America’s Road To Wealth

  Chapter 193 The capital butcher knife swung down

  The policy announced by the Central Bank of Neon, of course, does not mean that interest rates will be cut.

  Baba's request, how dare the neon cabinet ignore it.

   Neon policy announced by the central bank.

  It is that they will purchase neon medium and long-term national bonds of more than 30 trillion yen in the next three months.

  Generally speaking.

  A country's national debt is issued by the country's Ministry of Finance.

  The banking platform is only responsible for underwriting, which is the process of selling government bonds to investors.

  Before the Central Bank of Neon started to purchase the national debt of its own country on a large scale.

  The central banks of very few countries in the world will support the purchase of national bonds issued by their own Ministry of Finance.

  The main thing is to do this, which is equivalent to borrowing money from the left hand to the right hand.

  This right hand is still the kind that can print money.

  It is no different from printing money directly, it just looks better in name.

  As a result of doing so, the yield of national debt will be greatly reduced.

   The side effect is to make buyers of other national debts have doubts about their own national debts.

  The more direct role is to release a large amount of the country's local currency in the market.

   In economics jargon, this behavior is called "quantitative easing."

   Later generations of the United States have also used excessive quantitative easing on themselves many times.

  But the inventor of the policy of quantitative easing is actually Neon.

  Quantitative easing can pump a lot of money into the market.

  That is, under quantitative easing, the monetary policy implemented by the Neon Central Bank on its own country's economy is not a fine-tuning, but a direct dose of strong medicine.

  Neon Central Bank will make this decision once it is announced.

  USD/JPY This currency pair is idling more in an instant.

   Almost five minutes after the announcement.

  USD/JPY rose to 107.500 from 104.300 at the lowest point during the day on January 6.

  There is a time difference of about thirteen hours between Tokyo and New York.

  Neon Central Xing announced this news at 7:30 p.m. Tokyo time.

  When this news was announced, it was around 6:30 am on January 6th, New York East Coast time.

  The news that the Neon Central Bank is about to start quantitative easing came out.

  The heads of most investment banks on Wall Street, their phone numbers and contact information were blown up.

Manhattan, New York.

   Located in a luxury apartment next to Central Park.

   Paulson was woken up by his wife, who pointed to the ringing phone on the opposite side of the bed.

   "Telephone phone! Hurry up and answer the phone, I'm going to be so noisy!"

   As the wife of the president of Goldman Sachs. Paulson's wife is often woken up in the middle of the night or so early, or at other times.

  Although she is used to it, she still complains when she wakes up and gets angry.

   Paulson has long been used to it. He patted his face lightly a few times to wake himself up completely.

  The CEO picked up the phone, and the voice of the person in charge of the market monitoring department of Goldman Sachs came from the opposite side.

   "Mr. Paulson! Just now, the Neon Central Bank announced that it will buy a large amount of Neon government bonds today!"

  This huge black swan incident immediately woke Paulson up.

  Paulson held the cordless phone, walked quickly to the bathroom, and said loudly, "Are you sure?"

   "It's confirmed! Just now, in a few minutes. The yen quickly depreciated by more than one hundred points!"

   "Oh! Madfak! Didn't they just come here two years ago?"

   Paulson cursed and walked to the bathroom door.

   Paulson suddenly remembered...

  Goldman Sachs does not seem to have invested in yen assets recently.

  He was a little uncertain and asked the person in charge of the supervision department.

  The person in charge replied: "Well, because of your request, Goldman Sachs has indeed not invested in Japanese yen assets on a large scale recently."

   Paulson breathed a sigh of relief.

   His movements of washing in the bathroom also slowed down a lot.

  Since Goldman Sachs does not have large-scale yen asset investment.

  The quantitative easing of the Neon Central Bank will not have such a big impact on Goldman Sachs.

   Paulson is naturally not in a hurry.

   "Hey~" Paulson, who was holding a cordless phone, relaxed his tone.

   "I will rush to the company soon. Ha~ But at this time, Richard and the others must be more anxious than me~ Ha~ I hope they don't get too anxious."

  The person in charge also said with a smile on the other side of the phone:

   "Yes. These days they have really invested a lot of money in Japanese yen assets! Especially. Most of them are still shorting the dollar!"

  Paulson heard a touch of schadenfreude in the tone of the person in charge.

  Actually, Paulson is in the same mood at the moment.

  The president smiled and hung up the phone, and then began to dress up in a leisurely manner.

  Just like what Paulson said in the chat with the person in charge.

