The Son of Finance of the Great Age

  Chapter 787 Strong counterattack

  The actions of the United States are very fast, which can almost be described as lightning fast.

  On May 20, members of parliament submitted two bills, one about strengthening the supervision of rating agencies, and the other about the IMF rescue of Greece.

   There is no question that both bills passed quickly. On this point, congressmen from both parties showed a high degree of agreement.

  The first bill on rating agencies, the main content is to establish a credit rating committee with real power under the supervision of the SEC, which will act as an intermediary between bond issuers and rating agencies. The committee will have the power to select which rating agency will issue an "initial rating" for structured securities.

  Although the choice of this move is still among S&P, Moody’s and Fitch, it undoubtedly gives the rated agency great power. After paying, they can choose any rating agency to rate their products. In this way, the tricks that the two parties can reach in private will be greatly reduced.

  With the smooth passage of the new bill, it also means that the U.S. Congress’ action on rating agencies has officially come to an end. Basically the whole thing is a "raise high" at the beginning and a "lower down" posture in the end.

  Although this result is hardly satisfactory compared to the aggressive process, it is also expected by many insiders. The market's reaction to this was flat, and the stocks of the three major rating agencies fell slightly, and soon turned into normal expectations.

   What caused a sensation in the market was another bill that was passed.

  The amendment proposed by Republican congressmen was passed unanimously in the Senate with an astonishing 94 to 0 absolute advantage.

  The content of this bill is: The U.S. Treasury Department needs to assess whether the emergency loans provided by the IMF to countries whose public debt exceeds the size of their own economies can be recovered. The U.S. may need to vote against lending to a country if the Treasury Department believes that the country in question cannot repay the loan. These countries obviously include Greece, whose public debt was equivalent to 115% of its gross domestic product last year, according to IMF estimates.

  If it is said that the US senators are worried that their government’s money will be wasted, then combined with the IMF’s decision-making mechanism, the whole bill becomes very interesting.

According to the current relevant regulations of the IMF, any "significant matters" involved must be supported by more than 85% of the voting rights of the organization's members. Distribution and management of withdrawal rights, etc.

  If loans to Greece and other countries are listed as a major issue, it means that the United States has a "one-vote veto" over whether the IMF grants loans, because the United States still has about 17% of the voting rights.

Although this bill still needs to go through several rounds of voting, plus the final signature of the president to become a real law, but since the initial first round of voting, there has been no voice of opposition at all. It is only a matter of time before this bill finally becomes law. The problem.

  The market fluctuated violently!

  The most intuitive manifestation is in the exchange rate market. The exchange rate of the euro against the US dollar has almost fallen, and it has fallen for four consecutive days. It once fell below the 1.25 mark, hitting a new low in the past 17 months.

  The stock markets of various countries, which had been greatly encouraged by the EU's rescue mechanism, were also affected by this news, not only stopped the short-term upward momentum, but also faintly continued to decline.

  Of course, in addition to the uncertainty of this news, there are also reasons why various countries have successively introduced fiscal tightening policies.

  In any case, this news caused a huge shock in the global financial market, making investors realize that even though the EU is bailing out its member states, other countries in the world still have different calculations.

  The crisis still exists!

  For this situation, Europe’s response was not unpleasant. It didn’t take long for their countermeasures against the US bill to appear!

  First of all, Greece is the center of the storm. Only two days after the US passed the bill, Greek Prime Minister Papandreou announced in an interview with CNN that Greece may resort to legal action against the role played by US investment banks in the brewing process of Greek debt.

   At the same time, it was also revealed that the Greek Parliament is currently investigating the currency swap agreement reached between the Greek government and Goodman Company for 10 years, and whether there was any illegal act in it that helped the Greek government conceal the scale of its debts.

  This move is aimed at large capital institutions in the United States, and the purpose is to warn them not to continue to make trouble.

  After the U.S. rating agency was lightly held accountable, the European side also realized that the strategy of stabilizing the market by beating the rating agency had failed, and immediately they had to seize another agency, that is, the investment bank that was rampant all over the world.

   Speaking of the debt crisis, the role played by investment banks is by no means less than that of rating agencies. Rating agencies may only make a macro judgment, but investment banks have already extended their tentacles to all aspects, notifying their customers in advance that there will be a debt crisis here, and drawing blood (funds) from the organisms of these countries in a silent manner . The two functions can be said to complement each other and work together seamlessly.

  There is nothing you can do about the rating agencies in the United States, but it doesn’t mean that you can’t do anything about the investment banks in the United States, because their business is all over the world, and Europe is one of their important centers. Under such circumstances, it is an inevitable choice for politicians in European countries to properly beat the investment banks in the United States.

   Immediately afterwards, the European heads of state began a round of diplomatic mediation in response to the new US bill and its possible serious consequences.

  As the second largest economy in the euro zone, the President of France announced his visit to Japan on this day. According to the announced itinerary, after his two-day visit to Japan, he will also fly directly to Yanjing for a three-day state visit to China.

   Naturally, anyone with a discerning eye can see that the French president is seeking the support of major economies other than the United States. Asia's super economies have become his targets.

