Chapter 214 The Unfinished Aftermath

   Just when Zhong Shi was making a lot of money, he had no idea how much danger was hidden behind the financial crisis caused by him, and he was even almost kicked out of the US market.

  When Mexico announced the free floating peso, the United States still took a wait-and-see attitude towards the situation in Mexico. While the depreciation of the peso is good for U.S. imports, meaning that a dollar can buy more Mexican products, the depreciation is extremely bad news for the U.S.’s worsening trade deficit.

We must know that Mexico was the third largest trade exporter of the United States at that time. The United States exported tens of billions of dollars of products to Mexico every year on average. With the trade war with Japan dragging on, the depreciation of the peso meant that the United States lost another one. An important trading partner capable of substantially balancing trade deficits.

   Therefore, the Clinton administration quickly responded to the situation in Mexico. In addition to directly supporting Mexico with 20 billion U.S. dollars as foreign exchange reserves, it also made substantial concessions on trade policy. For the reason that the lips were dead and the teeth were cold, other South American countries also provided support together, and finally stabilized the situation in Mexico in March 1995.

   At this time, more than a month has passed since Zhongshi left the market, and the Mexican peso has also dropped sharply to the point where the exchange rate of 1 US dollar is 7.35 pesos.

As soon as the tense situation here stabilized, the United States began to investigate the culprit, and at the same time accelerated the trade negotiations with Japan. There was no other reason, but because it was less than half a year before the United States announced the implementation of the Super 301 clause on Japanese exports. Well, if the two sides can't reach any agreement within this period of time, then the super trade war between the two sides will really start.

   Coincidentally, the Mexican peso crisis made the U.S. government realize for the first time that Japan is no longer the little brother who gives and asks. In particular, the Japanese consortium continued to sell U.S. bonds this year, making the U.S. market always in danger of inflation.

  For the financial war launched by the Japanese consortium, the United States has never had a good solution. First, the U.S. government cannot stop Japanese conglomerates from selling in the U.S. bond market because it is a normal business practice. They also cannot restrict the inflow of this part of funds into the currency circulation system, the reason is the same as above. They couldn't even stop the Japanese consortium from shorting the bond futures market.

  What the United States can do is to raise interest rates, raise interest rates, and raise interest rates. The Federal Reserve began to raise interest rates in February 1994 and continued to raise interest rates until March 1995. The one-year US dollar interest rate reached an astonishing 6%, and the cost of borrowing increased significantly, which dealt a heavy blow to the US bond market.

  Of course, the U.S. did not get nothing. Inflation was not caused by the sale of bonds by the Japanese conglomerate, but because the continuous growth of the U.S. economy led to extremely loose liquidity, which caused inflation. Moderate inflation is obviously good news for economic growth, because the Fed’s interest rate hike has caused the bond market and the stock market to perform poorly. In addition to circulating overseas, more excess funds have entered the circulation of the real economy. among.

   The consequence of this phenomenon is that in 1994, the U.S. economy grew by an astonishing 4%, setting a new high in the past six years. This was achieved when the Federal Reserve continued to raise interest rates. The entire world economy benefited from the growth of the US economy and also showed signs of rapid growth.

Then in May 1995, the protracted U.S.-Japan trade negotiations finally turned around. The U.S. side made some concessions, and the Japanese side also accepted it as soon as it was good. auto parts of China are allowed to enter the Japanese market, while the Japanese market is holding onto shares in other markets such as insurance. Both parties claim to have achieved a goal that is extremely beneficial to them, but only they themselves know the pros and cons.

  The United States is quite satisfied with reaching an agreement. One reason is that the United States is suffering from the financial crisis in the headquarters of Central and South America and needs a stable rear. Secondly, the general election is about to start in 1996. Because of the continuous interest rate hikes by the Federal Reserve, Clinton and his staff have realized that the economic growth in 1995 will no longer be as satisfactory as in 1994. Out of the need for re-election, they It is impossible to really start a trade war with Japan, because then Japan will also announce high tariffs on products imported from the United States, and the US economy will face a double blow at that time. Obviously, under such circumstances, even if the Clinton administration made impressive achievements in its first term, it would be impossible for it to be re-elected.

  As for Japan, although the factors considered by the United States are not the same, they will not really launch a trade war. The main reason is also due to the needs of economic development. First, the yen has continued to appreciate this year, which has approached the minimum limit acceptable to trade exporters; second, if a trade war with the United States starts, then Japanese products exported all over the world It will face continuous trade wars around the world, which will undoubtedly worsen the already entrenched Japanese economy. No matter which prime minister comes to power, this situation will not be allowed to happen.

