The Son of Finance of the Great Age

  Chapter 819 The end of the crisis

   On Monday, November 22, as soon as the news that Ireland formally applied to the European Union came, it finally confirmed the market's long-standing concerns.

  According to publicly disclosed information, Ireland and the European Union reached an agreement on the evening of the 21st, and the Irish government began to enter the application process, hoping to obtain a total loan of up to 90 billion euros.

This news swept away the haze facing Europe, causing the market to react very positively. Among them, the capital markets of major countries such as the United Kingdom, Germany, and France all rebounded, and the exchange rate of the euro also rebounded, reaching a new high of 1.3785 at one point. .

  Ireland's government bond yields also fell sharply, falling from 7% to 6% within an hour after the opening, a drop of as much as 100 basis points. At the same time, the bond yields of the Irish banking industry also fell sharply, and the prices of these banks and Irish sovereign CDS also fell.

   "Now what do we do?"

  The response of the Irish government was very quick, beyond the expectations of Zhong Shi and others, and there was not much time left for them. Several bigwigs couldn't wait to go online for emergency consultations during trading hours, and Paulson asked anxiously.

   "Relax, now is the time when the benefits are strongest, we just need to wait a little bit now, the time of market irrationality will soon pass!"

  Zhong Shi was very calm at this time, facing the rapidly rising K-line chart, he said lightly, "Now they think it is the right time, but when they calm down, they will find that the matter is far from being resolved."

   "Is the successor to the Euro?"

   Compared with the frizzy Paulson, Delio is quite calm, "You mean that after a brief rise, the market will realize that the situation in Europe has not really eased?"

"good!"

  Zhong Shi's steady voice sounded, "If I'm right, there is already an organization that wants to release the news!"

  As soon as he finished speaking, a piece of news popped up on the screen in front of several people. The Goodman Company, which once turned the market upside down on Sunday, issued another statement.

In the statement, Goodman Company first stated that Ireland was right to accept the European rescue, although at the cost of part of its sovereignty, it at least stabilized the current domestic economic situation, and at the same time maintained a good relationship with international investors .

   But Goodman also said that it is expected that after the conclusion of the negotiations, Ireland may need 95 billion euros in funds. This amount of money is huge, so huge that it limits the EU's rescue operations to Portugal or Spain after the Irish incident has come to an end. Once this ability is lost, Portugal or Spain will definitely be attacked by speculators in the short term.

   This news seemed to have poured cold water on the hot market, and soon the market's enthusiasm for the euro was ruthlessly suppressed, and the euro began to go down again.

   "All this is your arrangement?"

  Ten minutes later, the euro has swallowed all the gains since the opening of the market, and there is still a tendency to continue to fall. This made everyone realize Zhongshi's foresight, and Paulson asked with admiration.

   "Yes, this is exactly my arrangement!"

  Zhong Shi said blankly, "When I expected that Ireland might receive rescue, I had already communicated with the people of Goodman Company, and the current manuscript is still written by me."

   "So you're still laying the groundwork here!"

Delio nodded silently, "This news is enough to calm the market down. It is expected that the negotiations between Ireland and Europe will last for about a week. During this period, should we just wait for changes in the market, or start closing positions? "

   At least so far, the upward momentum of the euro has been contained, but how long this effect can last, whether Portugal and Spain will really be attacked by speculators, these are still in doubt.

   At least it is foreseeable that for a period of time, the possibility of the euro wanting to rise is gone.

   "Don't worry, the market's confidence in the euro is far from the end!"

  Zhong Shi patted his cheek to wake himself up from the tiredness of day and night, "I still have another move, this time the goal is Portugal!"

  …

On November 22, the trend of the euro reversed. It rose sharply after the opening, but soon turned down again under the comprehensive effect of various news. Deeper doubts about the European rescue mechanism. In this case, EUR/USD lost 0.0130 throughout the day, which amounts to a loss of 0.98%.

  In the night of European and American time that day, an unknown source of news once again tested the nerves of the market.

  Because the Irish government declared during the daytime that it has not included the corporate tax rate in its negotiations with the EU, this has given hope to the Portuguese government, which has been concerned about how the Irish government will handle the debt crisis. According to sources close to high-level Portuguese sources, the Portuguese government is holding a secret meeting to discuss the possibility of Portugal applying for a rescue to Europe after Ireland.

  The anonymous source also said that based on Portugal's economic scale and situation, it is expected that the rescue scale proposed by the Portuguese government will not be lower than that of the Irish government.

  The market reaction to the news was shock!

  Although the market is well aware of the severe economic situation in Portugal and Spain, the Spanish government successfully issued a treasury bond last week, showing that investors' confidence in Spain has not been lost. The situation in Portugal, which is on the same island, is not so optimistic.

As a country with a GDP level similar to that of Ireland, Portugal has a much larger population than Ireland, and its per capita GDP is much lower than the other country. Although the fiscal deficit is only 4%, it is far from being able to compare with Ireland's level of more than 30%, but because The strengthening of market speculative forces made the yield of Irish 10-year government bonds break through the 7% level.

