Do you believe there is such a thing as national fortune?
During the Asian financial crisis in 1998, Soros kicked an “iron plate” when they shorted Hong Kong: they neglected the fact that behind Hong Kong, there was an increasingly powerful motherland.
- The Crisis of the Four Tigers In March 1996, the streets of Bangkok, Thailand were bustling with activity, and the friendly greeting of “Savadika” could be heard everywhere.
At this time, the first Asia-Europe Summit (ASEM) was underway in Bangkok, the first international meeting hosted by Thailand and a high-level intergovernmental meeting without American participation.
With Thailand’s rapid economic development and more passionate political demands from both the government and the private sector, the ability to host such a high-level international meeting puts a smile of pride on every Thai face.
The Thais have something to be proud of.
As the number one economic entity of Asia’s new “Four Tigers”, Thailand has been enjoying an economic boom for nearly a decade.
In the 1980s and 1990s, Southeast Asia was the power engine of the world. Because of cheap human resources and low land costs, the processing trade of many developed countries was almost entirely transferred to this region.
Europe and the United States large enterprises from low-tech textile and clothing to a little higher point of mechanical processing, basically in Asia to find their respective agents processing plant.
Although Thailand’s factories did not earn much from such industries and were polluting, the poor Southeast Asian countries that did not have any large-scale industries almost gratefully accepted one transfer processing project after another.
In the 1990s, after the “Four Little Dragons of Asia”, there were the “Four Little Tigers” of Asia: Thailand, the Philippines, Malaysia and Indonesia, and the scene of the boom was known as the Miracle of Asia.
Despite being a Buddhist country, Thailand has been a big fan of economic liberalization since 1990, when it joined the International Monetary Fund (IMF) and copied Western liberalism almost unconditionally.
The economic paradigm has gone from once-regulated to deregulated to complete market liberalization.
Capital of all kinds is like nobody’s business, and all foreign exchange is freely convertible in Thailand.
The Thai baht was even directly pegged to the US dollar. Row by row, eat Koko and take advantage of the depreciation of the US dollar to rapidly increase export business, resulting in an annual growth of 30% in Thailand’s manufacturing exports over a ten-year period, with the share of manufacturing exports in total exports rising from 36% to 81%.
In so many years, Thailand transformed itself from an agricultural exporter to a manufacturing exporter, with a rapidly upgrading industrial structure and tourism almost becoming a hotter economic pillar following the semiconductor industry.
There are inputs and outputs need capital, Europe and the United States and other countries of the tourists then quietly sneak into Asia, looking around for investment goals and direction.
However, behind the capital is the capital predator that eats people without spitting bones, their real purpose is not for what world peace, common prosperity, but: more efficient money-making.
Many poor and afraid of the Asian countries where to know this, anyway, someone is investing in the master, kneeling still too late, simply do not think to do some defense, have opened the door, welcome to the gold master father to do guests.
They seized the opportunity to transfer capital and technology after the large-scale restructuring of the world economy, the economy has been rapidly improved.
But they did not realize that this model of over-reliance on capital and competing only on the cost of power had long fallen into the trap of the capital market.
During this period, although Thailand’s stock market has had some fluctuations during the period, but the general is still growth-oriented, everyone turned a blind eye to the ups and downs.
Even Thailand’s top management did not have time to think about this issue, all consumed in the infighting.
From 1995 to 1996 a year, Thailand before and after the change of three prime ministers and five finance ministers, comparable to the palace drama.
The Thai people did not think so much, after all, in 1995, Thailand with more than 2,500 U.S. dollars per capita GDP by the United Nations classified as a middle-income country, becoming one of the few rich countries in Asia.
“Follow the big boys and you’ll have food on the table, you’ll be a rich man,” was the refrain of almost every Thai at the time.
Well, the air of freedom smelled good! But underneath this seeming prosperity, there was an undercurrent: the stock market had plummeted in the previous month, which had already planted a time bomb for Thailand.