  Adhering to the principle of domestic security before fighting against the outside world, the EU has also begun to settle accounts for Britain, which has been lagging behind in the rescue. This time it is not Germany and France that jumped out, but countries such as the Netherlands and Belgium. The foreign ministers or finance ministers of their countries spoke out at the same time. In view of the unwillingness of the UK to join in the European rescue process, if there is a financial crisis in the UK in the future, then "only God can save them"!

  Although it is only the opinions of high-level leaders of some small countries, it undoubtedly represents the opinions of the entire European Commission. Although Britain's financial situation is considered healthy so far, it is only a matter of time before the UK is hit in the minds of some European leaders.

   Apart from these, what surprised observers the most is that a plan planned by the German female chancellor, although it has not been formally written so far, has too much meaning for the United States!

  The most surprising thing about the whole plan is that it suggests that the European Commission may make some countries in the euro zone "orderly bankrupt" in the future!

  Because of the investment plan of nearly 150 billion euros in the entire rescue plan, the popularity of the female prime minister has plummeted. Although so far, Germany has undoubtedly participated in the euro zone rescue plan, Merkel and her aides are thinking hard in order to restore public opinion on the one hand and counter the US interference with the entire rescue plan on the other hand. , finally came up with a shocking plan.

   That is, let some euro zone countries in deep crisis "orderly bankruptcy".

  The specific content of the entire plan is: the fiscal budgets of the euro zone countries will be submitted to the European Central Bank for separate review. If some countries fail the review, or violate the EU budget rules, then these countries will not get the 750 billion euro bailout from the EU.

   And if these countries cannot get relief, waiting for debt default is the only way. At that time, under the arrangement of the European Council, these countries will declare bankruptcy in "an orderly manner".

This news was first reported by the German "Handelsblatt". Naturally, it is still a long time before a resolution is formed in the German government and parliament and reported to the European Council. way to go. But anyone with a discerning eye can tell at a glance that this bill is aimed at the bill of the United States.

  The U.S. bill is also aimed at Greece, a country with a debt of more than 100% of GDP, which is the most serious financial situation in the entire euro zone, not one of them. The wishful thinking of the United States is to let the debt of the euro zone continue to spread and expand by putting pressure on the IMF.

  The newly released proposal in Germany is also aimed at Greece. With Greece's current financial situation, it is difficult to meet the requirements of the EU budget. In this case, the European Council can openly stop the aid to Greece and turn it into a reasonable bankruptcy under certain circumstances. The United States wants to continue to make a fuss through the Greek issue, and it can also use limited funds to those countries whose financial situation is not so serious.

   Kill three birds with one stone!

   "Merkel's move is quite powerful!"

  After reading the relevant news, Zhong Shi didn’t speak for a long time, and he sighed for a long time. He looked out of the window and couldn’t help admiring, “This is completely **** for tat! I can’t tell that this female prime minister is really capable!”

   "It's natural!"

  Jiang Shan also felt the same way, "This is a woman with a Ph.D. in physics. She is not only extremely intelligent, but also has extraordinary political wisdom and decisive courage."

   "But what will happen next?"

  Admiration is admiration. Jiangshan always remembers his role. They can't intervene in the contest between these big countries. They can only look up and watch their silent and fierce confrontation. For Tianyu Fund and Zhongshi, it is to take advantage of the gap between them to fight and wait for the opportunity to reap more benefits.

"I'm not too sure either!"

  For the first time, Zhong Shi felt confused about the situation.

  In the past month, the European debt crisis has once again swept across Greece. This time, Italy, Portugal, Ireland, and Spain have also been involved, forming a name called "Pig Five".

  But with the formation of the European Council's 750 billion euro rescue mechanism, the wrestling of the whole matter has risen to an uncontrollable height. At least so far, Zhong Shi and his allies have been unable to do much at all. As for what to do next, it depends on the trend of the two sides fighting.

"Oh no!"

   At this time, a message jumped out from the Bloomberg terminal. Jiang Shan just glanced at it slightly, and his face suddenly changed.

"Um?"

  Zhong Shi turned his face and stared at him with some dissatisfaction. Jiang Shan's surprise interrupted his train of thought, which made him a little annoyed subconsciously.

  Jiang Shan didn’t care about Zhong Shi’s hesitation at the moment, pointing to the screen and said: “The German government has just promulgated a policy prohibiting short selling when there is no stock on hand.”

"what?"

  Hearing the news, Zhong Shi raised his eyebrows and raised his voice slightly, "No way? The German government shouldn't be so stupid, right?"

   What greeted him was Jiang Shan's wry smile.

On the 28th, the German Financial Supervisory Authority announced an order. From now on, if there is no borrowing of 10 large German financial stocks and euro zone government bonds, short-selling investment in these targets is prohibited. The deadline is March 2011. 31st.

   If there is no cash bond on hand, the behavior of directly shorting is called "naked shorting". It can be said that this order of the German Financial Supervisory Authority is essentially to restrict the "naked short selling" of some targets!

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  (end of this chapter)