Mediterranean hegemon

Before the stock market closed, Hoover's phone calls came all over the place: "Calais, why have you reduced your stock holdings? This is a huge blow to market confidence."

"Your Excellency, there is nothing I can do..." Contini said aggrievedly, "How can I deal with the run if I don't reduce my holdings? 150 million funds have flowed out of the United Bank system since yesterday. If I can't contain the risk , other banks will fall in piles like dominoes. Not only can you not criticize me, but you should affirm and appreciate me. Our United Group is the mainstay of safeguarding U.S. financial stability!"

Hoover was so choked by this sentence that he almost couldn't finish it. He said a little unhappy: "Since you have difficulties, why don't you raise them? We can all work together to find a solution. It's not like the banking industry is incapable..."

"Sir, I can't afford this ability. Do you know how much interest they charge?" Contini said in an exaggerated tone, "The annual interest rate is 25%, which is 5 percentage points higher than the current highest stock margin loan interest rate. , do you think I should take this stab or reduce my holdings? I can still get a better price.”

"You can ask the Fed..."

"The Fed said that unless I withdraw the transferred positions, otherwise..."

"Then take it back..."

"Your Excellency, I have explained repeatedly that this is a matter of credibility. Why do I have to withdraw it? Isn't it the same if I reduce my holdings to raise funds? It is my responsibility to maintain the stability of United Bank, but it is not my responsibility to maintain the stability of the stock market...Moreover It’s also my right to reduce holdings. I can’t move any stocks, right? Then why open the stock market and engage in capital trading? To put it another way, isn’t the decline something that the Fed likes to see? Many measures have been taken to suppress the stock market, and now it has finally begun to bear fruit. If you asked me to do this or that, have you considered their feelings? "

Hoover was speechless by his resentful words and said hurriedly: "Okay, okay, I understand that it's not easy for you. What are you going to do now that the stock market is like this?"

"We have to ask the Federal Reserve, are they satisfied with the current decline..." Contini said, "Besides, the stock market currently has a stabilization fund. They can play a role and value. They called me in the afternoon and hoped that I bought back a little bit, and then I bought back some of the stock -- 40% of the sell-off."

Hoover was relieved to hear that Contini had bought back another 40%. Indeed, he also believed that it was unreasonable to not allow United Group to reduce its holdings. Contini's willingness to work together seemed to be the only effective way at present. And as he said, after two consecutive days of sharp declines, the stock market has entered a relatively reasonable valuation range, which may be better for long-term development. It has only been 2 days since the bank run happened and there is still no problem. If there is no problem for Union Bank for 5-6 days, he believes that the matter will eventually be calm. So he comforted Contini for a few words, hung up the phone, and turned to Mellon and others to find a solution.

At 7 o'clock that night, the press conference was held as usual. This time more people poured in, because many people had received the news from other channels that United Group had reduced its stock holdings, and saw that at the end of the day, the Dow Jones Index had no Being able to recover 380 points is great bad news for the market. They can't wait to inquire about the news. Alessandro reported three pieces of news before starting:

“First, since September 16, during 36 hours of non-stop work, United Bank has agreed to allow depositors to withdraw US$190 million. At present, the entire revenue and expenditure system remains stable, and we have the ability to provide sufficient liquidity to depositors;

Second, United Group reduced its stock holdings by more than US$300 million today to supplement Union Bank's liquidity. In the afternoon, President Hoover had a phone call with the President out of the hope of stabilizing the stock market. At his request, the Group added another 40% of the shares have been repurchased, and the remaining part of the shareholding reduction has not been withdrawn. Other peers that have not yet recovered the dismantling of United Bank do not need to worry about the market outlook;

Third, United Group will continue to fulfill its promise and will not stop working 24 hours a day until people queuing up to withdraw money get the desired results. To employees who have been working overtime recently, the bank will pay three times their salary this month to express condolences! Now enter the free question time. "

There was a buzz in the venue. Everyone did not expect that United Group would readily admit today's shareholding reduction action so quickly, and they did not expect that Hoover would actually call the president directly - in fact, Contini was trying to save Hoover's face, and these 40 % had repurchased before the call, and Hoover should have known this well.

