Reborn Tech Maniac

Chapter 811 As long as you know
"After World War II, the analysis of the social base that supported Hitler's rise generally boiled down to the fact that hyperinflation at the time was a very important contributing factor."

"Therefore, in the past few decades, West Germany, and even now Germany, has taken the control of domestic inflation as the top priority, and it can even be described as an instinct, and to balance the inflation caused by German reunification , raising interest rates is the most effective way.”

"This is the politics behind the economy." Tang Huan raised his finger and pointed to the young people, "An insight into world affairs is knowledge, and understanding of human feelings is writing. In the future, you still have a lot to learn in this regard."

Jin Long, who is relatively familiar with the situation in the UK, suddenly said: "If we follow this line of reasoning, opposition to the European Exchange Rate Mechanism was an inducement for the former British Prime Minister Margaret Thatcher to lose the support of most members of the Conservative Party, and joining the European Exchange Rate Mechanism in 1990. It was an achievement of John Major, who rose from chancellor to prime minister, and his cabinet was naturally inclined to defend it.”

"Yes." Tang Huan clapped his palms and laughed, "It seems that you have mastered the key rules of this game, so I don't need to worry about the rest of the purely technical operations—you can start playing now."

……

It can be said that, on the surface, Mr. Richest is trying his best to distance himself from this European currency speculation, which is only a small business and has not yet reached its climax.

But there is one exception, that is, Tang Huan did not deliberately conceal the financial operations conducted by Qinhe Strategy's office in London, England.

As for the intention, of course it is very simple-it is to take the opportunity to retaliate and vent the dissatisfaction in my heart, and I don't care whether Britain knows or not.

By the end of August, Qinhe Strategy's short position in the British pound alone had reached 2 million US dollars.

In fact, after a series of piecemeal efforts, the entire speculative circle has gradually confirmed a consensus that every economy hit by a recession and whose exchange rate is pegged to the Deutsche mark is now a paper tiger—very fragile.

It is conceivable that the participants in this game are by no means limited to Quantum Fund and Qinhe Strategy. People with great reputations include Paul Tudor Jones and others.And these international free capital, after tacitly gathering together to launch an attack, are enough to challenge any central bank that is powerful and powerful.

in this case.The exchange rate between the British pound and the Italian lira has fallen to the lower limit allowed by the European Exchange Rate Mechanism—as far as the UK is concerned, the specific figure is 2.7780 pounds to 1 German mark.

As well as being mired in recession, UK mortgages are also very sensitive to rising interest rates – because they are often not fixed, and when the Bank of England raises interest rates, UK households feel the immediate pressure to make payments , and further hit spending power.

This transmission mechanism coupled with the economic recession made the UK unwilling to first raise interest rates to attract external capital and resist the depreciation of the pound, but instead pinned its hopes on the German Central Bank to cut interest rates.

In order to negotiate this issue, between September 9th and 4th, the finance ministers of the European Community member states and officials from the central banks met in a small town in the UK called Bath.

U.K. Chancellor of the Exchequer Norman Lamont, desperate to create room for sterling to weaken, was heckled first by his counterparts in Italy and France, who were also battling the recession, so he became angry and kept asking Germany to ease its monetary policy. During the process, he slapped the table and yelled at Helmut Schlesinger, the president of Deutsche Bank: "Twelve finance ministers are sitting here and asking you to lower interest rates. Why don't you agree?"

Norman Lamont's yelling, not only did not give the other party a head-on blow, but also aroused resistance, and Helmut Schlesinger's first reaction was to leave the meeting angrily.

After the president of Deutsche Bank calmed down, he still made a statement that although he did not intend to cut interest rates, he also believed that there was no reason to raise interest rates.

Norman Lamont immediately passed this cautious, almost nonsense statement to the media as a signal of German concessions.

When George Soros and Tang Huan were exchanging intelligence, he nervously asked: "Is Helmut Schlesinger's attitude due to pressure to lower interest rates?"

Tang Huan replied without hesitation: "According to what I know about Helmut Schlesinger, he attaches great importance to the independence of the German Central Bank, and Norman Lamont is trying to create political ~Cure stress, the result can only be counterproductive."

"I think that even if Helmut Schlesinger does not oppose European currency unification, he will subconsciously regard the Deutsche mark as superior to other currencies - use the Deutsche mark to cut interest rates to make room for other currencies to depreciate , very difficult!"

Naturally, George Soros could not trust Tang Huan's information unconditionally. In order to find out the attitude of the key figure, Helmut Schlesinger, he specially watched the other party's every move.

Hard work paid off, and George Soros really waited for Helmut Schlesinger to make another public statement.

Because Norman Lamont has been clamoring for several days, creating public opinion pressure through the media that Germany will cut interest rates, which completely angered the Germans, so he made a clarification on September 9-he cannot guarantee the interest rate of the Deutsche Mark future direction, while issuing a warning - he has little confidence in the current fixed exchange rate relationship between European currencies.

To emphasize this point, Helmut Schlesinger specifically mentioned the weak Italian lira as evidence.

George Soros was one of the audience members. In order to determine whether Helmut Schlesinger's remarks were sincere, he hurried forward to talk after the other party finished speaking.

"What's your take on a single European currency?" George Soros tactfully insinuated.

Helmut Schlesinger, who was in an impassioned state, replied directly without thinking: "I like the concept of the European unified currency, but I don't like the current name. Maybe it is better called Mark."

George Soros watched the Deutsche Bank president walking away with a smile, and said to himself, "Don's inference is really well-founded, and he does not regard me as cannon fodder for revenge against the British."

The subtext of Helmut Schlesinger's answer is exactly what all speculators in the European financial market hope for at this stage.

