What are the events in
history that were exposed on the spot?
In the 1998 Asian financial crisis, Soros encountered an iron plate when he shorted Hong Kong.
They have neglected that there is an increasingly powerful motherland behind Hong Kong. 1.the crisis of the
“Four Tigers” in March 1996, the streets of Bangkok, Thailand, were bustling with the sound of friendly “Sawadhika” greeting.
At this time, the first Asia-Europe Summit is being held in Bangkok, which is the first international conference hosted by Thailand and a high-level intergovernmental meeting without American participation.
With the rapid development of Thailand’s economy, the political demands of the government and the people have become more enthusiastic, and the holding of such a high-level international conference has filled every Thai with a proud smile.
Thais have something to be proud of.
As the number one economic entity among the new “four tigers” in Asia, Thailand has been taking off economically for nearly a decade. In the
1980s and 1990s, Southeast Asia was almost the power engine of the whole world. Because of the cheap human resources and the low cost of land, the processing trade of many developed countries was almost entirely transferred to this region. Large enterprises in
Europe and the United States, from low-tech textile and apparel to slightly higher mechanical processing, have basically found their own agent processing plants in Asia. Although
Thai factories do not earn much from such industries and have pollution, Southeast Asian countries, which are poor and have no large-scale industries, are almost grateful to accept one transfer processing project after another.
In the 1990s, after the “four little dragons” of Asia, the “four little tigers” of Asia appeared: Thailand, the Philippines, Malaysia and Indonesia. The scene was in full swing and was hailed as the miracle of Asia.
Although it is a country with a strong Buddhist atmosphere, Thailand has been a loyal supporter of economic liberalization since it joined the International Monetary Fund Agreement in 1990, copying Western liberalism almost unconditionally. The
economic model has changed from regulation to deregulation, and then to complete market liberalization. If
all kinds of capital enter no man’s land, all foreign exchange can be freely converted in Thailand.
The Thai baht is directly linked to the US dollar, sitting in rows, eating fruits, taking advantage of the depreciation of the US dollar, rapidly increasing export business, making Thailand’s manufacturing exports grow by 30% annually in the past ten years, and the proportion of manufacturing exports in total exports has risen from 36% to 81%.
Over the past few years, Thailand has transformed from an agricultural exporter to a manufacturing exporter, its industrial structure has been rapidly upgraded, and tourism has almost become a hotter economic pillar after the semiconductor industry. Capital is needed for
input and output, and hot money from Europe and the United States then quietly sneaks into Asia, looking for investment targets and directions everywhere.
However, behind the capital is the capital giant crocodiles who eat people without spitting bones. Their real purpose is not for world peace and common prosperity, but to make money more efficiently. Many poor and fearful countries in
Asia don’t know about this. Anyway, if someone invests, it’s too late to kneel and lick. They can’t think of doing some defense at all. They open their doors one after another and welcome the father of the gold owner to visit.
They have seized the opportunity of capital and technology transfer after the large-scale adjustment of the world economic structure, and their economy has been rapidly improved.
But they do not realize that this model of excessive dependence on capital and only competing for power costs has long fallen into the trap of the capital market.
During this period, although there were some fluctuations in the Thai stock market, it was still dominated by growth, and people turned a blind eye to it, bullish but not bearish.
Even Thailand’s top leaders have no time to think about this issue, and they are all consumed by infighting.
From 1995 to 1996, Thailand has changed three prime ministers and five finance ministers, which is comparable to the palace drama. The per capita GDP of
US dollars is classified as a middle-income country by the United Nations, making it one of the few wealthy countries in Asia.
“If you follow the boss, you will have a meal, and your brother will be rich.” This was the voice of almost every Thai at that time.
Well, the air of freedom smells good! But just below this seemingly prosperous scene, there is an undercurrent: the Thai stock market fell sharply in the previous month, which has planted a time bomb for Thailand.
However, the decline of the stock market is only a small episode in the eyes of the usually optimistic Thais.
After all, the overall strength of the country has been increasing, and has hosted important international conferences, the stock market has no reason not to continue to rise.
At that time, no one realized that the stock market had actually peaked in January, and that it would be 17 years later to come back.
2. The “crocodile” is coming. In fact, the Thai government and senior officials have realized that something is wrong. One of the topics of the Asia-Europe Summit is to discuss Thailand’s debt problem. Thailand’s
long-term economic prosperity is reflected in real estate and the stock market. In the three years from 1993 to 1996 alone, Thailand’s real estate prices rose by nearly 400%, and Thailand’s own SET composite index rose to an astonishing 1410.33 by January 1996, which is unprecedented.