However, the downturn in the stock market in the consistently optimistic Thai people seem to be only a minor hiccup.
After all, the country’s overall strength had been growing and it had hosted important international conferences, so there was no reason why the stock market should not continue to rise.
At that time, no one realized that the stock market had actually peaked in January, and it would be 17 years before it came back.
- The “crocodile” is coming In fact, the Thai government and top management had already realized that it was not good, and one of the topics of the Asia-Europe Summit was to discuss Thailand’s debt problem.
Long-term Thai economic prosperity in the real estate and stock market, only from 1993 to 1996 three years, Thailand’s real estate prices rose nearly 400%, Thailand’s own SET Composite Index as of January 1996 rose to a shocking 1410.33, unprecedented.
Since then, the real estate and stock markets have been in a downward spiral, and non-performing assets (NPAs) have reached 1.78 trillion baht, with a NPA ratio of 35.8%.
Thailand’s banking sector is wailing.
More fatally, since the US dollar began to appreciate in 1995, the Thai baht, which originally followed the US dollar closely, had to exchange at a consistently higher rate, severely affecting the country’s export industry and leading to a GDP %.
The Thai government is caught in a difficult situation: if the promotion of the economy, it can only implement expansionary monetary policy, but it will lead to inflation; but to control inflation, to make up for project deficits, but also have to raise interest rates, the export industry will continue to suffer a heavy blow.
In order to keep the baht from depreciating and causing massive bankruptcies, the Thai government had to bite the bullet and raise interest rates to maintain the exchange rate regime with the U.S. dollar.
As a result, Thailand’s deposit rate and lending rate reached 12% and 13.75% respectively, which is not only the highest in Asia, but also more than twice the world average.
Such an approach treats the symptoms but not the root cause.
The high interest rate policy caused Thailand’s investment and consumption to slow down sharply, the economy became even more sluggish, and the banking sector’s non-performing asset ratio continued to deteriorate day by day.
What’s worse, by the end of 1996, the Thai people, who had been optimistic, could no longer smile, with a foreign debt as high as $93 billion, equivalent to 50% of GDP, of which short-term foreign debt accounted for 60%.
A country with a chronic deficit and high inflation paired with a fragile financial system, that is exactly the big fat meat that capital hunters covet.
So, in January 1997, 67-year-old Soros struck.
The rumored George Soros is a Hungarian Jew, his family can be said to be the epitome of the tragic fate of the Jews.
In order to escape the Nazis, the family was uprooted, suffered all kinds of unimaginable insults and tortures, but fortunately, they all survived peacefully in the end.
This tragic experience, as well as his parents, had a very strong influence on Soros, who was always talking to people about metaphysical survival issues.
He himself also summarized the family escape process into a small probability of investment theory, later known as the “black swan theory”.
The paper explanation is that Europeans have always thought that all swans are white, but when they saw the black swan in Australia they were dumbfounded and realized that inertia is the limitation of most people’s perception.
Investment science says that this is speculation, from everyone ignores the event to find different opportunities, and then boldly bet.
Although the probability of losing the bet is very high, but if you win the bet, you will make a lot of money.
In 1992, he swung the knife to his own immigrants in the United Kingdom, shorting the British pound, resulting in the unique history of the British pound sell-off, so that the pound in the substantial devaluation of the European Monetary Union after the hate to leave.
These two things make Soros famous.
But this is not all, the latter years, he followed the original pattern and ruthlessly slaughtered a Mexican peso, but also harvested his native Hungary.
In 1996, the Thai government’s massive debt and fragile financial system finally attracted Soros, he rolled up his sleeves, greeted other international hedge funds did not hesitate to pounce on the bite, selling the baht for arbitrage.
The Bank of Thailand did not concede defeat, through the use of about 12 billion U.S. dollars in reserves as well as a substantial increase in interest rates and other measures to fight back, temporarily curbed the Soros-led lobbying attack.