  In this big USD/JPY market.

  Wall Street investment banks that are shorting the USD/JPY currency pair in large numbers.

  Their person in charge, there is really no way to sleep late at this time.

  Wall Street's bulldog, Mr. Richard Fuld, CEO of Lehman Brothers Bank.

  He was dragged into the company by his subordinates' fatal serial calls directly under the bed of his beautiful secretary.

  Due to the rush of time, Richard Fuld didn't even have time to get dressed.

  He only changed into a suit and didn't even wash up.

   rushed to the headquarters of Lehman Brothers, located on Seventh Avenue near Times Square in Manhattan.

   Halfway through, Richard Fuld had figured out why.

   This made the bulldogs on Wall Street couldn't help cursing at the Neon Central Bank all the way.

   "Madefake Neon Cabinet Madefake!"

  Richard Fuld, who was yelling at this moment, was no longer as relaxed as the previous two days. And before falling asleep last night, I saw the exaggerated floating profit in the foreign exchange account of Lehman Brothers, the happy look.

   When he came to Lehman Brothers Bank, in the trading department.

  Lehman Brothers' foreign exchange account.

  Floating profit has dropped from 950 million US dollars yesterday to 79 million US dollars.

   "Madfake! Close the position! Close the position! Close the position!" Richard Fuld yelled.

   A few minutes ago, the last time he obtained this floating profit number.

   They have another $150 million or so.

   It's only been less than five minutes, and they've already fallen in half.

   And it only took twenty minutes since he was called from the phone and rushed to the company.

  In twenty minutes, the false profit of 950 million US dollars will soon become a false loss.

  The chief financial officer Bryn Bulley, who was in charge of duty last night and stared at this transaction all night, said helplessly:

   "Sir, the stampede has formed. Fifteen minutes ago, I ordered the liquidation of the position. But until now, we have not even successfully closed a thousand lots."

  In the transactions of international foreign exchange, futures, etc., whether it is long or short.

  Want to close a position, there will be a prerequisite.

  That is the short/long opposite of the long/short bet, only if you are willing to take your order.

  Because to put it bluntly, whether it is foreign exchange or futures, what you are playing is gambling.

  Since it is a gamble, it is naturally zero-sum.

   That is to say, in the betting, there must be one person who loses money, and the other person can make money.

   I'm about to lose money, short/long want to close the position.

   The opposing faction must be at this number to accept your order.

   If no one takes orders all the time, then you have to keep losing money, and if you lose money until the margin is insufficient, you will immediately liquidate your position

   It's kind of like a stock market phenomenon.

  It is when a stock is sought after by everyone.

  It starts to rise wildly, and those who hold it refuse to sell.

  There will be prices but no market in the market, and the stock price will keep rising sharply, because the buying orders are much greater than the selling orders, or there are basically no selling orders.

   In turn, a stock plummets. When everyone is selling stocks and no one is buying.

  Then this stock will plummet.

  The stock will not stop falling until the number of buyers and sellers is about the same.

  The difference is that you can buy stocks as long as you don’t use leverage as long as the money is not borrowed.

  No matter how much the stock goes down, it's still there in the end.

  Even if the stock ends up rotten in the hands, it is still a stock.

  If the company does not go bankrupt, close down or delist, there will be some hope for the stock after all.

   But betting against foreign exchange and futures. If you lose in the end, you will really be liquidated directly. All the principal was lost, and even the money owed to the middleman after the liquidation!

  If leverage is used

  Lehman Brothers' current empty orders are like this.

   The tide of short sellers fleeing has formed. The short sellers who had an absolute advantage before all wanted to flee in the first place to ensure profits.

  In an instant, hundreds of thousands of empty orders wanted to close their positions.

  There is no corresponding response from the long side.

  These empty orders, there is no way to close the position immediately and end the gambling contract.

  The current market situation, coupled with the quantitative easing policy of the Nihong Central Bank.

   A bear carnage has taken hold.

   No long position will choose to close the position and leave at this time.

  This means that most of the short orders.

   There is no way to close the position immediately.

  Compared to other Wall Street investment bank managers, Richard Fuld is more decisive.

  After getting this news from the CFO.

  Richard Fuld immediately made up his mind:

   "If you cut the meat, you have to leave the field! Try to minimize the loss!"

   Meaning by Richard Fuld.

  It is directly on the current USD/JPY exchange rate, directly thanks to some points.

  I would rather let the bulls on the opposite side make a little more money directly at this time.

   You should also close your positions in advance, so as to avoid possible greater losses in the future.

