The Son of Finance of the Great Age

  Chapter 807 Attacking Ireland (3)

  The soaring yield of the 10-year Irish government bond naturally couldn't hide from the eyes of the media, and soon all kinds of speculations flooded the sky and the sky the next day.

The first to attack was the "Wall Street Journal" in the United States, the largest financial newspaper in the United States. First, it used a large section to report what happened in the Irish national debt market. After explaining the facts, it changed its writing style and attributed this change to the Irish government. Rescue the Irish banking system at any cost.

"It is estimated that about 35 billion euros in rescue funds may be needed to completely solve the bad debt problem in the Irish banking system, but all of this is based on the fact that the Irish government can spend so much money without causing market panic. .As far as the current situation is concerned, it is very difficult to achieve this. Analysts believe that the fiscal deficit of the Irish government is close to an astronomical figure. If rating agencies lower their credit ratings at this time, a crisis may erupt at any time!" They wrote so.

Bloomberg's point of view is: "After the Irish National Building Association was taken over by the Irish government, Ireland's two major banks, Bank of Ireland and Allied Irish Bank, are also in crisis caused by the collapse of housing prices. They have now accepted several rounds of government bailouts. What confused and puzzled the market was that the Irish government did not choose to allow these banks to undergo mergers and reorganizations under such circumstances, but directly chose rescue, which obviously violated the principles of the free market. Take taxpayers' money to Bailout of large financial institutions, not to mention what kind of public opinion it will lead to, just say that this behavior is not a resource maximization move.”

The British "Financial Times" directly sang the opposite tune with the two colleagues. They directly said: "The outside world's doubts about Ireland's political and fiscal risks are too exaggerated, and it is predicted that the Irish economy will recover faster than other second-tier European countries... Although Ireland There may be more bad news ahead for the banking sector, but market concerns about the country's economic reforms are actually not that serious due to the country's high level of economic flexibility in the private sector, continued inflow of foreign direct investment, and the labor market is regaining competition strength, the country’s economic recovery may be faster than other euro zone countries such as Portugal, Spain and Greece.”

  It is very rare that the media views of the two sides are very different, almost tit-for-tat, but it is not surprising in the current situation, because both sides represent their respective positions.

But as far as the market is concerned, even if the European media say more words of encouragement, they still cannot dispel their doubts, because in September the Irish government announced that this year's fiscal deficit may account for 32% of the entire GDP, while the European Union's internal Compared with the stipulation that the fiscal deficit of the member states should be less than 3% of GDP, the current size of the Irish government is ten times the size of this stipulation. In any case, it is difficult to dispel investors' doubts.

   The panic continues, and so does the sell-off.

   On this day, although the European consortium also bought Irish government bonds again, the yield remained at 7%, and the scale of selling still had the upper hand. The CDS of Ireland's domestic banking industry directly broke through 500 basis points on this day, showing that the market still has great concerns about the Irish banking industry.

   On the third day, this sentiment in the market finally spread to other countries.

  Portugal's 10-year government bond market also fluctuated, and some institutions began to try to sell their positions, which caused Portugal's national debt to rise considerably. Greece and Spain's national debt also encountered a similar situation.

  At the same time, there was a rumor in the market that some foreign banks and institutions were secretly reducing their holdings of Spanish, Irish, Portuguese and Greek national debt. They have been reducing their holdings since the second quarter. By the end of June, the foreign holdings of Portuguese and Irish bonds had dropped by 20%.

  As soon as this news came out, it naturally aroused concerns in the market.

   There is no doubt that bond giants like Pacific Investment Management Corporation are representatives of banks or institutions outside Europe in the rumors. Their unscrupulous selling of their positions in the market undoubtedly verifies the truth of this statement.

   Except for their domestic institutions, are other banks or institutions really not optimistic about the bonds of these peripheral countries in the euro zone? That's the question on every bond trader's mind, and it's a shame there aren't any answers so far.