The non-performing assets ratio is as high as 35.8%.
Thailand’s banking sector is howling.
What is more fatal is that since the US dollar began to appreciate in 1995, the Thai baht, which had closely followed the US dollar, had to continue to rise, seriously affecting the country’s export industry, resulting in GDP growth falling from 8% to 5%.
The Thai government is caught in a trap: to boost the economy, it can only implement expansionary monetary policy, but it will lead to inflation, but to control inflation and make up for the project deficit, it must raise interest rates, and the export industry will still suffer.
Helplessly, in order to keep the Thai baht from depreciating and cause large-scale bankruptcy of enterprises, the Thai government had to grind its teeth to raise interest rates to maintain the exchange rate system with the US dollar.
As a result, Thailand’s deposit and lending rates have reached 12% and 13.75% respectively, which are not only the highest in Asia, but also more than twice the world average.
Such an approach is a palliative. Thailand’s
high interest rate policy has led to a sharp slowdown in investment and consumption, a more depressed economy, and a worsening rate of non-performing assets in the banking sector.
More importantly, by the end of 1996, the Thai people, who had always been optimistic, could no longer laugh, with foreign debt as high as $93 billion, equivalent to 50% of GDP, of which short-term foreign debt accounted for 60%.
A country with chronic deficits and high inflation, coupled with a fragile financial system, is a big fat meat for capital hunters.
So, in January 1997, Soros, 67, made a move. The legendary
George Soros is a Hungarian Jew, and his family can be said to be the epitome of the tragic fate of Jews.
In order to escape the Nazis, their family was displaced and suffered all kinds of unimaginable insults and tortures, but fortunately they survived in the end.
This tragic experience, as well as the experience of his parents, has a great impact on Soros, who always talks about metaphysical survival with people.
He also summed up the process of family escape as a small probability investment theory, which was later called “black swan theory”. The
paper explanation is that Europeans have always thought that swans are white, but when they see the black swans in Australia, they are dumbfounded and realize that inertial thinking is the limitation of most people’s cognition. In terms of
investment, this is speculation, which is to find different opportunities from events that everyone ignores, and then gamble boldly.
Although in terms of probability, the probability of losing is very high, but if you win, you will make a lot of money. After the Plaza Accord
in 1919, the Japanese yen appreciated, and he made a lot of money by shorting the US dollar. In 1992, he wielded a knife to Britain, where he emigrated, and shorted the British pound. This caused a unique history of selling the British pound, and made the British pound withdraw from the European Monetary Union with hatred after a sharp devaluation.
These two things have made Soros famous.
But that’s not all. In the next few years, he slaughtered a handful of Mexican pesos according to the original pattern, and harvested his native Hungary by the way.
In 1996, the huge debt and fragile financial system of the Thai government finally attracted Soros, who rolled up his sleeves and invited other international hedge funds to take a bite without hesitation and sell the Thai baht for arbitrage. The Bank of
Thailand did not admit its weakness and fought back by using about $12 billion in reserves and sharply raising interest rates, temporarily curbing the hot money offensive led by Soros.
But Thailand has begun to panic, and a lot of money has flowed out of the country, forcing the government to start capital controls.
In June, hedge funds again attacked the Thai baht, burning up Thailand’s $30 billion foreign exchange reserves.
The Thai government could not bear it, abandoned the fixed exchange rate system and implemented the floating exchange rate system, and the Thai baht was badly weakened. On
2 July, ordinary Thais who had just woken up suddenly discovered that the Thai baht in their hands had depreciated by 20 percent.Panicked people rushed to banks to exchange money, forcing the Thai government to close more than 50 financial institutions.The Thai baht continued to depreciate by 60%, the stock market plunged by 70%, and the assets of all Thais “returned to the pre-liberation period overnight.”. According to the statistics of Thai shareholders during the
Asian financial crisis, Thailand lost $141.2 billion in wealth during the crisis, while Thailand’s GDP in 1997 was only $113.676 billion.
Then, the Philippines, Malaysia and Indonesia became the targets of international speculators one after another, and the currencies of these countries devalued one after another. For a time, the financial markets of Asian countries were in a state of chaos. From then on, the Asian financial crisis that
shocked the world began. Mahathir,
then Prime Minister of Malaysia, cursed George Soros by name on television, saying, “This guy came to our country and overnight wiped out the struggle of our people for more than a decade.”.
But cursing will not stop Soros and other speculators, and the once “four little dragons” and “four little tigers” in Asia have become lambs to be slaughtered in an instant.