   "Understood." Bryn Bulley responded immediately.

   Then the CFO of Lehman Brothers took a look at the latest market.

   USD/JPY has risen to 108.560.

  Brin Bully was a little desperate, because at this time Lehman Brothers had already begun to make a lot of floating losses.

   "Sir, what value should we choose for closing positions?!" Bryn Bully asked Mr. CEO again.

  The value of 108.560 made Richard Fuld equally desperate.

  But he was only desperate for a few seconds, and the value on it had changed from 108.560 to 108.590.

  The bulls have gone crazy, not even giving the shorts a chance to surrender.

   At this time, it can be said that the bulls have become a general trend.

  Those short positions in the market that do not have a full position, it is estimated that they will all become long positions at this time.

   "111!" Richard Fuld gritted his teeth and bleed, he shouted: "Immediately close all leveraged positions at 111 yuan!"

  Choose to close the position at the value of USD/JPY 111.000.

   The investment of Lehman Brothers in USD/JPY this time is really cutting flesh.

  The loss is almost more than half.

  CEOs are willing to take on such responsibilities, so Bryn Bulley naturally took action immediately and prepared to cut meat and close positions.

  Also Richard Fuld also immediately from idle much.

  He ordered Bryn Bulley to open a long position again, and the leverage used was very high, hoping to hedge the loss of this short position.

   Simultaneously do long and short, and the leverage ratio is different.

   This is known in the industry as "hedging".

  Hedge funds, that's what they do.

   Just decisive people like Richard Fuld, and there are a lot of them on Wall Street.

  Moreover, the long list does not mean that it can be opened as soon as it is opened.

  It’s okay if the number of hands is small, but if the number of hands is large, there are not many new empty singles on the market.

   At this time, start to turn more, but it is not as easy as the previous stalemate stage.

   Lehman Brothers managed to close 10,000 short positions, when USD/JPY rose to 109.950.

   Lehman Brothers' high-leverage long positions were successfully opened with less than a few hundred hands.

  The massacre of bears has been formed, how can there be so many iron bears?

   At this time, the meat cutting warehouse of 111 is also a little flat.

   Bryn Bulley turned around and wanted to ask Mr. President for countermeasures, but saw the president slumped on the chair, his eyes already a little dazed.

  US East Coast Time.

  January 6th (Asian time zone is earlier than American time zone).

  In the New York Exchange, those investors who held short positions in USD/JPY foreign exchange futures shrank by more than half in one day.

  The second day and the third day are Saturday and weekend.

  The U.S. futures market is closed and there is no trading.

  January 9th.

   On Monday, the US futures market opened, and USD/JPY broke through 118.950 a few hours later.

  After twelve o'clock, the major exchanges in the United States were temporarily closed.

  The financial predators on Wall Street are experiencing both sorrow and joy at the moment.

  Building 3, World Financial Center, New York.

  In the New York branch of PNC Financial Services Group, which is in the same building as Merrill Lynch.

Snapped!

   "Honey, go open a bottle of champagne!" said Sally Winston, CEO of PNC Financial Services Group.

  He happily leaned back on the office chair, crossed his legs, held a cigar in one hand, and swam freely behind the female secretary with the other, when he suddenly slapped hard.

   "Ice it cold! Lincoln will come over later, I have to celebrate with him!"

   "What do you want for lunch? My dear boss, let me help you figure it out!"

  The female secretary laughed idiotically, her body pouted on purpose, so that her boss could play more comfortably.

   "Besides money, I only have appetite for you. But Lincoln is a Puritan, he doesn't like playing with you with me."

  Sally Winston laughed.

  Last week, he discovered Abe Smith and Smith Capital together with Lincoln, the investment fund manager in the company, when he suddenly changed from idling.

  He and Lincoln, the head of the company's investment department BlackRock Fund, discussed behind closed doors for an afternoon.

  In the end, the two giants of PNC Financial Services Group unanimously decided to place a heavy bet on multiple contracts.

   At the beginning, because of the interest rate cut of the US dollar, the USD/JPY was turned from long to short.

  The fall made the eyelids of the two giants of PNC Financial Services Group twitch.

  When Abel's loss came to about two billion US dollars.

  He doesn't know, in PNC Financial Services Group, because he is optimistic about his investment style.

  PNC Financial Services Group also lost almost 500 million US dollars with him.

   Just when Sally Winston and Lincoln were a little suspicious of life.

  Neon Central Bank announced their quantitative easing policy.

  The situation suddenly turned around.

