Chapter 672 Long-term Plan
“Your Highness the Duke, our short selling in Japan and South Korea has already made good profits...”
After accepting Sun Zhengyi’s hospitality, Barron Met Phelan O'Neill who was in Tokyo at this time.
After ending his short selling in the U.S. market in response to the subprime mortgage crisis through the Black Swan Fund, Phelan O'Neill also happily accepted another task after receiving a generous profit share, which was to cooperate with other cooperated with Wall Street capital to carry out short-selling operations against Japan and South Korea.
After all, this time Wall Street capital suffered a lot of losses in the subprime mortgage crisis and needed to make a comeback elsewhere. Their first target was Japan and South Korea - after all, colonies were taken from Come to search.
Of course, if we were to short-sell in Japan and South Korea at this time, the rate of return would naturally not be as good as the Black Swan Fund's original short-sell in the United States.
But there is also an advantage, that is, in these two areas, at least they can act without scruples and have more means at their disposal.
This time, including the approximately US$20 billion raised by Barron’s through IE Fund, Rich23 Capital and other channels, plus other Wall Street capital, the total funds they used for short selling reached US$50 billion.
So far, according to Phelan O'Neill, their profits have exceeded 10 billion US dollars, which is still not the final result...
"We have formulated a With a complete long-term plan, even if the short selling is completed this time, it will still be difficult to continue to make profits in these markets when the Japanese and South Korean markets enter the recovery period.”
Phelan O'Neill excitedly introduced Barron.
It can be said that what they have formulated is a long-term plan with a cycle of several years or even ten years!
Take the Japanese market as an example. Phelan O'Neill and those Wall Street capital will use the principal and profits of this short sale to purchase corporate bonds of some large companies in the United States through Wall Street banks - you know, in After the subprime mortgage crisis, even though the Federal Reserve is about to launch a quantitative easing policy, the financing channels of many companies have not yet been fully restored, so the interest rates on these corporate bonds will be above 5%.
Then, they used these corporate bonds as collateral to issue a large number of bonds in Japan - as we all know, the interest rates in Japan are very low. The interest rates on these 5-year Japanese yen bonds are often less than 0.5%!
The interest on a 30-year long-term bond is only 1.5%, which is almost the same as free!
At the same time, in addition to Japan launching a quantitative easing policy and injecting a large amount of capital into the market, in order to further improve the transmission efficiency of monetary policy, the central bank of Japan has carried out a series of innovations, one of which is to expand the scope of asset purchases.
When central banks generally implement quantitative easing policies, they basically only purchase government bonds or bonds with government credit - for example, the Federal Reserve purchased more than US$3 trillion in government bonds, agency bonds and MBS during the subprime mortgage crisis. .
In addition to purchasing large amounts of Japanese treasury bonds, the central bank of Japan also purchased risky assets such as corporate bonds, commercial papers, exchange-traded funds (ETFs) and real estate investment trusts (REITs). The main purpose was to reduce risk premiums and long-term interest rate levels to improve corporate financing environment.
Then these Wall Street capitals are completely able to make the central bank of Japan buy the bonds they issue, so that they can obtain sufficient funds, or Japanese yen funds!
At that time, because the Japanese stock market has been shorted by them, they can then use the yen obtained from the bond issuance to backhand the Japanese stock market and buy a large amount of their stocks. The shares of the five major trading companies and other large companies. Next, after quantitative easing is started, the Japanese yen will enter a long-term depreciation channel, and the Japanese yen will depreciate in a huge proportion relative to the US dollar. So the key point is that the funds for their large-scale purchases of Japanese stocks come from the Japanese stocks. The Japanese yen obtained from the bonds, and their own funds were used to purchase corporate bonds in the United States. In the end, when it was necessary to repay these bonds issued in Japan, because the Japanese yen depreciated relative to the U.S. dollar, repaying them in U.S. dollars would be equivalent to repaying the debt. Got a huge discount!
And their US dollar principal has been paid high interest for so many years in vain!
After the Japanese economy recovers, in addition to making a profit and leaving, they can also find opportunities to short-sell again!
So ideally, they can repeat this process over and over again.
And the financial policy of Japan will also cooperate with their entire course of action... It’s not that they do it voluntarily, mainly because if they don’t do it, a mysterious department of Japan will be dispatched - the Tokyo District Prosecutor’s Office Special Investigation Department, those disobedient politicians will inevitably be found guilty of bribery and fraud, and thus step down.
In the political arena of Japan, the Special Investigation Department of the Tokyo District Prosecutor's Office is very powerful, because behind the entire department, there is always the presence of the United States. It can even be said that they are the knife inserted by the United States in Japan.
Because the Tokyo District Prosecutor's Office Special Investigation Department and ordinary Japanese politicians are originally "two trees growing from different roots."
The origin of the Special Search Department is closely related to the US military stationed in Japan.
During World War II, the Japanese army hid a large amount of supplies when they were defeated. On the one hand, it may be for the Japanese army to make a comeback if possible. On the other hand, it also became the personal confinement of powerful people.
In order to search for various materials hidden by the Japanese army, the Allied Command headed by MacArthur established an organization called the "Rangers". Most of its members were Japanese staff from the original American Consulate, as well as Allied Commanders. Japanese employees of the Ministry.
Most of them are fluent in English and admire and accept British and American social concepts.
After special training, this group of personnel went to work. Relying on the advantage of being far more familiar with Japan than the Americans, the Rangers seized many hidden assets for the US military and made great contributions.
Since then, this organization has been retained, specializing in investigating corruption and bribery in the Japanese political and financial circles. This is the predecessor of the Special Investigation Department.
To this day, the Special Investigation Department of the Tokyo District Prosecutor’s Office is still a way for the United States to exert influence on Japan. This is not difficult to understand. After all, in order to "please" the United States, this department once seized The hidden properties of countless Japanese Chinese and financial groups have also greatly offended the local forces of Japan. In order to continue, they can only move closer to the United States.
In addition, after becoming the "direct descendant" of the United States in Japan, the Special Investigation Department of the Tokyo District Prosecutor's Office also obtained "privileges" over many big shots. This kind of power will also make you feel uncomfortable. People who are in it are hard to let go.
And even if the Prime Minister of Japan bows to the United States, for the members of the Special Investigation Department of the Tokyo District Prosecutors' Office, there is no psychological barrier at all for them to act like this.
(End of this chapter)