But Thailand had already begun to panic domestically, and much of the money flowed out of the country, forcing the government to start capital controls.
In June, hedge funds once again to the baht, directly burned through Thailand’s foreign exchange reserves of 30 billion U.S. dollars.
The Thai government couldn’t carry it, gave up the fixed exchange rate system, the implementation of floating exchange rate system, the baht fell heavily resulting in a serious injury.
July 2, woke up the Thai people but suddenly found in the hands of the baht depreciated 20%, panic people rushed to the bank to exchange currency, so that the Thai government more than 50 financial institutions forced the closure of the baht continued to depreciate by 60%, the stock market plunged by 70%, all the Thai people’s assets “overnight back to the liberation of the former”.
According to the statistics of Thai stockholders during the Asian Financial Crisis, Thailand’s loss of wealth during the crisis amounted to US$141.2 billion, while Thailand’s GDP in 1997 was only US$113.676 billion.
Immediately after that, the Philippines, Malaysia and Indonesia became the target of international speculators, and the currencies of these countries were devalued one after another, and for a time, the financial markets of Asian countries were in a mess, and people were turned upside down.
Shocked the world of the Asian financial crisis has since kicked off.
The then Prime Minister of Malaysia, Mahathir cursed George Soros by name on TV, saying, “This guy came to our country, and overnight made the struggle of our people for more than ten years come to nothing.
“But curses don’t make Soros and other speculators stop, and what was once Asia’s “Four Little Dragons” and “Four Little Tigers” instantly became lambs to the slaughter.
In the face of hungry wolves, the frightened sheep do not know how to unite, can only panic and flee, become the wolf bite by bite prey.
The great victory of Soros slowly turned around, began to measure the last target in Asia – Hong Kong, China.
- Next stop: Hong Kong at this time, Hong Kong has just returned to the country’s fervor has not yet disappeared, the Hong Kong Monetary Authority has received the news that the financial system of the countries in turmoil.
In fact, after the return of the SAR Government has noticed an anomaly, the financial crisis in Thailand in July, the Hong Kong Hang Seng Index not only did not fall, but rose.
In fact, this is the intention of the hedge funds led by Soros to fatten up the pigs for slaughter as a build-up period for subsequent shorting of the Hang Seng Index.
It’s just a pity that all the financial experts in the SAR government have not reacted yet, they think they can defuse the crisis by building high walls and tightly controlling short-term lending.
By October, “It’s not that we are incompetent, it’s that the enemy is too cunning!” Taiwan’s central bank made the same old mistake as the Nationalist Army did back then, and without even resisting, it directly gave up its support for the NTD, causing it to depreciate by 9% instantly.
As a result, Hong Kong’s interbank lending rate surged to 280%.
Hong Kong also panicked at a glance, the foreign exchange reserves of Taiwan Province is the sum of foreign exchange reserves of Southeast Asian countries, they can not carry, their own not to mention.
As the enemy of the Hong Kong Financial Secretary Donald Tsang Yam-kuen and the HKMA Secretary Joseph Yam Chi-kwong immediately ordered the banks to control, strict control of short-term borrowing and lending amount.
Yam Chi-kwong which made the original on edge Hong Kong residents and foreign investors have sold Hong Kong dollar assets, Hong Kong stocks once plunged 13.4%, the stock market value reduced by 2.1 trillion Hong Kong dollars.
Subsequently, the Hong Kong stock market in the following months connected to be attacked, as the Monetary Authority Chairman Joseph Yam Chi-kwong because of the only increase in short-term loan interest rates a way, by Hong Kong people jokingly referred to as “Yam a move”.
After a few months of back and forth, Hong Kong gradually stabilized and seemed to repel the October 1997 speculative onslaught.
When the people of Hong Kong looked around, they saw that the economies of other Asian countries were already scorched earth.
