian economic powers began to be depressed, and the political situation in some countries also began to be chaotic.

The power of the Rim Asia and Greater Asia, which was originally raised, was interrupted.

In that crisis, Huaxia was in the best situation.If it weren't for the protection of Hong Kong Island, it can even be said that there is no problem at all.

The second is the vv area. Due to the special circumstances at that time, international hot money did not dare to do anything, so it was a lucky escape.

This is a typical dollar tide dominated by dollar hegemony.

The so-called U.S. dollar tide, in simple terms, means that the Federal Reserve reduces the attractiveness of the U.S. market by lowering interest rates, allowing a large amount of U.S. dollars to leave the U.S. and spread to the world.

After these dollars are distributed, they bring a lot of investment to the local area, as well as the job opportunities generated after the investment.

It can be of great help to the economies of countries around the world in the short term.

Therefore, whenever the U.S. dollar enters a period of several years of interest rate cuts, it is often also a time when the economies of emerging regions in the world are developing rapidly.

Once the time is right, or when the domestic economic situation in the United States is sluggish.

When a vampire is hungry and needs blood.

Then the Fed will gradually increase the benchmark interest rate accordingly.

The consequence of this is that the dollar capital invested by the United States in the past few years will gradually flow back to the United States.

Capital has always pursued stable high profits. When the interest rate of the Federal Reserve is high, they will return to the United States to earn interest.

After being siphoned a lot of money and losing foreign investment capital.

The situation of those emerging economic regions that have been developed with the help of external forces will immediately be in crisis.

In a short period of time, the vitality was severely damaged, and the exchange rate fell wildly.

Usually at this time.

The international hot money headed by Soros will act as a thug and start harvesting emerging countries whose immunity has been broken by the dollar tide.

After these robbers leave with their pockets full.

What is left is the rising unemployment rate, the depreciation of the currency, the economy and GDP have dropped a lot, and the emerging regional countries may even start to be in turmoil.

But don't worry, it'll be a while.

The Fed will lower the benchmark interest rate again.

Dollars will start leaving the US again and re-entering these countries that were "robbed" not so long ago.

With the entry of a large amount of foreign capital, the economy began to recover again, and workers began to have jobs again.

Obviously, a new round of tides has begun.

Since the end of World War II, the U.S. dollar has established global economic hegemony. The Marshall Plan successfully revived the European economy and turned it into a puppet.

Such dollar tides have been happening for decades.

This is a bit like some kind of magic cultivator in Huaxia fantasy novels.

The big devil spread his skills and skills to his disciples, asking them to practice and increase their cultivation base.

After they have become masters, before they have been happy for two days, the big devil will attack and absorb all the skills of these apprentices.

But it will not kill them, but after a while, give them new skills and let them continue to practice.
Just like this, the cycle continues, and the big devil can roam the world with this trick.

At the same time, you can use this method to suppress the second, third, and fourth, and determine your own hegemony.

The rise of the later generations is like that of Huaxia. Under this approach, at most they can only protect themselves, and they will even be affected by it.

It can only be done so that it will not be as helpless as those younger brothers in emerging regions and the United States.

But it's just that, because of the hegemony of the dollar tide.

To put it bluntly, it is ultimately based on the unique combat power of the United States in 2001.

It's like borrowing money to buy a tank.

When your tank is really bought, and the creditor wants to ask you to pay back the money, he has to consider whether it can withstand the shelling of your tank.

In this context, Soros and those international hot money can only be regarded as thugs at best.

Soros himself is the leader of the thugs, and he is used as a commanding direction.

Inside Charlie Brown's Pizza.

Hearing what happened in 1997 in Alberti, Soros didn't feel humiliated.

The finance capitalist lacks this feeling, especially since it is his forte in itself.

What was humiliation as long as it was profitable?
"From June 1999 to May last year, a total of 6 months, the Federal Reserve raised interest rates six times in a row, with a rate increase of 11%."

Facing Abel, Soros talked eloquently: "Don't you think this is the clarion call to charge?"

"So you chose Hong Kong Island?" Abel asked.

Soros nodded, "I have been buying Hong Kong dollars for half a year. You know what I mean."

