MTL - The Rebirth of the Financial Hegemon-v3 Chapter 77 pits everywhere

"Okay, thank you very much for your reminder and help, and on behalf of the Thai people, I also thank your country for your sincere assistance..."

Bangkok, inside the Bank of Thailand.

Governor Sonny is chatting on the phone with Li Xianchong, chief executive of the Monetary Authority of Singapore.

Sonny's tone and attitude were very humble, and his face was filled with gratitude from the bottom of his heart. He didn't even consider that the two parties were equal in terms of duties.

The family knows their own affairs.

Sonny's ability to serve as the president of the central bank is not entirely due to the power of the family. In terms of understanding of finance, there are still real materials.

As the governor of the Bank of Thailand, he is well aware of what kind of crisis Thailand is facing now.

After the Mexican financial crisis occurred in January 1995, the goal of international capital has been eyeing emerging market countries.

Investment banks such as JPMorgan Chase, Citigroup, Goldman Sachs, Soros Fund and Tiger Fund respectively launched a tentative attack on the Thai baht in July this year.

That time, the Bank of Thailand, together with the Monetary Authority of Singapore and the Hong Kong Monetary Authority, intervened in the market, and the short attackers were temporarily repelled.

The major bears left the market with losses of about $600 million.

At that time, the Quantum Fund under the leadership of Stanley Druckenmiller also launched an attack on the Thai baht, but it ended in a cumulative loss of 70 million US dollars.

The offensive logic of the bears is that the total circulation of the Thai baht is rapidly expanding, but the foreign exchange income-generating capacity of the Thai government has shown a rapid downward trend.

Simply put, the international supply of Thai baht exceeds the demand.

This point, Sonny is also very clear.

When Sonny Tokyo attended the conference at the beginning of the year, a scholar with close ties to Japan's Tibet Province mentioned a topic in a chat.

"If the yen/dollar exchange rate becomes 150:1, will the baht abandon its fixed exchange rate policy?"

Sonny thought the issue was important at the time, but never realized it was so terrifying.

In April 1995, the yen-dollar exchange rate peaked at 80:1.

By 1996, the Japanese economy had experienced a small recovery, and the exchange rate of the yen to the dollar was about 104-116:1.

Japan is Asia's largest economy, while Thailand is the most vulnerable country to yen carry foreign exchange trading, as 55% of Thailand's external debt is in yen and Japan is Thailand's largest source of foreign investment.

Because the GDP of Japan alone exceeds the GDP of other Asian countries combined, its financial assets are equivalent to about twice that of other Asian countries.

As the world's second largest economy, Japan's trade volume accounts for about one-fifth of East Asia's.

From the late 1970s, Japan began to construct its global supply chain.

The raw materials are first obtained from Asian countries, and then the cheap parts are purchased, and the finished products are mainly sold to the United States, then Europe and the rest of the world.

The expansion of the manufacturing supply chain is sometimes referred to as the "flying geese model."

Japan is the leading goose, followed by the "Four Asian Tigers" (South Korea, Taiwan, Hong Kong and Singapore), then the "Four Tigers" (Thailand, Malaysia, the Philippines and Indonesia), and finally China.

In the system supply chain network, there are two currency standards, the US dollar and the Japanese yen.

In September 1985, the "Plaza Accord" allowed the yen and euro prices to strengthen in international markets.

In less than two years, the yen-dollar exchange rate rose from 240:1 to around 120:1 in December 1987.

By 1990, Japan's real estate and stock markets, fueled by banks, had created a huge bubble. The Plaza Accord led to an overvalued yen and subsequent pullback.

The high yen led to heavy Japanese investment in the U.S. stock market, contributing in part to the 1987 U.S. stock market crash.

In 1989, the market value of Japanese real estate was estimated to be about $24 trillion, four times the market value of U.S. land prices, while Japan’s GDP was only 60% of that of the United States.

After the bubble, Japan had to change the country's overall strategic investment direction. Under the leadership of zero interest rates, a large amount of Japanese yen began to flow from Japan to emerging Southeast Asian market countries.

But then two things happened.

After the Kobe Earthquake on January 17, 1995 and the period from March 20 to April 19, the exchange rate of the yen against the US dollar began to depreciate after reaching a peak of 80:1.

The earthquake reconstruction plan stimulated the expansion of infrastructure investment in Japan, and the depreciation of the yen stimulated exports, which led to a slight recovery of the Japanese economy in 1996.