The economies of Thailand and Indonesia collapsed, the Korean won fell through the $1,000 level against the US dollar, and almost all the foreign exchange reserves were exhausted, so they could only seek help from the International Monetary Fund (IMF); Malaysia restarted its foreign exchange control, and Japan also suffered a heavy blow as a result of the devaluation of its currency.
In this way, suffering for almost a year, to the second year in August, Hong Kong only woke up: on the dog days when! It was only at this time that the HKMA realized that the speculators were in fact making a secret move, ostensibly attacking the Hong Kong dollar market, but in fact, they had been staring at the Hang Seng Index.
Unfortunately, woke up too late, August 12, Hong Kong Hang Seng Index fell through 6500 points.
The public was on tenterhooks, and everyone knew that once it really fell below 4,000 points, it would mean that two-thirds of the wealth of the whole of Hong Kong would evaporate, and countless Hong Kong families would go bankrupt as a result.
At this time, all corners of Hong Kong were in mourning, and many citizens who could not stand the evaporation of wealth even chose to commit suicide.
By August 14, the SAR Government suddenly announced a bailout of the market, and a great Jedi counterattack began.
As this day was a Friday, followed by the three-day “Anti-Japanese War Victory Anniversary” public holiday, the stock market was closed, and the SAR Government expected to buy three precious days.
Three days later, the SAR government announced that it would intervene in the market with a huge sum of money from the Exchange Fund and the Land Fund, to fight to the bitter end against international speculators such as Soros.
The then Financial Secretary Donald Tsang had stifled tears countless times over this decision. The pressure of this move was too great, and once it failed, Hong Kong’s economy would completely collapse, leaving no room for maneuver.
Donald Tsang and Joseph Yam discussed entering the market and immediately reported to the Chief Executive Tung Chee-hwa, who made careful inquiries and gave his approval less than half an hour later.
When the two left, Tung thought twice and dialed a red telephone in his office.
In the days that followed, the Hang Seng Index continued to push higher, reaching 7,820 points, as the battle between the SAR government and international speculators came to a fever pitch.
By August 27, on the eve of the settlement of the August futures contract, the SAR government injected about HK$20 billion a day to push the Hang Seng Index steadily up by 88 points, a modest figure, but a fighting stance.
If Hong Kong can stabilize the stock and currency markets on the 28th, then Soros and many speculators will lose hundreds of millions or even billions of dollars of their old capital; conversely, those previous investments by the Hong Kong government will really be a waste of money.
It was at this time.
Zhu Rongji, the then Premier, said on an important occasion, “If Hong Kong needs it, the Central Government will defend Hong Kong at all costs.
“It is said that Soros, who was relaxing over a cup of coffee when he heard the news, laughed in disdain.
But soon, the financial giant couldn’t laugh anymore.
- The morning of August 28, 1998, coincided with the Hong Kong Observatory’s issuance of a thunderstorm warning, and the six million people of Hong Kong anxiously watched the fast-beating Hang Seng Index in the torrential downpour, and everyone was anxious.
On this day, the vice governor of the Central People’s Bank quietly rushed to the Hong Kong Stock Exchange and the Hong Kong Futures Exchange in Central, Hong Kong Island, they have all the country’s foreign exchange reserves (144,959,000,000,000 Hong Kong dollars) at their disposal.
Not only that, all the Chinese organizations in Hong Kong were also notified to go all out to support the SAR government’s “protective action”.
At 10:00 a.m., with the sound of a gong, the Hong Kong market opened.
In just five minutes, the turnover exceeded HK$3.9 billion.
On this side, Soros and other international speculators aggressively attacked the two major HSI constituent stocks, HSBC Holdings and Hong Kong Telecom, in two directions, selling a large number of stocks and creating panic.
On the other hand, the SAR Government, which has taken the “peace of mind” pill, is sitting in a fishing boat and is ready to take on whatever you throw out.