  These are all later things. After the value of the peso stabilized, the United States began to investigate the institutions that shorted the peso. Although these are normal business practices, since the short-selling countries are the headquarters of the United States and the most important trading partners, the Clinton administration's dislike of these greedy banks can be seen.

  Although most of the Democratic Party’s campaign funds come from these large consortiums and banks, not all large consortiums are loyal partners of the Democratic Party. In fact, many large banks are flirting with the Republican Party. Under such circumstances, it is only natural that the Clinton administration wants to give these people some color.

Due to legal reasons, the U.S. government cannot directly take targeted actions against these consortiums, but don’t forget that the U.S. prosecutorial system and law enforcement agencies such as the CIA are not only responsible for crimes and espionage. Commercial crimes also have a lot of authority, and they are more ruthless and merciless.

In the history of the United States, for those cases of prosecution of large enterprises and consortiums, the amount of punishment is often hundreds of millions of dollars, or even billions of dollars, and even a lawsuit can lead to a company with an annual turnover of billions of dollars directly declaring bankruptcy.

  Investigations into speculative short-selling of the Mexican peso quietly unfolded amidst the ire of the Clinton administration, first in December when commercial banks that were heavily lending to the peso came into the investigation's sights. Chase Bank, Chemical Bank, Bank of Texas and other institutions with branches in Mexico began to accept confidential inquiries.

  Although they are very reconciled to this kind of investigation, these banks are not innocent. In fact, these banks have opened branches in Mexico, and they have more or less contacted with corrupt officials and even drug dealers in Mexico, and some of them have laundered money for these criminals, so after being caught, The heads of these banks obediently reached an agreement with the US prosecutors, selling customer information in exchange for not being charged. Eventually, some companies registered in tax havens surfaced.

  The investigation has reached this point, and it is no longer easy to proceed. Although the United States can obtain the registration information of these companies and even the information of the forces behind them, they cannot publish this information, because it is related to the reputation of these tax havens. You must know that the vast majority of companies and consortiums in the world have shell companies in tax havens such as the Cayman Islands and the Virgin Islands. Even if the U.S. government dares to punish those who shorted the peso, it would not dare to confront all the large companies that control the lifeline of the entire world economy.

   This path is not feasible, but there are still some companies or individuals that are regulated by US law and have come into the sight of investigators, including Zhongshi's Tianyu Fund.

  Tianyu Fund is an asset management company registered in a tax haven. The fundraising is unknown and there are many managers. It is divided into private equity funds in Japan, Europe, America, Hong Kong and commodities. The main office is in Hong Kong. The private banks of HSBC, Standard Chartered and other banks have investment shares in this fund. The flagship fund of this private equity fund once achieved a miracle of doubling its net value within a year. During the Mexican currency crisis, the fund made about $600 million, belonging to a small group of speculators.

As the investigation progressed, the U.S. was surprised to find that consortiums with British backgrounds were seriously involved in shorting the Mexican peso. Among them, the British consortia led by HSBC and Standard Chartered wantonly shorted the Mexican peso after announcing the devaluation of the Mexican peso. Since they have a branch in Mexico, it is extremely convenient to borrow pesos. After the peso was announced to be free floating, the branches of these banks even announced the cessation of lending at the first time, and turned their efforts to exchange dollars in the peso market.

   It can be said without a doubt that these British banks are one of the culprits driving the sharp drop in the peso, and it is not an exaggeration to say that they are behind the scenes. Naturally, they selectively ignore Bank of America's role in this.

  Because the British side is involved, it is difficult for the United States to continue the investigation. After all, the two sides are the most solid and reliable allies. In the end, the investigation was an ups and downs situation, but these financial institutions were remembered by the relevant US agencies.

  Although it is not easy to do it now, the financial war plan against these banks has begun to be planned, and it was fully implemented in 1997 and 1998. This is also the real reason why Hong Kong has been attacked again and again during the financial crisis sweeping across Southeast Asia.

Tianyu Fund was lucky to escape this catastrophe, but even so, the fund managers of Tianyu Fund in charge of Europe and the United States were surprised to find that the supervision of their investment behavior in the U.S. market has increased significantly, and even some They were all attacked for no reason this time, which put their investment income in the US market in a very embarrassing situation.

  After experiencing two or three such situations, Zhong Shi understood, and he ordered to reduce speculation in the U.S. market and switch to long-term holding, which slowly improved the situation.

   Thank you very much for the 2 monthly tickets voted by book friend Tokihikari! As of today, the third volume of this book has been completed. Starting tomorrow, I will enter the next volume. The author will continue to improve the deficiencies of this book, and strive to make the new part more exciting. I also hope that more book friends will pay attention And support this book, thank you everyone!

  

  

  (end of this chapter)