Chapter 346 Join forces with Smith

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

That crisis began in July 1997.

The first country to suffer was the Dai Kingdom, and then it quickly spread to Malaysia, Singapore, Neon and Han Kingdom.

The currencies of Dai, Indonesia, Han and other countries depreciated sharply during this period, which also caused sharp declines in most major stock markets in Asia.

At the same time, this crisis has also impacted foreign trade companies in various Asian countries, causing the collapse of many large Asian companies, causing workers to lose their jobs, and causing social and economic depression.

Reflected on the economic level, it broke the rapid economic development in Asia before this.

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

They simultaneously launched an attack and plunder on the economies of emerging countries.

It can be said to be their old profession.

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

But essentially they are the same...

The consequences for Asia are similar to those a hundred years ago.

At most, not so many people would die.

That is to say, starting from this crisis, the economies of some of Asia's major economic countries began to decline, and the political situation of some countries also began to be chaotic.

The rising power of Rim Asia and Greater Asia was interrupted.

In that crisis, China was in the best situation. If it were not for the preservation of Hong Kong Island, it could even be said that there would be no problem at all.

Next is the vv area. Due to the special circumstances at the time, international hot money did not dare to take action, so it was considered a lucky escape.

This is a typical US dollar tide led by US dollar hegemony.

To put it simply, the so-called dollar tide means that the Federal Reserve lowers interest rates and reduces the attractiveness of the U.S. market, causing a large amount of U.S. dollars to leave the United States and spread around the world.

After these dollars are dispersed, they bring a large amount of investment to the local area and 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 interest rate cuts that lasts for several years, it is often 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 U.S. dollar capital invested in the United States in previous years will gradually flow back into the United States.

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

After a large amount of funds were withdrawn and external investment capital was lost.

The situation in emerging economic regions that rely on external help to develop will soon be in crisis.

In a short period of time, the economy was severely weakened and the exchange rate plummeted wildly.

Usually at this time.

International hot money, led by Soros, will act as thugs and begin to harvest emerging countries whose immunity has been broken by the US dollar tide.

Wait until these robbers leave with their pockets full.

What is left behind are emerging countries with a sharp rise in unemployment, currency depreciation, economic and GDP declines, and even the general situation may begin to be turbulent.

But don't worry, it will take some time.

The Federal Reserve will lower its benchmark interest rate again.

Dollars will begin to leave the United States again and then re-enter these countries that were "robbed" not long ago.

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

It is obvious that a new wave has begun.

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

This kind of dollar tide has been happening for decades.

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

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

After they have become masters, the big devil will take action and absorb all the skills of these apprentices before they are even happy for two days.

But he will not kill them, but will give them new skills after a while and let them continue to practice.

This cycle continues like this, and the big devil can escape the whole world by relying on this method.

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

The rise of later generations, such as that of China, can at best only protect itself under this approach, and may even be affected by it.

The only thing we can do is not be like those younger brothers in emerging regions and the United States, who have no backhand power.

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

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

It's like borrowing money to buy a tank.

When you actually buy your tank, and the creditor wants to ask you to repay the money, you have to consider whether it can withstand the bombardment 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 is used to provide direction.

At Charlie Brown's Pizza.

After hearing what happened to Alberti in 1997, Soros actually didn't feel humiliated at all.

The financial capitalist lacks this feeling, which is especially his strength.

As long as it's profitable, what's the point of humiliation?

"From June 1999 to May last year, for a total of 11 months, the Federal Reserve raised interest rates six times in a row, with an increase of 1.75%."

Soros talked to Abel: "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, to 1.75%. But don't forget that from last year to now, in response to the Nasdaq crisis and the September 11 crisis, it has cut interest rates twice.

times, the current benchmark interest rate is 1%. The dollar’s ​​return has ended.”

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

confrontation."

"Exactly." Soros said: "That's why I'm inviting you. This time it's not just you and me, this time Bridgewater, Bridgewater, Greenwich, and Renaissance Technologies will all end up. Counting you.

With Smith Capital, we can amass over a trillion dollars in capital!”

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

Generally speaking, the main component of international hot money is also these hedging companies.

One characteristic of these companies is high leverage. Like Soros, he often dares to leverage up to 20 times, which is even more exaggerated than Abel's Smith Capital now.

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

As long as a part of this money is withdrawn, tens of billions of funds can already be operated with exaggerated high leverage.

The risks of this model are very high. Each time it takes a large group of people to act together to gather a terrible financial attack.

Ultra-high leverage ratios bring exaggerated interest rates. When interest rates are high, capital costs are high.

Therefore, the operations of hedging companies are basically short-term transactions, which generally do not exceed two months.

Facing Soros's proposal, Abel groaned and seemed to be thinking about it. This situation lasted for several minutes.

Soros did not disturb him, but quietly looked at this pizza restaurant, which was said to be Abe Smith's favorite place.

Because Abel liked to bring people here to talk things over, gradually this pizza shop became somewhat famous among New York's upper class society.

Many rich and famous people in New York have eaten here.

After some people ate it, they praised the food here so much that they started coming back more often.

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

That's unknown.

"So be it."

Abel's gentle voice drew Soros's eyes back from the surroundings.

He saw Abel and said: "As long as Warren joins, then I will join. How about that?"
To be continued...