In the face of hungry wolves, frightened sheep do not know how to unite, so they can only flee in panic and become the prey of wolves one by one. Soros, who had won a
great victory, slowly turned around and began to look carefully at the last target in Asia, Hong Kong, China.
3. Next stop: Hong Kong Hong Kong has just returned to China, and the jubilation of the whole country has not yet disappeared, and the Hong Kong Monetary Authority has received news of turmoil in the financial systems of various countries.
In fact, after the handover, the SAR government has noticed an abnormal phenomenon. In July, when the financial crisis broke out in Thailand, the Hang Seng Index in Hong Kong did not fall, but rose.
In fact, this is the hedge fund led by Soros intends to fatten the pig slaughter, as a follow-up short Hang Seng Index Jiancang period.
Unfortunately, the financial experts of the SAR government have not yet reacted, and they feel that as long as they build high walls and strictly control short-term lending, they can resolve the crisis.
By October, “It’s not that we are incompetent, it’s that the enemy is too cunning!” The central bank of the Taiwan region made the old mistake of the national army in those years. It did not resist and directly gave up its support for the NT dollar, causing the NT dollar to depreciate by 9% in an instant. Affected
by this, the Hong Kong Interbank Offered Rate rose sharply to 280%. As soon as
Hong Kong saw it, it panicked. The foreign exchange reserves of Taiwan Province were the sum of the foreign exchange reserves of Southeast Asian countries. They could not bear it, not to mention themselves.
Hong Kong’s financial secretary, Donald Tsang, and the head of the Monetary Authority, Joseph Yam, immediately ordered banks to control short-term lending quotas. As a result,
Hong Kong residents and foreign investors, who were already in a panic, sold their Hong Kong dollar assets, with Hong Kong stocks plunging 13.4% at one point and the market value of the stock market falling by HK $2.1 trillion.
Subsequently, the Hong Kong stock market was continuously attacked in the following months, and Joseph Yam, the chairman of the Hong Kong Monetary Authority, was jokingly called “any move” by Hong Kong people because he had only one way to raise the interest rate of short-term loans. After
months of back-and-forth, Hong Kong has gradually settled down and seems to have repelled the speculative attack in October 1997. The people of Hong Kong, who are
secretly lucky, look around and see that the economies of other Asian countries are already scorched. The economies of
Thailand and Indonesia collapsed, the Korean won fell below the 1,000 level against the US dollar, almost exhausted its foreign exchange reserves and had to resort to the International Monetary Fund (IMF); Malaysia reintroduced foreign exchange controls, and Japan was also hit hard by the devaluation of its currency. After almost a year of
suffering, it was not until August of the following year that Hong Kong woke up: I was taken in by a son of a bitch! Only then did the Hong Kong Monetary Authority discover that the speculators were actually attacking the Hong Kong dollar market on the surface, but in fact they had been staring at the Hang Seng Index.
Unfortunately, it was too late to wake up. On August 12, the Hang Seng Index in Hong Kong fell below 6500 points. Everyone
knows that once it really falls below 4000 points, it means that two-thirds of Hong Kong’s wealth will evaporate and countless Hong Kong families will go bankrupt.
At this time, all corners of Hong Kong were in distress, and many people who could not stand the evaporation of wealth even chose to commit suicide.
By August 14, the SAR government suddenly announced the rescue of the market, and a Jedi counterattack began.
Because this day is Friday, followed by the three-day “Victory Day of the War of Resistance Against Japan” public holiday, the stock market is closed, and the SAR government hopes to gain three precious days. Three days later, the
SAR Government announced that it would intervene in the market with a huge amount of Exchange Fund and Land Fund, and fight to the end with Soros and other international speculators. The Financial Secretary
at that time, Donald Tsang, cried for this decision countless times. The pressure was too great. If it failed, Hong Kong’s economy would collapse completely and there would be no room for manoeuvre.
Donald Tsang and Joseph Yam immediately reported to Chief Executive Tung Chee-hwa after discussing the market entry. After careful inquiry by the Chief Executive, they agreed in less than half an hour.
When they left, Tung Chee-hwa thought over and over again and dialed a red telephone in his office.
In the next few days, the Hang Seng Index continued to push up to 7820 points, and the battle between the SAR Government and international speculators became white-hot.
On August 27, on the eve of the settlement of futures contracts in August, the SAR Government injected about HK $20 billion a day, pushing the Hang Seng Index up 88 points steadily. The figure was not high, but the fighting posture was put out.
