Soros is the chief culprit of the 1998 Asian financial crisis... George?6?1 Soros was born in Budapest, Hungary in 1930. In 1947 he moved to England and graduated from the London School of Economics. He went to the United States in 1956, where he accumulated a large amount of property through the international investment funds he established and managed.
Soros and the Asian Financial Crisis;;In February 1997, the International Monetary Fund Boorman issued a warning that only two years after the Mexican financial crisis, a large amount of hot money was being injected at a record pace In emerging markets such as Asia, "irrational enthusiasm" is widespread in these markets, which can lead to painful and sharp swings.
However, Boorman's voice was still not heard, which made Soros finally determined to fight against the power of national groups with the power of one person in Southeast Asia.
Faced with the prevalence of speculation in the currency markets of various countries, the central banks of Southeast Asian countries have been hesitant about the rate of change in market value. They are particularly worried that hot money will flow out as quickly as it flows into the country, causing sharp fluctuations in exchange rates. But at this moment, it is very difficult to turn on the reopened capital faucet. Southeast Asian central banks have reached their final moments.
Soros saw the opportunity and took action.
However, this time Soros and his men not only appeared cautious and prudent, but also chose to start with the Thai baht, which had not become the regional currency in the 1980s. Although the interest rates in Indonesia and the Philippines are higher than those in Thailand, the Indonesian exchange rate is often artificially manipulated by Indonesian officials, making it less susceptible to speculation. The Philippines also has more controls on the foreign exchange market, and it is also inconvenient to have a free war to decide the outcome. In contrast, Thailand has the most open financial market among Southeast Asian countries, with free capital entry and exit; in addition to higher interest rates, the Thai baht has been pegged to the U.S. dollar for a long time, with a fairly stable exchange rate and minimal risks: On the other hand, Thailand's economy has been "falsely" prosperous The booming and sluggish real estate market is dragging down the financial industry that used to have huge pockets. Therefore, the market value of the Thai baht is actually the most unstable and easiest to break.
The reason why Soros took advantage of Tai Mo was that he took a fancy to the above-mentioned favorable conditions. This is called "capturing the thief first, capture the king". After breaking the Thai fortress, he can completely sweep Southeast Asia. In this way, Soros ordered his men to secretly transfer funds to Southeast Asia, so that when the time comes, they can land in Southeast Asia in a large scale and catch these people who are still dreaming by surprise.
Soros finally quietly declared war on the Southeast Asian countries.
March 3, 1997. The Central Bank of Thailand announced that nine domestic finance companies and one housing loan company had problems with low asset quality and insufficient liquidity. Soros and his men believed that this was a hint of deeper problems that might arise in Thailand's financial system, so they took a preemptive strike and ordered the sale of the stocks of Thai banks and financial companies. All financial and securities holdings of depositors in Thailand were The company made huge withdrawals. At this time, Western impact funds headed by Soros, who were waiting for a large number of Southeast Asian currencies, jointly sold the Thai baht. Under the siege of many Western "heroes", the Thai baht was unable to resist for a while and continued to decline. In May, it jumped to a minimum of 1 US dollar. 26.70 baht. The Central Bank of Thailand devoted all its efforts to launching an anti-encirclement and suppression campaign against Soros in mid-to-late May, aiming to break Soros's will and make him retreat in the face of difficulties and no longer lead the crowd to attack the Thai baht group.
In the first step, the Central Bank of Thailand formed a coalition with Singapore and spent about 12 billion U.S. dollars to absorb Thai mills; in the second step, it followed Mahathir’s strategy and tactics in 1994 and strictly prohibited it with administrative orders. Local banks lend money to Soros' army; the third step is to significantly raise interest rates, with overnight interest rates rising from about 10% to 1,000 to 1,500%. A three-pronged approach, cutting-edge weapons, and powerful counterattack caused Taimo to rise to a new high of 2520 on May 20.