  After that, major countries around the world successively announced interest rate cuts along with the dollar.

  The window period for dollar depreciation quickly disappeared.

  Combined with the quantitative easing policy of the Central Bank of Neon.

  The U.S. dollar has strengthened again, and at the same time, there is also the quantitative easing method of the central bank to devalue the yen.

   This made PNC Financial Services Group's investment in USD/JPY in the next few days, the floating profit continued to expand like a wild horse.

  Currently, the floating profit of PNC Financial Services Group has accumulated to 1.5 billion US dollars.

  Sally Winston's gamble with Lincoln won a huge victory.

   "What should I do this afternoon?"

  Sally Winston was thinking carefully while tasting the fine wine and beautiful lips of the female secretary.

  Stanley O'Neill, a black executive of Merrill Lynch who works in the same office building as Sally Winston.

   But not as easy as Sally Winston, nor as lucky as Sally Winston.

   Stanley O'Neill is sitting on a chair with bloodshot eyes at the moment, holding his head in his hands.

  The most powerful black man on Wall Street is in the midst of infinite remorse at the moment.

  Because just now, Merrill Lynch had as many as 150,000 empty orders, when USD/JPY reached 118.900.

   Completely liquidate all positions.

  Merrill Lynch's more than US$3.5 billion in deposits and funds were all wiped out.

   Liquidation is fine.

  The loss is 3.5 billion US dollars, which is not yet to the point where Merrill Lynch is hurt.

but

  Since it is a VS bet, sometimes liquidation may not necessarily solve the problem.

  Because liquidation is just a loss of margin in the account.

  If there is no way to close the position, the position contract in the account will continue to lose money.

   Just like now, if USD/JPY continues to rise.

  Merrill Lynch has lost $3.5 billion in addition to liquidation.

  The position contracts that have not been closed next will continue to lose money.

   There is no guarantee deposit with the middleman, and it will become a debt.

  What should I do if I owe money, I need to make up the money first.

  If the compensation is not complete, the middleman has the right to collect the debt.

   If the arrears are too long, the middleman can also file a lawsuit to collect the debt.

   That is to say, after losing 3.5 billion US dollars, Merrill Lynch must continue to make up money later.

  The position contracts in the hands of Merrill Lynch were replenished until all the positions were successfully closed, and the matter was considered over.

   Fortunately, after USD/JPY reached the value of 119, it finally stopped its crazy rise.

  The butcher's knife wielded by the bulls is finally not so sharp under the possible profit retracement and anti-short situation.

   At this time, Merrill Lynch can basically close this position contract as long as it makes up another 500 to 600 million US dollars in margin.

   but do

   Never a good thing for Stanley O'Neill.

   Stanley O'Neill is in despair at this time, and is thinking about whether to continue to call for margin.

  Continue to make margin calls if USD/JPY can fall again.

   Then Merrill Lynch Securities may reduce losses and even turn losses into profits.

  It is also possible to increase the margin, continue to liquidate the position and continue to owe money

   This is a dilemma.

  One is to cut the flesh and leave directly. Merrill Lynch will lose more than 4 billion US dollars this time.

   Stanley O'Neal in the previous three years.

  A total of Merrill Lynch, not to mention the loss of more than two billion U.S. dollars earned on the dollar/yen.

  Merrill Lynch has to pay more than one billion US dollars for this.

  If you choose this, it will basically declare that Stanley O'Neill is completely over at Merrill Lynch.

   Even the second half of his entire life can be declared a real social death.

  The company lost so much money, can Merrill Lynch shareholders be expected to let Stanley O'Neill go?

Forget it!

how can that be.

   Stanley O'Neill also knew that if he took another step back, it would be a dead end.

  The black president gritted his teeth and planned to go all the way to the dark.

  However, just as he finished thinking about it, he was about to let the company continue to increase the margin.

  Stanley O'Neill had just walked to the trading department, and was about to issue an order to continue the offensive to the traders who were also panicked and desperate.

  At the same time, let other departments of the company adjust more funds to support themselves.

   Stanley O'Neal met outside the door of the trading department.

  The CEO of the company, David Komansky, was pushing the door and walking in.

   Stanley O'Neal saw a smile on David Komanski's face that he had never seen before.

  That's the kind of smile that David Komansky would be happy with if Merrill Lynch lost four billion dollars.

   See David Komansky smile.

   Stanley O'Neill suddenly gave a mental rattle.

  The most powerful black man on Wall Street, he knew he was done.

  (end of this chapter)