"President, you were very bullish on the U.S. stock market at the beginning, advocating that 300 points was the starting point of a new bull market in the U.S., and now you are reducing your stock holdings. Are you suspected of being inconsistent?"

Contini said calmly: "There are several issues here that need to be looked at separately. First, I said that 300 points is the starting point of the bull market. Everyone, what is the highest point of the stock market in September? More than 450 points! From 300 points It reached 450 points, a full increase of 150 points. However, it took nearly 4 years for the U.S. stock market to start and confirm that the stock market was bullish. In the first four years, it only increased by 200 points, and in the next year it increased by more than 150 points. Point, what’s wrong with me saying that 300 points is the starting point of the bull market? Facts have proved that I was not only right, but also very timely. When I said this, it was not even 280 points, and I had never played in stocks before. At that time, if you rush in and invest, you can earn at least half of it. If you add 2-3 times leverage, you have already bought a car and a house and become a winner in life... Secondly, the stock market can rise even higher. I think it is possible to rise more than 500 points. Yes, but because of the United Nations - I'm sorry, I promised the president not to curse anyone. I am a civilized person and this is in public, so I will do what I say..."

Everyone burst into laughter!

"Because some institutions have implemented a policy of imaginative thinking - imagining is not a curse, right?" Contini said to himself, "Destroying the stock market, I wish I could just go into battle with my shirt off and drag down the stock market points. Come down and desperately introduce some policies that are contrary to the interests of the vast majority of American investors. They call it risk control and protecting the interests of small and medium investors. In their life dictionary, losing money or making less money is the interest of small and medium investors. Otherwise it’s hard to explain the motivation.”

Everyone laughed again: The president promised not to curse, and he did so. Although he did not use a single curse word here, he cursed the Federal Reserve thoroughly.

"Based on this stance and judgment of the situation, I think this bull market is almost over and it's time for a correction. This is the second sentence I said. I am not optimistic about the subsequent development of the stock market. I said this a few months ago. At that time, I repeatedly emphasized that if certain policies are enforced, the stock market will encounter severe tests. You have also seen the facts. Judging from the data and market trends in the past two days, it shows that I was right again!" Contini laughed! Laughing, "I think you should give me a golden prophecy trophy to show that I still have eyesight and am not talking nonsense with my eyes closed, nor am I speaking out of conscience."

The audience burst into applause. Contini said two "nos", so who is the "yes"? The answer is self-evident!

"Are you still optimistic about the market outlook? Is this decline preparation for a better rise? Just like last November and March this year."

"I think it's basically difficult." Contini pondered, "I've heard a lot of news about investors jumping off the building in the past two days. Why is it that the stock market has only dropped 20% from its peak and forced them to jump off the building? Because? Their leverage is too heavy, generally 8 times or 10 times, and some even borrow part of the principal from here and there - some irresponsible small banks violate regulations and provide funds in the form of consumer credit, which is nominally It's commercial credit, actually called 'principal loan' in the circle - it's used for speculating on the stock market, and it's called 'down payment loan' for speculating on real estate... In short, what you see is 8-10 times leverage. , In fact, their leverage is as high as 15-20 times. As long as a few points dive, their accounts will be wiped out. Jumping off the building is the last manifestation of despair!

Now the market value of the stock market has fallen below 60 billion. If it wants to rebound by 10%, it will need 6 billion in funds. Even if it uses 4-5 times leverage, it will still require 1.2-1.5 billion in funds. This is a very huge number, because the previous Deleveraging also requires increased investment. In other words, if you want to keep your principal safe in the face of such a violent shock, you must reduce the leverage ratio - one is to deleverage by reducing stock holdings, and the other is to increase investment to deleverage. For United Group, we The main thing is to reduce stock holdings and deleverage, because the United Department has a large credit exposure, and we must ensure credit. It doesn’t matter to us whether we have more stocks or less. For ordinary people, they may need additional funds, which will make The banking system is put to the test. The information I got today is that not only is there a run on Union Bank, but the number of people withdrawing money from other major banks is also increasing, and everyone is increasing their liquidity. It is impossible to regain consensus after this expectation has been changed.

