Rebirth of England.

Chapter 985 Strategic Missile?

If we look at the rate of return, it is clear that Morgan Stanley's performance has been somewhat poor since the subprime mortgage crisis until now.

Since March 2009, the share price gains of Morgan Stanley and Goldman Sachs have lagged far behind those of Wells Fargo, Citigroup and Bank of America - commercial banks have performed much better than investment banks.

In contrast, during the five-year bull market from September 2002 to September 9, the S&P 2007 rose 9%, with the financial sector rising 500%. During this period, Goldman Sachs rose 87% and Morgan Stanley rose 66%, both significantly outperforming the market.

In the next year, these banks and investment banks will generally have at least a 10% increase...

The reason why Baron said that now is "not the right time" is not mainly because the stocks held by the BFT Fund still have room for growth, but also because of the exchange rate between the pound and the US dollar.

Initially, when the Bank of England injected 250 billion pounds into the BFT Fund, the exchange rate of the pound to the US dollar was around 2.1.

By the time the BFT Fund made its first repayment of 135 billion pounds, representing 25% of the total debt to the British government, in principal and interest, the exchange rate of the pound to the dollar was 1.45, so the 135 billion pounds was equivalent to less than 196 billion US dollars.

Now, the exchange rate of pound sterling to the US dollar is around 1.67. Compared with the last time when 25% of the British government's debt and related interest were repaid, the exchange rate of pound sterling to the US dollar has risen. Therefore, the funds needed to repay this 25% debt and related interest are close to 140 billion pounds (the extra part compared to the last time is the accumulated interest during the period), which is equivalent to nearly 234 billion US dollars.

After all, the assets currently held by the BFT Fund are all denominated in US dollars, so that it can obtain additional benefits from the lower exchange rate of the pound against the US dollar.

However, this is not a big problem. Just like the last time the BFT fund repaid part of the British government’s debt, it was not raised by the fund selling its own shares, but was “transferred” from other places.

After all, the interest rate given by the BFT Fund for the British government's 500 billion pounds investment was not low - at that time, there had not been these rounds of quantitative easing policies, and there had not been rounds of interest rate cuts - so for example, if the BFT Fund needs to return 135 billion pounds to the British government, then they can raise this money from other places at the same interest rate...

Just like the Friends Insurance Group controlled by Barron, there is a considerable amount of pound sterling funds deposited in its business in the UK, which is used to purchase the relatively high-interest "debt" of the BFT Fund, which is enough to cover the funds that the BFT Fund needs to return to the British government.

This time, they can still do so. The longer the time is delayed, as the exchange rate of the pound to the dollar decreases, the more cost-effective it will be to convert their US dollar assets back into pounds for transfer.

……

As for Barron's proposal to Cameron to repay part of the British government's debt, it is related to Britain's national security.

"Although we are close allies with the United States, our country's nuclear deterrence capability still needs to be in our own hands, rather than being controlled by the United States as it is now..."

"what do you mean?"

"We need to have our own strategic missiles for precision delivery!"

Why do I say that? Because the button of Britain's strategic nuclear deterrence is not in its own hands, but requires the consent of the United States.

In fact, Britain originally wanted to reduce financial pressure, but ended up becoming the "sucker" who spent money... In 1952, Britain detonated the atomic bomb it developed with the assistance of the United States, and then in 1957, it successfully detonated a hydrogen bomb.

Britain thus became the third country to possess the hydrogen bomb after the Soviet Union (1953) and the United States (1954), and before China (1967) and France (1968).

The reason why Britain was so actively developing atomic bombs and hydrogen bombs at that time was because it was worried about the invasion of the Soviet Union - after all, the Soviet Union's steel torrent was right next to Western Europe at the time, and the Soviet Union already had atomic bombs and hydrogen bombs.

Britain's nuclear strategy at the time was "minimum nuclear deterrence" - maintaining a limited and effective strategic nuclear force, and declaring that it would aim to strike important cities in the enemy country, causing the enemy country to suffer unacceptable losses, in order to deter potential enemies from launching nuclear attacks easily.

To put it bluntly, you, the Soviet Union, can "nuclearize" the British Isles, but at least I can drag your Moscow down with me...

However, due to funding issues, Britain eventually gave up the research and development of nuclear weapons delivery vehicles and signed an agreement with the United States, abandoning the "three-in-one" nuclear strike capability and only retaining sea-based strategic nuclear submarines as nuclear strike capabilities. By purchasing and using American strategic missiles to carry their nuclear warheads - and according to the agreement, Britain can continue to develop nuclear weapons, but its experiments need to be carried out within the United States...

So in the end, the situation arose that Britain manufactured its own nuclear warheads and nuclear submarines, but needed to use America's Trident to deliver them.

In theory, the British Prime Minister can issue an order to launch a Trident strategic missile without prior approval from the White House...

But this is only in theory. After all, the manufacture and maintenance of the "Trident" strategic missiles all depend on the United States. If the United States refuses, then even if the British launch the "Trident", whether it can reach their designated destination at that time is also a problem...

This is also the reason why in the classic British drama "Yes, Prime Minister", it is bluntly stated that "Britain is America's missile base."

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"You mean we should stop using America's Trident and develop strategic missiles ourselves?"

Cameron asked, eyes widening after hearing Barron's words.

This is not something that can be decided casually. In addition to the reaction from the United States, the research and development of this strategic missile will certainly require a large amount of money. By then, not to mention the opposition party, even within the Conservative Party, there will probably be many questioning voices - is this necessary?
"Of course we don't need to do research and development independently. I also understand that this is a very difficult thing, but what if we cooperate with other countries in research and development? For example, France and Italy..."

Seeing that Cameron remained silent, Barron continued:

"We just need to put forward this idea as an option..."

At this point, Cameron finally responded:
"But in America..."

"We can't follow the United States like Blair did. Sometimes, maintaining a certain degree of autonomy will make us more worthy of being won over, Mr. Prime Minister."

(End of this chapter)