If Hong Kong can stabilize the stock market and foreign exchange market on the 28th, Soros and many speculators will lose hundreds of millions or even billions of dollars; otherwise, the Hong Kong government’s previous investment will be really wasted.
Just then. Zhu Rongji, the
then premier, said on an important occasion: If Hong Kong is in need, the central government will defend Hong Kong at all costs.
It is said that when he heard the news, Soros, who was leisurely drinking coffee, sneered and was dismissive.
But soon, the financial giant couldn’t laugh. On the morning of August 28,
1998, when the Hong Kong Observatory issued a thunderstorm warning, the 6 million people in Hong Kong anxiously watched the fast-beating Hang Seng Index in the rainstorm, and everyone was nervous.
On that day, the deputy governor of the People’s Bank of China quietly rushed to the Hong Kong Stock Exchange and the Hong Kong Futures Exchange in Central Hong Kong Island, where they had the right to control all the country’s foreign exchange reserves (HK $144.959 billion).
Not only that, all Chinese-funded institutions in Hong Kong have also been informed to go all out to support the SAR Government’s “action to protect the market”. At 10
A. m., Hong Kong opened with the sound of a Gong.
In just five minutes, the turnover exceeded HK $3.9 billion.
On this side, Soros and other international speculators aggressively attacked the two major constituent stocks of the Hang Seng Index: “HSBC Holdings” and “Hongkong Telecom,” selling a large number of stocks to create panic.
On the other side, the SAR Government, which has been “reassured,” is sitting on the Diaoyutai, and I will eat as much as you throw out. The
33 constituent stocks of the Hang Seng Index have been carefully arranged by the SAR government to eat one by one and buy all of them. Half an hour after the market
opened, turnover climbed to HK $40 billion.
Faced with such a situation, the international speculators were unable to stand it and quietly brought in European funds when the market closed at noon. After the market opened
in the afternoon, the Hang Seng Index’s heavy “HSBC Holdings” was continuously attacked, and the two sides had another round of bloody battles.
On this day, the SAR government spent 30 billion Hong Kong dollars, and tens of millions of Hong Kong dollars and US dollars were fighting every minute.
And the red Hang Seng Index beats every grid means 10 billion Hong Kong dollars level of fighting, both sides can be said to be red-eyed. When the
battle was in full swing, a huge amount of capital quietly entered the market and made indiscriminate acquisitions of futures sold by international hot money in step.
At this time, some people found that this capital, without exception, has the word “country”: PetroChina, China Shipbuilding Heavy Industry, China Huanengji, China Postal Savings. They share the same name: China’s state-owned enterprises! This makes the international speculators who are already at the end of their strength completely desperate: I won’t take you to play like this! Take all the strength of a country and fight with us! Yes, the speculators just want to take advantage of the opportunity to make some money, but a country has pressed all its assets and assumed a desperate posture.
As of 4 P. M. that day, Hong Kong was closed, and the Hang Seng Index remained above 7800 points (only when the index was below 7500 points, international hot money could make profits, otherwise it would lose money).
On that day, the turnover of the Hong Kong market reached a record HK $79 billion. When the market finally closed, the Hang Seng Index was 7829 points, up 1169 points, or 17.55%, from August 13, before the HKMA entered the market.
At this point, Soros and international speculators in the Hong Kong foreign exchange market, the stock market, the futures market attack declared a failure.
The hand-to-hand battle of capital ended in the failure of international speculators, while Soros and other speculators lost at least $1 billion.
Even so, overseas criticism of the Hong Kong SAR government’s direct support for the market has continued, arguing that any government intervention to stop the stock market from falling is seen as a violation of free market principles.
However, the basic principle of a free market is fairness. When a medium-sized market is manipulated by a handful of big speculators to create a systemic collapse that is far beyond the explanation of the basic economic factors, it is in itself an extremely unfair fraud and plunder. What is fair and moral to talk
with hooligans and bandits?
Ten years later (2008), the international financial crisis broke out again. In order to protect the financial system and economy from collapse, many governments chose to learn directly from the financial defense experience of the Hong Kong government, and took measures including huge rescue of banks, provision of assets and deposit guarantees, which effectively protected their economies from collapse.
5. On October 30, 1998, the Hang Seng Index of Hong Kong returned to the 10,000 point mark and rose from the ashes.
Reflecting on the economic crisis, Soros and other financial speculators are only a fuse, and the fundamental problem is the loopholes in the economic system of various countries. It is not only international speculators such as Soros who
take advantage of the situation, but also organizations such as the International Monetary Fund (IMF).