   On the fourth day, Ireland's 10-year government bond yield remained at 7.5%. This kind of borrowing pressure made the Irish government unable to sit still. That evening, Lenihan was forced to announce ahead of schedule a budget cut that had been planned for the middle of the month.

  The Irish government began to take the initiative to appease the mood of the market, and they made a move.

  In this plan, the Irish government announced that it will increase savings or taxes by about 6 billion euros next year, accounting for about 3.6% of GDP. At the same time, it will cut fiscal expenditures by 9 billion euros in the next three years, with the goal of reducing the fiscal deficit to 3% of the EU standard in 2014.

   And this plan announced at the same time, the Irish government will announce its 2011 budget plan on the 7th of next month.

   Obviously, this statement is used to appease investors. But soon some people made tit-for-tat refutations based on this plan.

Analysts at Goodman expressed their views on Lenihan's statement almost immediately, and a macro analyst who asked not to be named told Bloomberg whether the fiscal cut plan could convince investors that the Irish government has The ability to deal with the current financial predicament is the key to deciding whether they will eventually seek help from the IMF or the European Union. The macro analyst said that although the Irish government still has about 20 billion euros in cash reserves, this figure guarantees that they will not need to issue new bonds to raise funds at least on the basis of a new round of bank rescue. But these amounts are very limited, and by mid-2011 Ireland will have some of its national debts due to be paid. Even if the financial pressure cannot overwhelm Ireland now, it may overwhelm them at that time. Therefore, they were unable to successfully raise new funds from the international market before that, and they will still be rescued by then.

At the same time, some European analysts said that Greece, Portugal and Ireland are likely to avoid sovereign debt defaults, because all three countries have a strong local investment base, even in times of stress, institutions such as local banks and pension funds will buy government bonds .

  The two sides quarreled again because of their different views. However, what most people didn't expect was that the statement issued by the Irish government on its own initiative, although the starting point was to appease investors, caused reverse fluctuations in the foreign exchange market.

   In the past few days, there was no problem with the trend of the euro, and it even rose by about 2% in four trading days, forming a considerable upward momentum. However, as soon as the Irish government's statement was released, the market immediately realized that the Irish government really had the possibility of defaulting on its debt.

   This has nothing to do with the fundamentals, it is a psychological game, because even the increase in the yield of national debt for a certain period of time cannot explain any problems, but at this time the Irish government jumped out, at least proving that they are guilty.

  The euro’s gains disappeared in an instant, and it fell 0.0200 that day, a drop of 1.41%.

  The trend of the euro has fueled concerns about Ireland to a certain extent, because once Ireland announces to accept aid, whether other countries in the same situation, such as Portugal and Spain, will follow suit will become the focus of market attention.

  Under this pressure, the trend of the euro was completely reversed, and continued to fall by 1.23% on November 8.

  On this day, the European Union can't sit still. On the 8th, European Commissioner Ollie Wren, who is in charge of economic and monetary affairs, will pay a two-day visit to Ireland. According to the scheduled program, the focus of Wren's trip is to check the budget cut plan announced by the Irish government last week.

   Regarding the purpose of Commissioner Wren's trip, the general market view is that the Irish government may use this opportunity to lobby the EU for its ability to restore the country's financial order, thereby avoiding being bailed out. Because of the conditions attached to the bailout, their existing policies will be drastically changed. In this case, the Irish government is unwilling to take the initiative to be rescued.

  At the same time, the market also stated that the main purpose of Commissioner Wren's trip this time is to stand for Ireland. But the effect and significance of this kind of platform depends on the reaction of the market.

   "I didn't expect things to get out of hand like this!"

On the plane to Seoul, Jiang Shan did not forget to observe the market conditions, "Ireland's 10-year national debt has fallen below 8%, and it is very likely that it will fall below 9% in these two days. This range is astonishing. If it continues at this rate, they will soon be overwhelmed by the enormous pressure to refinance."

  For a week, a huge storm was brewing in the market from the sale of Irish government bonds by Pacific Investment Management Company. This storm not only swept the Irish bond market, but also involved the rising euro into right and wrong.

