The Son of Finance of the Great Age

  Chapter 795 European Consortium (7)

  Hearing what Zhong Shi said, everyone remained silent for a long time.

There is no doubt another choice before them. Although Zhong Shi's reasons are almost absurd and not convincing at all, everyone is human, and without exception, they chose to ignore Zhong Shi's so-called "gambling theory" , shifting the focus of attention to the original intention of Zhongshi.

  Is this proposal another test by Zhong Shi to them? See if they sincerely repent, or just pay lip service.

  For a while, everyone's faces were cloudy and uncertain, and their hearts were like overwhelming thoughts.

   "I join!"

Paulson was the first to jump out again. A few days ago, he mustered up the courage to reject Zhong Shi's proposal. As a result, he fell into a loss situation within a few days. Self-confidence has a fatal blow.

  After witnessing Zhong Shi reverse the situation with his own power, Paulson has fanatical confidence in Zhong Shi. The reason why he hesitated for a while was not because he was thinking about something, but because he wanted to see other people's reactions first.

   As a result, there was no response for a long time, Paulson finally couldn't hold back, and jumped out first.

"I agree!"

   Immediately afterwards, Delio also expressed his opinion, "Even if the data released by the EU is a little bit better than expected, can't we create something more and make the whole situation a little more chaotic?"

  His words can be said to have awakened the dreamer all of a sudden.

   "I'm joining too!"

"count me in!"

  …

  The rest of the people expressed their opinions one after another, as if all their worries disappeared at once.

   Their thinking has fallen into a misunderstanding, that is, all considerations now focus on the economic data to be released by the EU, ignoring their subjective role. But after Delio's reminder, they realized that what Zhong Shi had done not long ago had shocked the global financial community by accelerating the crisis of a Spanish bank.

   As we all know, it is impossible to manipulate the economic data of the European Union, and even the US government is powerless. It is precisely because all eyes are fixed on the economic data of the European Union that they do not realize that there is actually something to do in it. After Delio's reminder, they suddenly came to their senses.

   "So everyone joined in, huh?"

   Although Zhong Shi's tone was flat, he gave Delio a thumbs up in his heart. This guy manages the world's largest hedge fund. When everyone can't figure out Zhong Shi's true intentions, he can think calmly and accurately guess Zhong Shi's hidden tricks. He really is a real person.

"right!"

  Dairio seems to have a plan in mind, and there is no emotion in his tone, "So Mr. Zhong, can you tell me what kind of back move you will have now?"

  Originally, Zhongshi did have a tentative mind, but after being pointed out by Delio, it naturally lost its effect, so now Delio is urging him to speak out.

But when these words fell into the ears of other people, it turned into another meaning, that is, if they were on the wrong team at the beginning, they would not have the opportunity to hear Zhongshi's follow-up actions now, which also meant that they lost the profit they had made. Opportunities for more profits. Thinking of this, a layer of cold sweat suddenly broke out on their backs, and at the same time they were full of gratitude to Delio.

Zhong Shi, who was distracted by Delio, was not annoyed or ashamed, and said lightly: "My initial idea is that we will continue to suppress the exchange rate of the euro in the next few days. Before the EU releases economic data, Released together with my last move. If the EU’s economic data is not satisfactory, this will make things worse; if the EU’s data is better than expected, then at least my last move can offset the benefits brought by this news to a certain extent influences."

   "I think we're in an undefeated position anyway, don't we?"

  After hearing Zhong Shi's words, the others suddenly realized that Zhong Shi had already calculated it. Thinking about it, too, with his ingenuity, how could he say such absurd words as "gambling".

   "What the **** is that?"

  Ackerman asked, "If the EU announces better economic data, then what kind of news can offset the good news from the EU, I am really curious."

  As one of the two with the lowest net worth, he is now full of fear. If it wasn't for Delio's words to wake him up, he would have given up on this action. Of course, he didn't feel resentment towards Zhong Shi. If he thought about it in another way, he couldn't completely trust these people who just violated his will.

  Like him, the others were full of curiosity, as could be inferred from their obviously thickened gasps.

"Spain!"

  Zhong Shi sneered twice, and said to everyone, "Gentlemen, do you think the situation in Spain is over? They still have a lot of room for maneuver!"

  Hearing Zhong Shi's words, everyone's minds became lively again.

   I have to say that this is also a misunderstanding of thinking. That is to say, after Zhongshi accelerated the crisis of CajaSur Bank, everyone achieved their goals, and the motivation to continue under this situation has disappeared, so they did not follow up. Now after Zhong Shi reminded them, they realized that there is indeed a lot of room for maneuver in Spain.

  …

  Two days later, a piece of news began to circulate in the market. Although it was not confirmed, the lethality of this news was like a nuclear bomb, and it quickly swept the entire global market.

  The content of the rumor is: According to the current financial situation, the three major rating agencies will soon implement a sovereign downgrade to the French government.

   This time the spearhead is aimed at France, the second largest economy in the euro zone after Germany in terms of GDP.

  Currently, the French economy has not experienced any problems. At most, the growth rate has been adjusted again and again, from the original 2.4% to the current 1.3%. In addition, the debt of the public sector is relatively high, but it only accounts for about 63% of GDP, which is fundamentally different from countries such as Greece and Italy.