The German Central Bank can accept the idea of ​​European Monetary Union, but this does not mean maintaining European harmony at all costs—Norman Lamont's political tricks of blowing his beard and staring at creating public opinion pressure cannot shake its maintenance at all. The deutsche mark is strong, the primary task of preventing inflation and the determination of good traditions.

The German mindset is - if other economies can't stand the resulting austerity, then their currency deserves to be devalued!
George Soros couldn't help speculating Helmut Schlesinger's motives maliciously—all units have the instinct of self-preservation, and the other party, as a professional central bank official, must be in this policy~ representative of political trends.It is highly likely that it will welcome its hardline stance and undermine plans for European Monetary Union.Because the goal of the alliance includes the establishment of the European Central Bank, which will replace the powerful German Central Bank.

George Soros, who personally came to this conclusion, naturally could not share it with Tang Huan. He first called Stanley Druckenmiller in New York, USA, and excitedly informed that "the Italian lira will soon depreciate further." ; and then rushed back to New York to start preparing for the real big deal.

The Quantum Fund, run by Stanley Druckenmiller, had already bet on the pound by this point, but it wasn't nearly enough.

……

"George Soros called and requested that the 5 million US dollars invested by us be fully paid out as soon as possible." Zhuang Menghua came in and reported softly.

"Where is he now?" Tang Huan picked up the remote control and turned down the volume of the TV.

"George Soros has returned to New York, USA. He should have raised more funds to build bigger positions." Zhuang Menghua looked at Helmut Schlesinger on the TV screen and speculated: "This German I’m afraid the bank president won’t be able to stay in his position for too long.”

"To appease the public anger, it can only be an afterthought." Tang Huan smiled lightly, "The announcement will continue, and the real drama will begin—hedge funds will definitely test and verify Helmut Schlesinger's statement today. And the first whetstone should be Finland, which is still struggling in the quagmire of economic recession."

……

And indeed it is.

On Tuesday, September 9, the day Deutsche Bank President Helmut Schlesinger announced that Germany could make no promises on interest rates, a wave of speculative selling crushed Finland's central bank.

This small Nordic country has not yet joined the European Exchange Rate Mechanism and only implements a policy of pegging the European currency unit. Naturally, it cannot receive legal and voluntary support. The Finnish mark fell by nearly 15% that day, so the Finnish government was forced to abandon the current policy. There is an exchange rate policy.

Profits can be obtained in a blink of an eye, which immediately arouses the appetite of speculators who are full of tacit understanding to find the next target of attack-and Finland's neighbor-Sweden, unfortunately, has become such a victim.

On Wednesday, September 9, Sweden was hit.

With Finland's recent example, Sweden was extremely shocked and raised interest rates to an unprecedented high of 75% overnight to defend its currency.

……

When Tang Huan walked into his sons' office, he heard Jinge exaggeratingly shouting, "75% interest rate, I read it right!"

"We considered Sweden in our investment portfolio, but we didn't expect it to be so exaggerated." Jin Chang turned his head and explained to his father with a smile: "In this way, after this round of financial tsunami, bearishness on the Swedish currency must not be left behind." .”

Tang Huan nodded slightly, and pointed out: "The movement in front of me is just a small incident. Next, the hedge funds with greatly increased confidence will definitely start attacking the member countries of the European Exchange Rate Mechanism, and the Italian lira will bear the brunt."

Jin Chang opened his notebook and analyzed: "Italy has received support from the powerful German Central Bank, borrowed lira equivalent to US$360 billion, and raised the interest rate to 15%. This is a tough nut."

"Italy is a thing that cannot be supported by mud." Tang Huan shook his head disapprovingly, "European officials, including European officials, are still superstitious about the absolute power of the central bank and do not realize that a new financial order is being established. Take advantage of these insights that cannot be provided in books."

……

Italy's football is very beautiful. Take the AC Milan of the ship queen Christina as an example, a recognized Milan dynasty has been established on the European battlefield, but the economic performance is just as described by the richest man - the mud can't support it wall,
On Friday, September 9th, the well-prepared Italian lira still did not escape the fate of collapse, falling below the lower limit allowed by the European Exchange Rate Mechanism—a member of the European Exchange Rate Mechanism, the first time that the so-called market , His nose was bruised, his face was swollen, and his body was bruised.

However, Italy is still lucky. The collapse of the Italian lira occurred on Friday, the last trading day, which provided a breathing space.

The next day, on Saturday, September 9, the Italians and visiting German officials began negotiations on the devaluation of the lira.

……

Hedging funds defeated the Central Bank of Italy so well that George Soros once again called the richest man who had come to the UK to inspect Jaguar and other industries to ask about the latest developments there.

You know, European countries are in a state of turmoil right now. If the UK, which is in a similar situation to Italy, suddenly takes decisive measures, all the preparations will be in vain.

Tang Huan laughed heartily, "Don't worry, the British Prime Minister is as immovable as a mountain, and the British Chancellor of the Exchequer is as usual—Norman Lamont seems to have nothing happened, and he still has leisure and elegance, according to his schedule arranged, went to a concert, and sang the British Naval Song with great gusto."

"After all, the economic achievements of the Conservative Party in power in the 1980s are remarkable, and they are confident in coping with the current financial volatility. And I guess there is no shortage of British people who have a point of view, how can Italy, the sick man of Europe, be compared with itself."

"No, the British media still have time to hype up the rift between me and John Major."

Some of Qinhe Strategy’s operations in the London financial market have been noticed by some thoughtful people and described as wanting to take advantage of the situation.

Tang Huan said frankly to the reporter who came to ask for confirmation, "As long as you know, there are obviously some obvious reasons for this. For example, Xiangjiang Telecom, a subsidiary of Qinhe Group, has to find a way after losing its franchise. Expand your income sources.”

(End of this chapter)