Abel thought for a while, and said softly: "The Federal Reserve has raised interest rates six times, 6%. But don't forget that from last year to now, in response to the Nasdaq crisis and the September 1.75 crisis, it has cut interest rates twice. Second, the benchmark interest rate is now 1%. The repatriation of dollars is over."

"And don't forget. Last time China was able to protect Hong Kong Island, they will make the same choice this time. If we do this, we are not dealing with Hong Kong Island at all, but with the foreign exchange of a big country. confrontation."

"That's right." Soros said: "I will invite you. This time it's not just you and me. This time, Bridgewater Fund, Bridgewater, Greenwich, and Renaissance Technology will all end. Count you With Smith Capital, we can amass over a trillion dollars!"

Abel knows all the companies that Soros mentioned.They are several well-known hedge fund companies in the United States.

Generally speaking, the main components of international hot money are also these hedging companies.

One of the characteristics of these companies is high leverage.Like Soros, he dared to pull 20 times the leverage in many cases, which is even more exaggerated than Aber's Smith Capital.

Therefore, the assets under custody of these hedge funds are generally not exaggerated, at most tens of billions to hundreds of billions of dollars.

As long as a part of the money is taken out, with exaggerated high leverage, tens of billions of funds can already be manipulated.

The stakes of this model are high.Every time it takes a large group of people to act together, it is possible to muster a terrible financial attack.

The ultra-high leverage ratio brings exaggerated interest.The higher the interest rate, the higher the cost of capital.

Therefore, the operations of hedging companies are basically short-term transactions, generally no more than two months.

Facing Soros's proposal, Abel pondered, as if he was thinking about it, and this situation lasted for several minutes.

Soros didn't bother him, but quietly looked at this pizza shop that was said to be Abel Smith's favorite place to visit.

Because Abel likes to bring people here to talk about things, gradually this pizzeria has become somewhat famous in the upper class of New York.

There are many rich and famous people in New York who have eaten here.

After some people ate it, they praised the food here, and they came here often.

As for whether the food here is really that delicious, or whether these people come here to eat because they want to bump into someone.

Then it is unknown.

"How about this."

Abel's soft voice pulled Soros' gaze back from the surroundings.

He saw Abel say, "As long as Warren is in, then I'll be in. How?"

Soros thought, if you want to say no, just say it, Warren Buffett. That guy never does that kind of thing.

Soros opened his mouth, wanting to persuade him again.

But he heard Abel say to him: "George, are you interested in investing in Smith Capital?"

Before the words of persuasion that he had just thought of were out of his mouth, Soros was stunned.

"What do you mean?" Soros looked at Abel.

"Just like Warren and Michael. Invest in Smith Capital."

Abel made a condition: "Use the shares of Soros Fund Company, plus the shares of American Express. The ratio is the same as theirs, how about 4%?"

"What about the valuation?" Soros asked almost without hesitation.

If Soros heard the exaggerated valuation of Smith Capital last year, he would have laughed it off, thinking it was a joke.

After Buffett took a stake, Soros began to face up to Smith Capital.

Wait until after PNC Financial Services Group becomes a shareholder.

Soros has begun to seriously study Smith Capital.

Later, Bloomberg also took a stake.

Soros has approached Bloomberg in private, and the two oil men have talked a lot.

After that, in fact, the sword of Wall Street already had some ideas about Smith Capital.

Only at that time, Soros still disliked the high valuation of Smith Capital.

Before listing, the valuation is 4000 billion US dollars.

This figure is too exaggerated no matter how you look at it.

But then when in London.Soros and Abel met and witnessed how Abel made money.

Soros began to really move.

In this year-end reception of Smith Capital.

As suspicious as Soros, he is also completely attracted to Smith Capital.

Faced with Abel's proposal now, he naturally asked it without thinking.

"There's almost a year difference between you and Warren." Abel said with a smile.

Soros immediately said: "Not a year! Only nine months. Buffett joined your company in February last year."

"Okay. Nine months away."

Abel looked at Soros with a smile, "I really want to continue to use the valuation of 4000 billion U.S. dollars. But now this company is not just me as a shareholder. I am responsible for Warren and the others."

"what do you mean?"

"When the contract is signed. Let them be there. Or you go to communicate with them, as long as they agree to 4000 billion US dollars, then I agree. If they don't agree, then I have nothing to do."