However, after the rumor targeted France, it still created a huge panic in the market. Because of France's special status, once France is downgraded, their cost of raising funds in the market will be greatly increased. Combined with their economic growth rate, it will further increase their debt ratio. In time, it is not impossible for France to fall into a real debt crisis.

But this time the French side moved very quickly. Just when the rumors were aimed at the French government, their budget minister jumped out at the first time, declaring that France needed to carry out further economic reforms and budget cuts, and try its best to keep the current AAA grade credit level. At the same time, he also revealed that the government and the economic circles are discussing this matter, and relevant information will be disclosed in the near future.

During this period, the United Kingdom, Italy, Greece, Spain and other countries have introduced plans to cut spending. Although these plans have been strongly opposed by domestic labor unions, the demonstrations in Greece continued day by day, and Italy, Spain and other countries also broke out. There were large-scale demonstrations, and some voices even encouraged trade unions across Europe to stand up and hold strikes across Europe. However, this statement by the French government eliminated the influence of the rumors as quickly as possible.

  Despite the official statement, some economists still believe that France is too optimistic about the current economic situation.

   But soon their president stood up and announced a series of measures: the government adopted a series of measures to reform the fiscal system and reduce the budget deficit. At the same time, it plans to amend the constitution to include the realization of public financial balance as a permanent goal of the government in the constitution. Not only that, the French government is also planning to implement pension system reform. At present, pension expenditure accounts for almost 70% of French public expenditure and is the largest source of the country's budget deficit.

At the same time, the French President also promised that the French government will reduce the ratio of the fiscal deficit to the gross domestic product (GDP) from 8.2% in 2010 to 4.6% in 2010, and control the ratio to 3% set by the EU within 3 years. Within %.

  This series of measures proved that the words of the French budget minister were not aimless, and soon the rumors about France disappeared, as if nothing had happened.

  But one wave is not flat, and another wave rises again.

  On May 31, the last day of this month, Fitch, one of the three major rating agencies, announced without warning that it would lower Spain's sovereign rating from AAA to AA+, with a stable rating outlook.

Fitch believes that fiscal consolidation in Spain is expected to severely slow down its economic growth in the medium term. Spain will undergo a longer and more difficult economic adjustment process than other AAA countries. Spain's economic recovery will be slower than its government currently expects .

    Fitch also said that the risk of the banking industry has become the most important factor affecting the economy of Spain. So far, 12 of Spain's 45 savings banks are seeking mergers. If the negotiations do not go well, it is very likely that a similar case of CajaSur Bank will appear among them. If the Bank of Spain takes action again, it will greatly affect their liquidity, which may affect Spain's current fiscal policy, making it difficult to achieve their goal of reducing fiscal expenditure.

   It should be noted that this is the second time Fitch lowered Spain's sovereign credit rating this month. They previously lowered Spain's sovereign rating from AAA+ to AAA.

   So far, among the three major international rating agencies, Standard & Poor's downgraded Spain's sovereign rating from AA+ to AA as early as the end of April; while Moody's still gave Spain AAA rating.

   The market predicts that Moody's will soon follow suit and downgrade Spain's sovereign rating.

   Affected by this news, euro zone bank stocks fell again. Although the decline this time was not as obvious as last time, the pessimism was far worse than last time. Most importantly, the overnight interest rate between European banks has climbed to an astonishing 0.25%. At the same time, in the US dollar market in London in March, the cost of borrowing has risen by 0.33%, almost reaching a record high.

  Two news hit the euro foreign exchange market hard.

  The news from France caused the euro to fall 1.18% that day. At the close, the exchange rate of 1 euro to 1.2187 US dollars was extremely close to the 1.2 mark. Later, because of France's timely statement, the euro once rebounded. But soon, as the news of the downgrade of the Spanish government spread, the euro fell again, but this time the European consortia took action one after another, buying euros almost regardless of the cost in the market, trying to maintain the 1.2 line of defense from being breached. Finally, the day before the release of important economic data in Europe, the exchange rate of the euro was stuck at the price level of 1.2176.

  However, the news of another crisis in the euro zone will not only affect one part of the euro zone, but in fact the entire world economy will be stirred up. Due to the impact of the debt crisis in Europe, the pace of economic recovery around the world has been dragged down. After some regions implemented economic stimulus policies in 2008, it is now time to gradually withdraw, but now the pace is delayed because of Europe.

  On the day Spain was downgraded, Canada announced that it would raise its benchmark interest rate by 25 basis points to 0.60%, becoming the first country among the G7 to raise interest rates.

  By releasing liquidity to the market to stimulate economic growth. So far, Canada has managed to recover its economy, and in the first quarter of 2010, their GDP grew by 6.1%. What they want to consider now is to gradually withdraw from the economic stimulus plan and start to control the occurrence of inflation, so raising interest rates has become inevitable.

   But the problem is that if Canada raises interest rates, it will also accelerate the flight of funds from Europe to North America, which will undoubtedly cause a major blow to the euro zone.

   Thanks to book friends Fatty Taoist, Shengchen, seanju1, and Jiangnan Liu Feiyan for voting monthly tickets! It's not too late today, I wish you all a happy Lantern Festival, and I hope you enjoy reading books, book friends who still have tickets, don't forget to continue to actively support, thank you very much~

  (end of this chapter)