  Like Ireland, Portugal is also ushering in the peak period of national debt repayment in the middle of next year. Before that, they must raise enough funds to repay the debt due. Now that the market's government bond yields are so high, it is difficult to convince investors to buy new bonds. This is the crux of Portugal.

  With the lessons learned from Ireland, it is natural for Portugal to apply to the EU again, and to some extent they will enjoy the same preferential treatment as Ireland, which is far better than Greece. So although this news is highly motivated, it doesn't look like real news. But the market has its own understanding of this, because it conforms to their logic.

  As soon as the foreign exchange market opened on the 23rd, the euro was under tremendous selling pressure, and the transaction price also fell sharply, almost to the point of being out of control. At noon, the rating agency Fitch announced that it might downgrade Portugal's sovereign credit rating in the near future, which intensified the panic in the market.

  Faced with this situation, EU officials stepped forward in time, and it was Ollie Wren again. He declared in an interview that Ireland's current predicament would not lead to Portugal becoming the next aid country.

  In the interview, he cited the differences between Ireland and Portugal. He thinks Ireland's problem is that the banking sector is in trouble, while Portugal does not have such a problem because economic growth and private debt are at the heart of Portugal's problems. But as far as he knows, the Portuguese government is actively resolving domestic conflicts, and it is expected that they will introduce a series of measures to alleviate the current predicament before next year.

   This news has to say that it has comforted the confidence of some investors, but it has not solved the fundamental problem at all. Because even if the Portuguese government can achieve a fiscal cut plan, it is impossible to repay the large-scale maturing national debt in the middle of next year, and the creditworthiness of the Portuguese government's bonds is still a problem.

   The propaganda basically did not achieve the effect that the Europeans wanted, and the euro continued to fall.

   By the time of the close, the euro fell by 0.0216 all day, and the drop reached a staggering 1.59%. Although the decline narrowed in late trading, it did not change the general trend of the whole day's decline at all.

  In the next three trading days, the shadow hanging over Europe still persisted. Various news about the negotiations between the Irish government and the EU continued to spread. As a result, within these three trading days, the euro fell again slightly, although the range was not very large, but before November 29, the euro had fallen by nearly 7% from the highest point on November 5.

  On November 29, Europe finally reached a negotiation with Ireland. Europe announced that it would provide Ireland with an aid of up to 85 billion euros in the next three years, with a loan interest rate of 6.5%. The first tranche of funds will arrive in January next year.

This news did not surprise the market, but the funds of 85 billion euros still exceeded the market's broad expectations. Money of the EU, market concerns remain.

   Affected by this news, the euro fell again, falling 0.0130 on the day, a drop of 0.98%.

  The next day, Fitch officially announced that it would downgrade Portugal's sovereign credit rating from AA- to A+++.

   This news did not exceed market expectations, but despite this, the euro fell by 0.83, fell directly below the 1.3000 line, and closed at 1.2994 all day.

   During this period of time, the jitters in Europe finally came to an end on December 1st. The Portuguese government, which had been giving the market a heads-up for a long time, finally reached an agreement on fiscal cuts in the early hours of December 1 after more than ten hours of intense debate, that is, the Portuguese government’s 2011 Budget. A new round of austerity measures.

  In this new government agreement, in the next three years, the Portuguese government will cut a total of up to 12 billion euros in fiscal expenditures, including benefits, civil servant salary increases, bonuses and other aspects. Although the process of the game was fierce, the Portuguese government finally brought good news to all parties in the market under the compromise of all parties.

   Now it seems that at least for a period of time, it is impossible for the Portuguese government to ask for help from Europe.

  Stimulated by this news, the euro rose by 0.92% that day. In the next two trading days, the euro rose again by 0.49% and 1.48%, completely ending this wave of euro crisis.

   But for some speculators, before that day comes, they have already cleared their positions.

   "Gentlemen, let's toast!"

  After the whole incident was over, several people got together again, but this time the place they chose was not the United States, but Hong Kong.

  As the host, Zhong Shi hired the top-floor presidential suite of the Four Seasons Hotel to entertain these guys. At this time, they were in the spacious and luxurious private room, and several people were celebrating each other with champagne.

   "Mr. Zhong, what is our next goal?"

  After taking a sip of champagne, Paulson asked excitedly, "Is it Portugal? When shall we do it?"

   "Are you in a hurry?"

  Zhong Shi chuckled and teased Paulson, "I should have earned a lot this year, why aren't you satisfied?"

  Although no data has been released yet, in this harvest, Paulson's fund has earned at least more than $1.5 billion in profits, and this is just what happened in the past month. Combined with the annual income, the Paulson Fund's account definitely exceeds 10 billion US dollars.

   Thanks to book friends Molong Zhangui, lyangyang, Manqiangchunse Gongqiangliu for voting monthly tickets! Thank you book friend gengsu for your reward! The past two days of the weekend are really bleak, and the collection has dropped a lot... I sincerely hope that it will pick up next week, and I hope everyone can continue to actively vote for it. The recommended votes are also very effective, keep going~

  (end of this chapter)