Abel smiled and said: "But for the sake of our good relationship. I promise it will not exceed 5000 billion US dollars."

$5000 billion?
Soros couldn't help frowning, the price was too expensive.

For 4% of the stock, $200 billion is needed.

Compared with Buffett, they are directly expensive by 40 billion US dollars.

It can be said to be very expensive, because the market value of General Electric is now only about 3400 billion US dollars.

In other words, at this valuation, Smith Capital is already more expensive than General Electric.

And much more expensive.

Soros didn't immediately agree, but he didn't refuse either.

Because Abel still has some leeway, he has brought some benefits to the Buffetts, and he doesn't have to be the bad guy himself.

Sly boy.

Soros thought for a while and said, "I will contact them. But on my side, I can't use all the stocks. If I am sure that I want to buy shares. In addition to the shares of American Express, I will take out 50 billion U.S. dollars in cash, and then Add a part of the stock of Soros Fund Company."

"This is impossible." Abel shook his head and said, "To tell you the truth, Smith Capital has no shortage of cash at all! Let me tell you a secret, the cash available to Smith Capital now exceeds 1000 billion U.S. dollars. Doubling as much as Earl Hathaway. All I want is stock."

"and."

He spread his hands to Soros: "Mutual holdings, cross-holdings, we can enhance mutual trust. Don't you think this is better?"

Soros took a deep breath, and he said decisively:

"20% of Soros Fund's stock is worth $30 billion. For the rest, I use stocks from other companies, such as American Express."

Soros didn't say yes, but he bargained with Abel in this way, basically he meant that he was sure.

In addition, the capital managed by Soros Fund Company is not very good in Wall Street, only about 300 billion US dollars.

Among Buffett, Smith and Soros, he is obviously the poorest.

Soros is not as rich as outsiders imagine.He has always been ranked around 120 to [-] in the richest list in the United States, with a net worth of [-] billion US dollars.

Most of them are shares of Quantum Fund and Soros Fund Management Company.

4%, the Smith Capital stock valued at US$200 billion, cannot be eaten by Soros alone.

Soros' idea is very simple, he can't eat it, but someone behind him can eat it.

Like Bloomberg, 4% of Smith Capital shares have no less than five actual holders.

Bloomberg is little more than a proxy and takes up the lion's share.

Soros is now too, and he will eat part of it.But the rest, Soros will allocate to other interested parties within his own interest group.

Equivalent to this 4% of the stock, in fact, not only Soros holds it alone.

Like Bloomberg's 4%.

This is why Soros proposed to buy part of it with cash.

Some people who intend to buy but don't want to reveal their identities are unwilling to take stocks and only want to cash out.

"can."

Abel stretched out his hand, smiled at Soros and said, "George, happy cooperation."

"Happy cooperation." Soros also smiled for the first time, and shook hands with Abel.

Karma-

A crisp shutter sounded.

Soros turned his head sharply, and saw David Jones, who often appeared beside Abel, holding a camera and aiming at the two of them.

Just now was the sound of the camera shutter sounding.

"take it easy."

He heard Abel's laughter: "Haha~ Take a photo as a souvenir. Then we will have a photo together in the future."

Soros shook off Abel's hand angrily, and said:
"If you do this, don't you worry about being said that we are acting in concert?"

There is no need for Abel to explain, Soros knows what Abel is doing by asking people to take this photo.

With this photo, Abel just needs to let his newspaper publish this photo.

Then this photo of two people smiling and shaking hands, plus the location and time of shooting.

Immediately, the stock of American Express, which is currently at a high level of around US$43, will have a crazy decline.

"What are you afraid of?" Abel said indifferently:
"Just let the SEC and FINRA investigate. We are not really acting in concert. I am not the one who actively stirs up our hostile relationship. The board of directors of American Express has made a lot of efforts."

Soros knew this too.

The law on "persons acting in concert" is strict and prohibited.

But this kind of thing also depends on the person, who is the person acquiring and the company being acquired.

As long as it is not recognized as a "person acting in concert" acquisition model, it does not matter even if it is actually the case.

Soros took the opportunity to make a request: "The share price of American Express cannot be calculated at $35."

"$40, this is my bottom line. And you have to promise me a small request, not too much."

"No problem." Soros agreed directly.

Did not ask what Abel's request was.