With the yen weaker, the Bank of Japan began to take advantage of the weaker yen to recycle its overseas loans.

This is so deadly.

Fifty-five percent of Thailand's external debt is in Japanese yen.

With Japan's shrinking overseas loans, it is difficult to borrow the money back.

like a company.

When the bank suddenly blocked the loan, it can kill a company alive.

Thailand is like this company, which immediately suffered from the shrinking credit scale of Japanese banks.

Even worse.

Previously, major central banks around the world believed that the United States would continue to raise interest rates.

Because U.S. interest rate policy tends to be cyclical.

But no one expected that Federal Reserve Chairman Alan Greenspan persuaded other colleagues to end the U.S. dollar interest rate hike policy and cut interest rates.

This means that the U.S. interest rate hike cycle is over, and it may enter a rate cut cycle.

If interest rates are cut, the return on money deposited in the bank will be reduced, and may even be reduced to keep pace with inflation.

In this context, the funds that are lying in the bank and sleeping in the bank will be forced to flow out of the bank.

Capital is always in pursuit of profit.

When large-scale capital outflows from banks, it is bound to promote the strengthening of the US economy.

In this regard, the US stock market has responded well.

In the economic laws of the United States for a century, the characteristics of the barometer of the stock market are very obvious.

After the Fed's decision on interest rates, the Dow Jones and Nasdaq began to enter an upward trend, and the real estate industry, which had been deserted in the United States, also began to recover.

Where there is profit, there is investment.

With the return to be seen, global capital has started to flow into the United States, further driving up the price of the dollar.

The consequence of this is that capital in Thailand can also start to convert Thai baht assets into U.S. dollars.

If that's all, the pressure on the baht isn't so great.

What's more pitiful is that the yen suddenly announced a rate hike at this juncture.

Standing in the position of the Bank of Japan, it is certainly right to raise interest rates.

Japan's economy in the past six months is the first recovery after the burst of Japan's real estate and stock market bubbles.

This sign shows that Japan's domestic economy is showing signs of improvement.

If the yen raises interest rates, it can drive some yen back to local investment.

In addition, the yen has chosen to actively depreciate, which can also improve the competitiveness of Japanese products in the world.

as the world's second largest economy.

Whether in high-tech, modern industry, or agriculture, Japan has far more power than other countries.

Otherwise, it is impossible that the total annual export value of a single company can exceed the export value of the entire country in China.

With this increase in competitiveness, Japan's life will be better.

The U.S. economy has strengthened, and the U.S. has had a better life. Japan has reduced the scale of overseas investment and improved the competitiveness of its product exports. Japan has also had a better life.

But when they are better, others are not.

To create wealth, that is only in part of the monomer.

Wealth is, in fact, always a process of exchange, once it is put into the overall picture.

With the strength of the dollar drawing blood and the shrinking of the yen's overseas investment scale, it is undoubtedly equivalent to digging a huge hole for emerging market countries in Southeast Asia.

Thailand, in particular, immediately became the most stressed country.

Thailand's economic development is mainly driven by overseas capital.

Now these capitals want to exchange Thai baht assets for U.S. dollar withdrawals, which is equivalent to drawing the blood of the Thai government.

Japan's strategic adjustment and the shrinking scale of overseas investment are tantamount to forcing Thailand to repay its debts.

Even more pitiful.

Thailand used to sell agricultural products, low-grade processed goods and jewelry at a fixed exchange rate to earn some foreign exchange.

The devaluation of the yen has greatly affected Thailand's export industry.

In just six months, Thailand's export revenue has dropped by nearly half.

The way to make money is to open source and reduce expenditure.

Now the situation in Thailand is reversed.

The United States draws blood, Japan wants debts, and the things at home are so suppressed that they cannot be sold.

It must have been a very bad day.

If only that was the case, it would still be able to get through it if you held on.

In the past 20 years of development, Thailand has accumulated a lot of wealth.

In addition, there are two powerful allies, Singapore and Hong Kong. As long as this period of time is passed, we can think of other ways in the future.

When ASEAN's influence expands in the future, with Thailand's status in ASEAN, it can slowly make up for the hollow defects left by the rapid development of the past two decades.

But who knows that man is not as good as God.

When the Thai government's abacus was ready, the Myanmar government quietly dug a hole in the back.