Due to the sudden tightening of money, interest costs increased significantly, which caught Soros' army off guard, resulting in a loss of US$300 million and a blow.
However, Soros is still Soros after all. Based on his intuition, Soros believes that the Central Bank of Thailand can use no more tricks than this. After the Thais tried their best, they did not put themselves in a desperate situation, and the losses they suffered were relatively small. Relatively mild. From a certain perspective, Soros thinks he has already won. For the countries in Southeast Asia, the initial victory is just a flashback before the catastrophe. It cannot damage their vitality at all, nor can it save the fate of Southeast Asia's financial crisis.
Soros has been working hard for this opportunity for several years. This time he came prepared and determined to win. A setback for the vanguard will not make him give up. Soros has three more battles in Southeast Asia.
In June 1997, Soros sent troops again. He called on the three armies to regroup and ordered hedging funds to start selling U.S. Treasury bonds to raise funds to expand the size of Soros's army. The Thai baht launched a fierce attack.
In an instant, the flames of war reappeared in the Southeast Asian financial market, and the smoke filled the air. The opposing sides launched a hand-to-hand battle. Thailand was in chaos, and the war situation was complicated. The major exchanges were like boiling hot soup, and people were going crazy. The ground was running and howling.
This is a war of individuals against the state. From a formal point of view, this seems incredible; however, from a point of view of the result, it is even more puzzling.
After a short battle, the Central Bank of Thailand, which only had a mere US$30 billion in foreign exchange reserves, declared that it was "out of ammunition and food." Facing the overwhelming Soros army, they had to maintain a fixed exchange rate for the Thai baht. Powerless. The Thais had no choice but to resort to a last resort, to dig out the flesh and mend the sores and implement a floating exchange rate. Unexpectedly, this had been expected by Soros, and he had made various preparations for this. Various countermeasures were implemented one after another, and the fate of the Thai baht was determined by Soros on the cross of shame. The Thai baht continues to decline. On July 24, the Thai baht fell to 32.5:1 against the US dollar, hitting another historical low. The situation of being slaughtered by Soros is really terrible for the world. The Thai people are even more frightened, beating their chests and asking the sky. .
However, after defeating the Thai baht city, Soros was not satisfied with this. He concluded that the Thai baht's sharp depreciation would lead to the collapse of other currencies, so he ordered to continue to expand the results of the war and swept the entire army across Southeast Asia. Soros secretly vowed that this time he would plunder all the countries in Southeast Asia and destroy the dream of this group of unscrupulous people who tried to replace the West.
Having heard that Soros's army was making trouble, other Southeast Asian countries put in all their strength to mount a desperate resistance. The Philippines sold US$2.5 billion and Malaysia sold US$1 billion to stabilize their currencies, but it was difficult to prevent the depreciation of the peso and ringgit in the face of Soros's powerful offensive. At the same time, the Indonesian rupiah and the Singapore dollar also fluctuated violently. For a time, the Southeast Asian currency market was in turmoil. Is this a precursor to a financial crisis or the end of a financial crisis? I'm afraid no one dares to jump to conclusions. Perhaps only one person knows the secret, and he is Soros.
Soros adopts a three-dimensional speculation strategy, not just foreign exchange operations. The so-called three-dimensional speculation is financial speculation that uses the correlation between three or more financial instruments
In the first half of 1997, some large funds represented by Quantum Fund used "leverage" on a large scale. "Continuously squeezing the Thai financial market, triggering the Thai financial crisis. During the subsequent evolution of the Southeast Asian financial crisis, these funds used "leverage" on a large scale, exacerbating the crisis. How did they do it? As Soros himself described, "We use our own money to buy stocks, pay 5% in cash, and borrow the other 95% of the funds; if we use bonds as collateral, we can borrow more money, and we use a thousand dollars, at least You can buy $50,000 worth of long-term bonds..." (Soros on Soros et al., Hainan Publishing House, 1997 edition). They used their own capital as collateral, borrowed money from banks to purchase securities, and then used the securities as collateral to continue borrowing, rapidly expanding their debt ratios. Not only that, they also widely speculated on various derivatives with "high leverage" characteristics, thus The leverage ratio was further increased. According to a report by The Economist, Quantum Fund indeed bought a large number of put options as early as March 1997, borrowed a large amount of Thai baht in the form of swaps, and sold Thai baht futures and forwards in anticipation that the counterparty would sell Thai baht spot. To maintain the value of derivative contracts, it is easy to create depreciation pressure on the Thai baht through the hands of others. It is worth mentioning that his approach in Hong Kong is a classic example of three-dimensional speculation.