The final and most fundamental judgment is based on economic data: from 1923 to the present, the U.S. stock market has risen more than three and a half times and nearly four times in six years. Among the world's major powers, Italy has performed best, especially in industry, especially heavy industry. Output doubles, light industry grows by 80%, agriculture grows by 40%, all other countries are lower than this figure, the US industrial growth rate may not exceed 50%, agriculture may only 10-15%, at most 20%, you have these data Gotta be more comprehensive than me. Let me make a metaphor that is not very appropriate. The economic foundation is gravity, and the stock market points are cannonballs fired upward. Although the cannonballs fired violently at the beginning seem to escape the constraints of gravity, they fly faster and faster. High, but in the end it is still inevitable to be restrained and fall back to the ground - the stock points may significantly outperform the actual economic data, but in the end they inevitably have to be consistent with the fundamentals - it is impossible to create a powerful country or a strong country out of thin air by relying on stock market speculation economic system. "

There was silence as everyone began to ponder Contini's words.

Another reporter stood up and asked: "Are you saying that the stock market's nearly four-fold increase is too much and that it should fall back to 150-180 points? Only in this way can it match the economic data?"

Contini sneered in his heart: When the Great Depression was at its worst, the US stock market would fall to a lower position than when it started to rise. The Dow Jones even created an unprecedented record of 47 points. Although I don’t know what will happen this time, at least it is expected to fall below 100. Of course, he can’t say this - it’s still more than 370 points now.

“I have said that sometimes the economy runs fast, and sometimes the stock market runs fast. If the two can be measured by precise mathematics or formulas, then I dare to guarantee that the most profitable people must be mathematicians or astronomers, but as far as I know, no mathematician or astronomer has made a fortune in the stock market. This kind of thing does not exist for the time being. Even a great physicist like Newton was inevitably swallowed up by the speculative bubble. I believe you must have heard of his famous saying - I can calculate the laws of celestial movement, but I can’t calculate the degree of greed in people’s hearts.

I know a professor who is relatively famous for stock speculation now - Mr. Fisher. The stock market has fallen sharply in the past two days, and his wealth has shrunk a lot. Today he called me and asked me what I think about the market outlook, and He asked me tentatively if I could support him with some funds. I said I was not optimistic about the market outlook, but I had no problem with your money. I personally admired your knowledge and would support tens or even millions of dollars. The only requirement was to clear my accounts first. He said he would think about it again... You see, it is harder to touch interests than to touch the soul! Last week, he and I had different opinions at the Investor Summit Forum. At that time, he did not agree with my point of view. Today, the situation is completely different. Although he has not admitted defeat and is unwilling to lose his position, he has begun to doubt in his heart. I am not optimistic about his investment prospects, and he is too optimistic about the stock market! "

The reporters immediately wrote down these contents. Fisher actually called the president today? It seems that he is also undecided? You know, he was confident and bullish before...

"Mr. Fisher is a professor I respect very much. He is very good at economics. He invests in stocks and puts his knowledge into practice, accumulating data and experience. Just like I invest in stocks to cooperate with the industrial operation of the United Group. I hate it when people call me an investor - I am an industrialist, not an investor. Investment is something I attach to it! The United Group is the first industrial group in Italy and the most comprehensive multinational consortium with the most development potential and technological content in the world. This is my foundation.

I hate those speculators who get rich overnight by relying on stocks in the media even more. They ridicule those honest and hardworking operators, entrepreneurs, skilled workers, and skilled workers, saying that they work hard for a year but make less money than they do in a day of making phone calls in the stock market. In my opinion, this is completely putting the cart before the horse. The latter are the backbone of the American nation. As long as they are still there and the real industry is still there, even if the stock market plummets by half or more tomorrow, the United States will not collapse; on the contrary, if these people are also attracted by the frenzy of the stock market and are keen on making quick money and speculative money, even if the US stock market continues to soar by double tomorrow, I think this country is finished! "