Rebirth of England.

Chapter 769 QE2
Outside of Europe, there are also more and more news indicating that the Federal Reserve is likely to start its second quantitative easing policy after 2008...

The first round of quantitative easing (QE1) was launched after the collapse of Lehman Brothers in 2008. In order to prevent more financial institutions from following the same fate as Lehman Brothers, the Federal Reserve hastily introduced the quantitative easing policy.

In the three months that followed, the Fed created more than a trillion dollars in reserves, primarily by lending them to their affiliates and then through direct purchases of mortgage-backed securities.

In this way, the destructiveness of the subprime mortgage crisis was finally mitigated, preventing major Wall Street players including Goldman Sachs and JPMorgan Chase from collapse.

But at the same time, this has also led to a certain depreciation of the US dollar and an increase in the prices of many raw materials and commodities...

Moreover, although the Federal Reserve has released $1 trillion in funds in this round of quantitative easing policy, its effect is also time-limited.

Since April this year, U.S. economic data has begun to disappoint, and the overall economic recovery has also seemed to falter.

Under such circumstances, the Federal Reserve has increasingly come under pressure from multiple parties, including Wall Street, to launch a new round of quantitative easing policies to increase market liquidity and accelerate economic recovery.

As early as August, Federal Reserve Chairman Ben Bernanke, in a speech at a gathering of Federal Reserve officials, had already revealed his inclination to launch a second round of quantitative easing, although he also cautiously pointed out that quantitative easing was not a mature remedy.

Yes, at this time in the economic decision-making circles of the United States, not everyone supports the quantitative easing policy, and everyone understands that the quantitative easing policy is only a temporary solution and will cause many troubles.

But at a time when Wall Street and many capital giants are calling for the start of a new round of quantitative easing policies, I am afraid that even as the chairman of the Federal Reserve, Bernanke can not do much...

Baron knew that in his previous life, the Federal Reserve's second round of quantitative easing policy (QE2) was officially announced in early November this year. At that time, the Federal Reserve's Open Market Committee (FOMC) announced that it would once again implement a $11 billion "quantitative easing" plan. The Federal Reserve would issue currency to purchase long-term bonds issued by the Treasury Department, with a monthly purchase amount of $6000 billion until the second quarter of 750.

This is QE2 in the original time and space, the so-called second quantitative easing policy of the Federal Reserve.

The purpose of QE2 is to boost the U.S. economy by purchasing a large amount of U.S. Treasury bonds and lowering long-term interest rates, especially to avoid deflation and reduce the unemployment rate as high as 9.6%.

However, judging from the current situation, the Fed will definitely not be able to hold out until November this time. I am afraid that the second round of quantitative easing will be implemented by next month, that is, October at the latest, and the scale will be even larger...

Correspondingly, quantitative easing policies will still bring many adverse effects, such as the dollar will flood again and bring exchange rate fluctuations and asset bubbles to many countries.

In the case of active "flooding" of the US dollar, if a series of countries including Europe and Asia want to avoid greater losses, the best option is to actively "flood" together, which will also cause a new round of price increases for raw materials and various commodities...

For Barron, this round of quantitative easing policy will also have a significant impact on him.

“We need to increase investment in various markets, including stock and securities investment, as well as the acquisition of high-quality assets!”

This is a choice that both Barron and Daisy agree with.

At this point in time, their DS Group and other investment funds had reaped rich returns from shorting Japan, South Korea and Europe.

But it is clear that with the Fed's "flooding", the dollar is about to experience a depreciation after the flood - not only the dollar, but also other currencies such as the pound and the euro will also depreciate. This means that the cash held by Barron and others will also have its real value diluted in this round of quantitative easing policy.

This is just like the U.S. debt and dollar assets held by many countries now, which will definitely depreciate with the Federal Reserve’s quantitative easing policy.

The best way to combat this depreciation is to exchange your US dollars and other currencies in cash for high-quality assets before the depreciation occurs.

These high-quality assets include stocks of high-quality companies in various markets, as well as "hard currencies" such as minerals and real estate.

Even for Barron, it is not satisfactory to just add the funds in hand to the investment. He also needs to make a large amount of loan financing to buy high-quality assets. When the currency depreciates, it means that the funds that need to be returned have actually shrunk passively in value...

Once this decision is made, it means that they will start a new round of large-scale acquisitions, and the targets will include assets with clear "value preservation" attributes such as energy, mining, basic public services and cutting-edge manufacturing...

In fact, the current round of "acquisitions" has already begun, including the West African Mining Group's acquisition of Chilean lithium mining giant SQM, and...

British Gas, a subsidiary of United Energy Group, has made an offer to France's Total Energy to acquire their natural gas pipeline and storage subsidiary Total Infrastructures Gaz France (TIGF).

In fact, after Total was interested in selling TIGF, they received more than seven offers for the company, including the private equity investment company of French insurance company AXA, the nuclear fund of Electricité de France, the French state-owned bank BDTIC and the Spanish utility company Enagas...

Together with British Gas, a subsidiary of United Energy Group, a total of five companies will participate in the second round of auctions for TIGF. According to their estimates, the final transaction price will be around 25 billion euros.

By acquiring TIGF, United Energy hopes to expand its natural gas business into France and use this as a starting point to enter various countries on the European continent.

There are currently two natural gas long-distance pipeline operators in France. One is GRT gaz, of which Engie Group (Engie Group is a vertically integrated energy utility company that dominates the French natural gas market and owns the largest natural gas pipeline network in Europe) owns 75% of its shares, and the remaining 25% is owned by a public consortium.

GRT gaz is the largest natural gas long-distance pipeline operator in France, owning 3.2 kilometers of natural gas pipelines. It controls nearly 85% of France's long-distance pipeline network (trunk pipelines) and supplies gas to nearly 50 wholesalers.

Another company is TIGF, the acquisition target of United Energy Group this time.

TIGF controls nearly 15% of France's long-distance pipeline network, operates 6000 kilometers of natural gas pipelines and storage facilities in southwest France, and supplies gas to 14 wholesalers.

In France's natural gas storage facility business, there are mainly two companies involved, namely Storengy (a subsidiary of Engie) and TIGF, a subsidiary of Total.

Storengy operates 13 underground gas storage facilities in France, including 10 aquifer storage facilities (centered in the Paris Basin) and 3 salt cavern storage facilities (in southeastern France), with a total storage capacity of 104 billion cubic meters (about 80% of France's storage capacity).

TIGF is a wholly owned subsidiary of Total and operates two underground gas storage facilities in France, located in the Izaute and Lussagnet aquifers in southwestern France. TIGF has a total storage capacity of 2 billion cubic meters (about 27% of France's storage capacity).

It can be said that although TIGF is still far behind Engie Group in terms of France's natural gas pipeline network and storage, for United Energy Group, TIGF is still the most suitable and likely choice for them to enter the French natural gas market.

(End of this chapter)