It is estimated that Abel's request is too excessive, and his promise will also be invalidated.

After a pause, Soros said again: "Are you really not going to participate in the affairs of Hong Kong Island?"

"Not participating."

"OK then."

The U.S. stock market is closed in the afternoon. Tomorrow is Saturday, and the stock market will be closed for two days.

Shares of American Express stopped at $42.35.

Abe Smith's hostile takeover of American Express this time can be said to have attracted much attention.

Not only because this is the largest hostile takeover since the outbreak of the September [-] crisis.

It is also because of the offensive and defensive plots of the two sides along the way from the beginning to the present of this merger and acquisition case.

It is almost comparable to the "barbarians at the gate" known as the most classic merger and acquisition battle in history.

Whether it is a stock repurchase or a white knight raid strategy, it can be seen in the offense and defense of Abel's acquisition of AmEx.

However, after the previous rounds of attack and defense, Amex and Abel had contacts with each other.

But it doesn't seem to have really changed the situation.

Abe Smith's sudden silence and silence made the situation of this acquisition actually deadlocked.

Except for the leeks and investors above, they want Abel to come and take over.

Anyone with a discerning eye thinks that the only way left for the two sides is to confront each other head-on at the Amex shareholder meeting.

It will be held on November 11, which is four days later at the Amex shareholders meeting.

Abel Smith plans to nominate five more board members.

If the goal is achieved, then Abel Smith can occupy a majority of the 9-seat Amex board of directors.

And then obtain the leading right to pass the acquisition case.

It is worth noting that the board of directors of American Express released two consecutive news before the stock market closed to stabilize the falling stock price of American Express.

The first of the two messages is that Jim Walton, one of the top 30 shareholders of American Express, has decided to vote for the director candidate nominated by American Express.

What's more, Jim Walton said that he asked to postpone the shareholders' meeting originally scheduled for November 11 for one month on the grounds of emotional tension during the war.

The second news is that American Express announced at the same time that its 34.5 billion US dollars of overseas funds retained overseas will be returned to the United States through investment channels and used to repurchase the shares of American Express.

Of this part of the stock, part is distributed equally to shareholders, part is rewarded to the top board of directors in the form of dividends, and the remaining part is returned to equity.

These two pieces of news stabilized the share price of American Express before the market closed.

"This is delaying time. Some shareholders thought they could sit on the ground and raise the price to sell their shares for more value."

Inside Smith Capital, the top office of the Woolworth Building, Abel sneered when he heard the news reported by Alan Baker.

Abel dismissed the dying struggle of AmEx's board of directors.

Soros is on his side.

Those so-called white knights, after knowing the news, will most likely disperse.

Without these troublemakers, the board of directors of American Express would be unable to compete with themselves.

"According to Glenda McNeill, vice president of American Express, who has decided to side with us."

Alan Baker stood in front of the boss and reported softly——

"Many shareholders still insist that the value of American Express's stock is much higher than our quotation of 35 US dollars, even higher than the current market price. According to the initial voting results of shareholders, some directors of the original board of directors won more than 50% of the shareholders. support, with some directors only at around 40 percent.”

In fact, in a listed company, there are not independent directors, but executive directors with real power in the company. Once the support rate among shareholders is lower than 80% to 90%, it means that there is a problem.

Only 40% indicates that the problem is very big.

This means that 6% of the shareholders do not support it. It is impossible for such an executive director to reassure the general meeting of shareholders.

The American Express board of directors is not ignorant of this.

But they can't help it, they can only bite the bullet and bear it now, hoping that the white knight can repel the barbarians.

"It seems that I really don't give up."

Abel thought for a while, he took out his mobile phone, and found a call on it.

"Hey, Jace, how about having dinner tonight?"

"Haha, okay. You decide the location, I'm in New York right now. OK~OK. That's it, see you there."

Abel quickly finished the phone call, raised his head and said to Alan Baker: "Let AMC TV announce the photo taken by David. At the same time, we also announced that we have obtained their 6.9 from Soros Fund Company." % of American Express stock.”

Alan Baker knew who the owner of the call the boss made just now was.

Because of this call, part of it was suggested by the Smith Intelligence Group that Abel should make the call.

"Okay. Then I'll get ready." Alan Baker smiled.

"Go."

(End of this chapter)