Generally, due to the existence of a non-arbitrage equilibrium relationship between financial markets, with the birth and development of various financial derivatives and their markets, the foreign exchange spot market, forward market, money market, capital The market and the derivatives market are closely linked, each step is locked, and one move affects the whole body. Typical examples include when international speculators attacked Hong Kong's financial market in October 1997 and several subsequent times. International speculators first borrowed a large amount of Hong Kong dollars in the money market and sold Hong Kong dollars, forcing the Hong Kong government to sharply increase the money market interbank interest rate; the money market interbank interest rate The sharp rise caused the stock market to fall; at the same time, it caused the Hang Seng Stock Index futures to fall sharply in the derivative market; the sharp fall in the Hang Seng Index futures accelerated the fall of the stock market; the fall in stocks also caused foreign investors to lose confidence in the Hong Kong economy and the Hong Kong dollar, and they sold their stocks one after another. The exchange of shares out of Hong Kong for U.S. dollars puts the Hong Kong dollar under a new round of depreciation pressure... The chain reactions in various markets eventually expanded the fruits of victory for speculators.
The attack on Hong Kong’s foreign exchange market is expected to cause a chain reaction. International speculators have a three-dimensional layout in various markets. On the one hand, they will increase their bets in various markets to fuel speculation; on the other hand, once the speculation is successful, they will It can achieve a full harvest and match high returns with the speculative risks. Soros described this vividly: "It's easiest to understand this if you think of the average investment portfolio as a flat or two-dimensional thing, as the name suggests. But ours is more like a building. , use our equity as the basis to establish a three-dimensional structure, with structure and financing, supported by the pledge value of basic shareholdings... We are willing to invest capital based on three main axes: stock positions, Interest rate positions and foreign exchange positions.
…Different positions reinforce each other, creating this three-dimensional structure of risks and profit opportunities. Usually two days - one up day and one down day - are enough to inflate our funds at high speed. "("Soros on Soros", Hainan Publishing House, 1997 edition). International speculators made full use of this "three-dimensional speculation" strategy when they attacked the Hong Kong financial market: first, they borrowed a large amount of Hong Kong dollars in the currency market; In the stock market, borrow constituent stocks; accumulate short futures positions in the stock index futures market; then use spot transactions to short the Hong Kong dollar and sell Hong Kong dollar forward contracts in the foreign exchange market; force the Hong Kong government to raise interest rates to defend the linked exchange rate; In the market, borrowed constituent stocks are sold, suppressing futures... On the whole, based on the close connection between financial markets, the "three-dimensional layout" not only strengthens the risk exposure of speculators, but also increases the power and returns of leveraged speculation. Before August 1998, the huge returns obtained by international speculators using this method undoubtedly encouraged their greed and made them willing to take risks, which increased the abnormal fluctuations in Hong Kong's financial market in mid-August 1998. International speculators came to Hong Kong again and used the same tactics, but their luck was not so good. The Hong Kong government resolutely entered the market to fight against the international speculators. This "battle" was thrilling. The Hong Kong government finally won and protected Hong Kong's wealth. It defended Hong Kong's linked exchange rate system. It is said that the Chinese government used its foreign exchange reserves to strongly support the Hong Kong government.
However, the market opened by the government itself can be used by oneself, which is a bit of self-entertainment