The big drug lord Khun Sa has been selling drugs for many years, and all those drugs are sold to the United States and Mexico.

Earned, all in dollars.

After the Myanmar government reached an agreement with Khun Sa, in order to obtain the support of the dollars in Khun Sa’s hand, it refused the extradition of the U.S. government to Khun Sa.

This gave the US government an excuse to impose economic sanctions on Myanmar.

As a neighbor of Myanmar, everyone can imagine that Thailand will also be affected.

In July, international capitals all made a tentative attack on the Thai baht, although which one was repelled.

However, the group behind these capitals has never stopped talking about the baht in the international arena.

As you can guess, these capitals are still looking for opportunities to make the next attack on the Thai baht.

To this end, Sonny, the governor of the Bank of Thailand, has been worried.

If the Thai baht cannot survive the day when ASEAN's influence expands, then Thailand will not replace Hong Kong as the financial center of Asia, or it will be beaten overnight and decades ago.

It's just that no matter how hard the defense is, there will always be a day when a loophole will appear.

Ants kill elephants.

Even the most powerful British Empire of that year was smashed into the sand under the repeated attacks of international capital, not to mention a mere Thailand.

It is true that Thailand raises elephants, but Thailand’s comprehensive strength is probably just an elephant’s legs.

If you really want to be targeted by international capital and bite twice a day, plus domestic capital continues to flow out, if it goes on like this, you will be consumed to death sooner or later.

Therefore, Sonny hated his neighbors so much.

A distant relative is worse than a near neighbor.

Myanmar is a good neighbor. For the dollar in Khun Sa's hand, regardless of the overall situation of ASEAN, he dug a hole quietly behind the scenes.

Then....

Under the economic sanctions imposed by Europe and the United States, the kyat collapsed without an international capital attack.

In this case, the situation in Thailand is certainly worrying.

A pit is connected to a pit, and outsiders dig pits and neighbors dig pits.

As long as those international capitals are not stupid, they will definitely seize the influence of Myanmar to launch another attack on the Thai baht. When the domestic foreign exchange reserves are exhausted, Thailand will have to be buried alive by these pits.

as predicted.

Sonny judged that the international capital would seize the opportunity of the collapse of the kyat to attack the Thai baht, which came true the next day.

Billions of dollars in Thai baht selling immediately emerged in the spot market, and positions in futures contracts in the forward financial market began to grow rapidly.

BOT can catch a day's selling, a week's selling.

But if it goes on continuously, it will not be beaten to death by those international capitals.

As the governor of the Bank of Thailand, Sonny not only knows his own family, but also understands what the herd effect is.

Once the front is unstoppable, the subsequent selling will drown Thailand like a tide.

Even the Bank of England can't stand the tide like the tide. Once the gap is really opened, Thailand will definitely not be able to stand it even if it has ten more allies~www.novelbuddy.com~ After thinking for a long time, Sonny has to ask his ally Singapore. HKMA for help.

Although Thailand wants to be higher than Singapore, Sunny also has to admit that Singapore has more experience in finance than Thailand.

This is why Sonny is grateful to Li Xianchong.

During Sonny's request for help, Li Xianchong, chairman of the Monetary Authority of Singapore, gave Sonny a fairly good solution after considering it.

As Deputy Prime Minister of Singapore and Chairman of the Board of the Monetary Authority, Li Xianchong has certain insights in philosophy, economy and military affairs.

He knows that with the current situation in Southeast Asia, if the Thai baht fails, Singapore may also become the target of international capital attacks.

Li Xianchong has already felt faintly that the US government will not give up on the ASEAN issue.

These international capital's attempts to test the baht are not without the United States and Japan making small moves behind the scenes.

Everyone knows that once ASEAN's influence expands, it will have an impact on the world economic structure.

As the largest economy and the second largest economy, no one wants their position to be threatened.

Li Xianchong thinks.

When the soldiers come to block the water and cover the soil, that's when the strength far exceeds the opponent's.

With the amount of foreign exchange reserves currently held by Thailand, if it really wants to compete with international capital for a long time, it is very passive.

Now all the countries in Southeast Asia are pits.

If someone else digs a hole, they can only pass the hole on.

Thousands of days to prevent thieves, it will definitely not be able to prevent.

Only by killing those coveted capital to the point of fear, can we scare away those beasts who choose to eat meat.

Finally, Li Xianchong made a suggestion.

Show the enemy's weakness and lure the enemy to go deeper.