The 33 HSI constituent stocks have been carefully arranged by the SAR government to deal with the situation, and they are all bought in one by one.
Half an hour after the market opened, turnover climbed to 40 billion Hong Kong dollars.
In the face of such a situation, the international speculators are a bit overwhelmed, quietly at noon when the market is closed and pull in European funds to help.
When the market opened in the afternoon, the HSI heavyweight “HSBC Holdings” was attacked consecutively, and there was another round of bloody battle between the two sides.
On this day, the SAR government used HK$30 billion, with tens of millions of Hong Kong dollars and US dollars duking it out every minute.
And every tick of the red Hang Seng Index meant tens of billions of Hong Kong dollars, both sides could be said to be killing each other.
When the battle was in full swing, a huge amount of capital quietly entered the market, and in unison with the international lobbyists selling futures for indiscriminate acquisition.
At this time, some people realized that this capital without exception with “national” prefix: PetroChina, China Shipbuilding Heavy Industry, China Huaneng set, China Postal Savings …… they have the same name: China’s state-owned enterprises! This makes the international speculators who are already at the end of their tether completely despair: don’t take you guys to play like this! Taking a country’s entire strength and fighting us to the death! Yes, the speculators just want to take advantage of the opportunity to make some money, but a country has pressed all the body, put up a desperate stance.
As of 4:00 p.m. that day Hong Kong closed, the Hang Seng Index has always remained above 7800 points (only the index at 7500 points below the international lobbying can make a profit, and vice versa at a loss).
On that day, the Hong Kong market turnover for the whole day reached a record 79 billion Hong Kong dollars, the final close of the market, the Hang Seng Index for 7,829 points, than the HKMA into the market before the August 13 up 1,169 points, an increase of 17.55%.
At this point, Soros and international speculators in Hong Kong’s foreign exchange market, stock market, futures market attack declared a failure, returned in defeat.
This white-knuckle battle between capitals ended in the defeat of international speculators, and Soros and other speculators suffered a loss of at least US$1 billion.
Even so, there have been criticisms overseas about the HKSAR government’s direct market support this time, arguing that any government intervention that tries to stop the fall of the stock market is regarded as a violation of free market principles.
However, the basic principle of a free market is fairness. When a medium-sized market is manipulated by a small group of large speculators to create a systemic collapse far beyond what can be explained by economic fundamentals, this is in itself extremely unfair fraud and plunder.
What’s fair and moral to talk to rogue bandits about?
Ten years later (08), the international financial crisis broke out again, and many governments, in order to protect their financial systems and economies from collapse, chose to learn directly from the Hong Kong government’s experience in financial defense this time, and carried out measures, including huge bailouts of banks, provision of assets and deposit guarantees, etc., which strongly protected their economies from collapse.
- Conclusion October 30, 1998, the Hong Kong Hang Seng Index returned to the 10,000-point mark, reborn in flames.
Reflecting on this economic crisis, Soros and other financial speculators were only a trigger, the fundamental problem was still the loopholes in the economic systems of various countries.
It is not only international speculators such as Soros who took advantage of the fire, but also organizations such as the International Monetary Fund (IMF).
As the International Monetary Fund (IMF), the so-called experts have been sparing no effort in Southeast Asia’s economic upswing to call on countries to give up the original control of state-owned capital, the implementation of a policy of financial openness, and loans for construction.
However, when these countries were plunged into crises, many of them were forced by the IMF to sign a pledge to strictly implement economic austerity programs, reduce social welfare, and sell their enterprises cheaply, so as to achieve the goal of “self-castration” that some countries hope for.
People always hope to learn from the various economic crises, but they are always tempted by capital, intoxicated by the seeming prosperity, and neglecting the development of the real economy and the principle of not over-indebtedness.
These international speculators eventually hit a wall in Hong Kong and suffered a big defeat.
Unbeatable speculators may be used to seeing governments and central banks fleeing in the wind, completely ignoring the fact that there is a strong motherland behind the newly returned Hong Kong to back it up.