  This market can be described as changing rapidly.

   "Because of the lessons learned from the past, everyone is very worried and fearful. Just wait and see, no matter who stands up now, the final result will be to make the market even more worried!"

Zhong Shi stroked his chin, feeling a little surprised in his heart. The current situation was not created by their group, and the development of the facts was completely beyond their expectations. It has to be said that after the shock in May After that, the market has become a frightened bird.

"Yes!"

  Jiang Shan echoed, "Fortunately, all our positions have been sold out. According to today's momentum, we have made at least 200 million profits. This is still the current situation."

"Quiet!"

  After thinking for a while, Zhong Shi picked up the phone and dialed a number, "Mr. Brian, this is Zhong Shi."

   "Have you arrived in Seoul yet?"

A deep voice sounded immediately, "I have confirmed with the British side that the Prime Minister of Ireland will not be present at that time, but one of his high-level officials will appear at the G20 venue. Of course, he will not be an official appeared in his capacity, but he will be involved in the meeting between the President and the Prime Minister of the United Kingdom."

  The G20 meeting will be held in Seoul, South Korea. At that time, the heads of world powers such as the United States, Britain, Germany, and China will attend to discuss the current world situation.

"I see!"

  Zhong Shi responded noncommittally, and after thinking about it, he asked, "Are there any other opinions on the alternative plan?"

In order to persuade Ireland to make up its mind to leave the euro zone, the United States has formulated a joint consortium plan to save Ireland. The participating institutions include Citigroup, JP Morgan, Bank of America, Stanley, Goodman and many other large American consortiums, as well as Chung. This small group of stones.

"It will be raised through the sale of bonds, and the aid will be divided into three phases. It is estimated that the funds for the first phase will be around 50 billion U.S. dollars. Once Ireland announces its departure from the euro zone, their currency will be replaced by the British pound during the transition period. In this process, the British consortium will naturally join in."

Andrew Bryan said in an orderly manner, "As for the American consortium, I have already convinced them. The next job will be handed over to you. I believe that with your ability, raising 15 billion US dollars in the first phase of funds will not be a problem. "

   "What about the conditions that will be offered to Ireland?"

   Counting with his fingers, this number is indeed not too much. Especially with the addition of the British consortium in the later period, the share of expenditure may be even smaller. With confidence in Zhong Shi's heart, he asked again, "After all, leaving the euro zone will make Ireland's foreign trade bear the risk of exchange rate. If there is no substantial concession, they may not agree."

   "Don't worry about this!"

  Andrew Bryan said confidently, "The rescue plan we formulated is much better than the EU or IMF's plan. I will discuss it with the people in Ireland personally, and you don't need to know!"

   "What is the attitude of the British side?"

  Zhong Shi continued to ask, "Aren't they worried that Ireland's departure from the euro zone will cause turmoil in the entire euro zone and affect the British mainland?"

"this…"

Andrew Bryan seemed to be in a difficult situation. After pondering for a while, he confessed to Zhong Shi, "According to the rules, I must keep these things secret. But what I can reveal to you is that the president will give them a little promise, a little promise to protect them .”

   "Also, you have done a great job in Ireland and won us the opportunity to take the initiative! The president appreciates your work very much, and may meet you at that time. You have to be mentally prepared."

"I see!"

  Zhong Shi nodded silently, the corners of his mouth twitched slightly, and then hung up the phone.

   Thanks to book friends ReaderSlip, Xingxiyuelang, it wasn’t me last night, and the four-eyed prodigal son voted monthly! Thank you book friend Nie 13 for your reward! I was in a bad mood yesterday, and the number of words I wrote was a little short. Let me make up for it by writing more today. How has the situation changed now? The prospects are worrisome. The once prosperous period is really gone forever... So I sincerely hope that all book lovers will stick to it and continue to actively vote for this book, and don’t forget to vote for more recommendations. I hope the situation of this book will improve as soon as possible, thank you~

  (end of this chapter)