The Rebirth of the Financial Hegemon

v3 Chapter 26: 1 blow up Southeast Asia

In the office of the president of Boulder Capital, there are a lot of materials on the table.

After reading these materials, Zhao Jiangchuan was writing and drawing with paper and pen.

From time to time he frowned, sometimes in a daze, and occasionally sighed.

After the end of World War II in the 1950s, the trend of capital globalization was unstoppable.

When the productive forces in developed countries are seriously excessive and the original accumulation of capital reaches a certain level, if there is no reasonable and legal way of international trade, expansion of the international market, and integration of production materials, war will be inevitable.

Therefore, exporting agricultural products and low-end industrial products and participating in international trade became an important reason for the rise of Southeast Asian economies in the 1970s.

In the 1990s, when the Western economy was in recession, Southeast Asian countries achieved the "Asian Economic Miracle" by virtue of their raw material export advantages.

Countries such as Thailand, Malaysia, Indonesia, and the Philippines have the reputation of being one of the "Four Asian Tigers".

Taking Thailand as an example, its average annual gdp increased by 8%. In 1995, its per capita income exceeded US$2,500, and it was listed as a middle-income country by the World Bank.

At that time, after Japan's economic strategy was adjusted from foreign trade to foreign investment, Japanese companies used yen to buy and sell all over the world.

Building factories, mergers and acquisitions, and rapid expansion.

Japanese companies, especially car companies, have placed their investment focus and production base in Thailand, promoting Thailand's economic development.

The rapid development of the economy has made the Thai government flutter.

However, behind Thailand's high economic growth, in addition to tourism, is a single export model of low value-added agricultural products and labor-intensive industrial products.

It does not have irreplaceable high-tech content, nor does it have high value-added agricultural terminals.

In other words, the economic strength of Southeast Asian countries is actually driven by foreign capital.

The inflow of international capital is invested in speculation and speculation projects such as real estate and stock markets in Southeast Asian countries.

But in the field of science and technology and production technology, these countries have not upgraded.

The quality of the labor force has not improved, and productivity remains low, but economic growth has pushed up wages, and with the rise in labor costs, the export advantage has gradually declined.

However, in fact, Thailand's economic growth is not based on the growth of unit input and output, but mainly depends on the increase of external input.

In order to determine the price of imported and exported goods, calculate and control the cost of international trade, and reduce the risks caused by exchange rate fluctuations.

The Thai government pegged its currency, the baht, to the U.S. dollar and implemented a fixed exchange rate system.

under a fixed exchange rate regime.

The exchange rate is relatively stable, and the fluctuation range of the exchange rate is maintained either spontaneously or artificially.

This enables the price determination of imported and exported goods, the calculation and control of international trade costs, and the settlement of international creditor's rights and debts can be carried out relatively stably.

Reduce the risk of exchange rate fluctuations.

In addition, the relatively stable exchange rate has also restrained foreign exchange speculation to a certain extent.

Therefore, in theory, Thailand's implementation of a fixed exchange rate system at that time played a certain role in promoting economic development.

However, the fixed exchange rate is the exchange rate regime that prevailed under the gold standard and under the Bretton Woods system.

This system stipulates that a fixed ratio is maintained between the domestic currency and the currencies of other countries, exchange rate fluctuations can only be limited within a certain range, and the stability of the exchange rate is guaranteed by official intervention.

The fixed exchange rate is basically fixed, and the fluctuation of the exchange rate is limited within a specified range of exchange rates.

Under the gold standard, the gold transmission point is the boundary of exchange rate fluctuations.

After World War II, a fixed exchange rate system centered on the US dollar was established. The International Monetary Fund stipulates that the currency parity of member countries shall be expressed in a certain amount of gold or US dollars.

The currency exchange rates of member countries can only be fluctuated by 1% at the upper and lower limits within a certain range according to the ratio of gold parity.

When the exchange rate fluctuation of a country's currency against the US dollar exceeds this range, the country's officials are obliged to limit exchange rate fluctuations within the specified upper and lower limits.

However, the Thai government is overconfident in its economy, completely unaware that its economic development is all driven by foreign capital.

The lack of flexibility of the exchange rate system also makes a large amount of foreign debt not take exchange rate risk into account.

These all paved the way for the subsequent financial crisis.

irreversible foreshadowing.

Fixed exchange rate This is an overestimation of the real value of the Thai baht.

Currency under the credit standard does not have any value in itself.

Its purchasing power is fully reflected in the comprehensive aspects of technology, military, economy and domestic trade.

In the short term, due to the popularity of the stock market and the real estate market, the Thai baht has maintained a steady appreciation, and there is room for speculation and arbitrage, but in the long run, it cannot be recognized by the international market.

Not only that, Thailand at that time also borrowed a lot of foreign debt to make up for its capital gap.

And make full use of the favorable international economic conditions of low oil prices, interest rates and exchange rates to invest in overseas countries and regions such as Japan, Taiwan and South Korea.

With the rapid economic growth, Thailand's bank credit has increased at a faster rate, and short-term external debt has reached unprecedented levels.

With rising wages and rising prices, Thailand's economic level seems to be only one step away from developed countries.

But the Thai government has not noticed that a considerable part of the speculative capital has flowed into real estate and the stock market.

When asset prices inflated driven by capital, in the capitals of Thailand and Malaysia, for example, house prices soared more than tenfold.

All of this has contributed to the outbreak of the financial crisis.

The bomb has already been planted.

Even without the promotion of the Jones Fund, Tiger Fund, and Quantum Fund.

The Southeast Asian financial crisis will still break out.

Studying every major event in the history of finance is a compulsory course for a financial practitioner.

Only by finding experience and lessons from history can we make attacks and defenses against various things.

Zhao Jiangchuan remembered it very clearly.

The financial crisis that swept across Southeast Asia at that time first broke out in Thailand.

Between March and June 1997, 66 finance companies in Thailand secretly received substantial liquidity support from the Bank of Thailand.

In addition, there has been a large amount of capital fleeing Thailand.

The Bank of Thailand, which finally realized the risk, raised the lending rate to deal with the attack of international capital.

At its peak, short-term lending rates in Thailand soared by 1,000 percent overnight.

That time, the killing of the international empty head discarded his armor and discarded his armor.

But when there are problems with the fundamentals of the economy, short-term adjustment of interest rates is no longer decisive.

After defeating the initial temptation of the international capital bears, it has buried deeper hidden dangers.

The exchange rate was kept, but the real estate and the stock market could not be kept.

Under the skyrocketing interest rates, Thailand's real economy is under pressure.

Because interest rates rise, it means that financing costs rise.

Some speculative capital had to be withdrawn from real estate and the stock market~lightnovelpub.net~ But under the gaze of wolves, Thailand could not escape the fate of being sniped.

Thailand's central bank spent all of its foreign exchange reserves on maintaining a peg, but it still failed.

Stock market, bond market, foreign exchange market, property market.

Total collapse.

Neither saved.

All of this, including the detonated Southeast Asian economic crisis, fell into the hands of Zhao Jiangchuan, no less than a nuclear bomb.

As long as he buries in advance, he just needs to wait for the detonation.

With the ambition of this fellow, he has absolutely no interest in drinking soup behind the international capital.

Zhao Jiangchuan wants to blow up Southeast Asia in one fell swoop.

(=)