As the International Monetary Fund (IMF), the so-called experts have spared no effort to call on countries to abandon the original control of state-owned capital, implement financial opening policies and lend money for construction during the period of economic rise in Southeast Asia.
But when these countries fell into crisis, many countries were forced by the IMF to sign up, promising to strictly implement the economic austerity plan, reduce social welfare, and sell enterprises at a low price, so as to achieve the goal of “self-castration” that some countries hoped for.
People always hope to learn lessons from various economic crises, but they can not resist the temptation of capital, indulge in the seemingly prosperous scene, ignore the development of the real economy, can not be over-indebted.
These international speculators eventually ran into a brick wall in Hong Kong and were defeated.
Insufferably arrogant speculators may be used to seeing governments and central banks on the run, completely ignoring that Hong Kong, which has just returned to China, has a powerful motherland behind it. Under the protection of the motherland, the
newly returned Hong Kong has preserved the assets of every Hong Kong person and the prosperity of Hong Kong for a long time.
Afterwards, some international public opinion satirized that the central government’s unlimited liquidity support to Hong Kong in the Hong Kong financial defense war fell into the trap of Soros and gave a large sum of money to these international speculators in vain.
Indeed, it is conservatively estimated that Soros and his gang are making far more money than they are losing.
Moreover, their profits from short selling of stock index futures in Hong Kong in one year are far greater than capital of this game.
However, compared with other Asian economies that have completely collapsed, Hong Kong has finally maintained its status as a financial center and social stability with the support of a strong central government.
If Soros and other international speculators succeed, it will not only be a loss of money, but also a disaster scenario for the displacement of countless Hong Kong families. Behind
this, in fact, is a mother desperate to protect the calf.
At that time, the motherland was not as rich as it is now. In this financial defense war, the central government used almost all of its 140 billion US dollars in foreign exchange to defend Hong Kong.
Without the determination of the central government to fight with its back to the wall and without the strong financial guarantee of a strong motherland, Hong Kong, the Pearl of the Orient, may be dimmed and will not be able to shine again.
Some Hong Kong people have said lightly that if the Chinese Government does not protect Hong Kong, Hong Kong will lose confidence in the Chinese Government. Has it ever occurred to those who have
said this that Hong Kong, without the protection of the Chinese Government, will be like a sampan in a precarious situation in the face of ferocious international speculators, and will sink to the bottom of the sea beyond redemption in an instant.
It is precisely because the Chinese government has repeatedly firmly stated that the RMB will not depreciate that Hong Kong has won the battle to defend its financial system. The consequence
of non-devaluation was that China’s domestic exports fell sharply in that year, heavy industry suffered heavy losses, and all kinds of export trade were affected to varying degrees.
Hong Kong was safe and sound because many domestic enterprises later sacrificed their own interests to pay for it. In the following two years,
Hong Kong’s economy remained stable and ushered in a new life. On December 6,
1999, the Hang Seng Index in Hong Kong broke through the 16000 point and closed at a 16168 of.62, which is the second time that the Hang Seng Index has returned to the 16000 point since the financial crisis.
In fact, since the reunification, Hong Kong’s tax revenue has been self-supporting and has not been turned over to the central finance.
Very often, when Hong Kong is in trouble, the Central Government has to lend a helping hand and give selfless support, asking for money and giving money to others.
However, after experiencing such a serious financial crisis, Hong Kong has seen a series of incongruous scenes of “Occupy Central”, “sending China back” and even “Hong Kong independence”.
In the end what kind of person can so reverse right and wrong, good or bad? It has been more than 20 years since the
return, and even the children are mature enough to share family responsibilities.
But no one would have thought that a mother who has worked so hard to take care of her children would be accused by children who have made all kinds of rebellious acts for no reason. How can it not be chilling?
Hong Kong is an inalienable part of China. “If you are well, it will be sunny.” This is the exhortation of the motherland, and it is also a responsibility.
END The author of this article is Wu Li Dongqi, a researcher of Blood Diamond Story.
Some References 1. “Asian Financial Crisis: Hong Kong’s Financial Stability Defense War”, Chen Delin, Chief Executive of the Hong Kong Monetary Authority 2. “Financial Alchemy”, Soros, Hainan Publishing House 3. “1998 Asian Financial Crisis Tracking Research Record”, Li Kemu, Liu Shijin, China Development Publishing House 4. “Capital Massacre”! 22 Years Ago, The Terrible Financial Storm in Asia, No.2 Leader 5, Hong Kong Financial Industry Centenary, Feng Bangyan. Focus on not getting lost ~