Under the care of the motherland, the newly returned Hong Kong has preserved the assets of every Hong Kong citizen and the long-standing prosperity of Hong Kong.
In the aftermath, some international public opinion sarcastically criticized the unlimited liquidity support adopted by the Central Government for Hong Kong in this financial defence of Hong Kong as having fallen into the trap of the Soros people and given away a large sum of money to these international speculators for nothing.
Indeed, so regardless of the loss of the takeover, conservative estimates, Soros gang is making far more than the loss.
Not only that, their short-selling stock index futures against Hong Kong for a year’s profit is actually far greater than the capital of this game.
However, compared with other Asian economic entities that completely collapsed, Hong Kong ultimately retained its position as a financial center and social stability with the support of a strong central government.
If international speculators such as Soros were allowed to have their way, it would not only be a loss of money, but also a disaster scenario in which countless Hong Kong families would be displaced.
Behind this is actually a mother protecting her calf against all odds.
At that time, the Motherland was not as rich as it is now, and the Central Government used almost all of its foreign exchange reserves of US$140 billion to defend Hong Kong in this financial defense war.
Without the determination of the Central Government to fight against all odds, and without the strong financial guarantee of a powerful motherland, the Pearl of the Orient in Hong Kong might have been dimmed, and it would have been difficult for it to shine any more.
Some Hong Kong people have said lightly that if the Chinese Government does not protect Hong Kong, then Hong Kong will lose confidence in the Chinese Government.
But has it ever occurred to those who said these things that Hong Kong, without the protection of the Chinese Government, will be a sampan in the midst of the storm in the face of international speculators like wolves and tigers, and that it will sink to the bottom of the sea in no time at all?
It is precisely because the Chinese Government has repeatedly and firmly stated that RMB will not be devalued that Hong Kong has won the battle of financial defense.
The consequence of not devaluing Renminbi was that China’s domestic exports dropped drastically that year, heavy industries suffered heavy losses, and all kinds of export trade were affected to varying degrees.
Hong Kong’s peace of mind is later on, many domestic enterprises sacrificed their own interests to pay the bill for it.
Hong Kong’s economy maintained sustained stability in the following two years, ushering in a new life.
On December 6, 1999, the Hang Seng Index of Hong Kong exceeded 16,000 points and ended at 16,168.62 points, which was the first time since the financial crisis that the Hang Seng Index had once again regained 16,000 points.
As a matter of fact, since the reunification, Hong Kong’s tax revenue has always been self-supporting and has not been paid to the Central Government.
Very often, when Hong Kong encountered difficulties, the Central Government even had to lend a helping hand to provide selfless support, giving people and money as needed.
It is only after such a serious financial crisis that Hong Kong has witnessed the incongruous scenes of “Occupy China”, “Anti-Send China” and even “Hong Kong Independence” one after another.
What kind of people can turn right and wrong so upside down, not distinguishing between good and bad?
It has been more than 20 years since the reunification, and even children have reached an age where they are mature enough to share family responsibilities.
But no one would have expected that a mother who has taken great pains to take care of her child would be blamed for no reason by her child who has committed all sorts of rebellious acts, so how can this not be chilling?
Hong Kong is an inalienable part of China. “If you are well, it is a sunny day”, this is the motherland’s mother’s advice and a responsibility.
END This article is written by: Five Mile East Seven, researcher of Blood Diamond Stories.
Some references 1, “Asian financial turmoil: Hong Kong’s financial stability to defend the war”, the Hong Kong Monetary Authority Chief Executive Norman Chan 2, “Financial Alchemy”, Soros, Hainan Publishing House 3, “1998 Asian Financial Crisis Tracking Research Transcripts”, Li Kemu, Liu Shijin, China Development Publishing House published books 4, “capital” massacre “! 22 years ago, the terrible financial turmoil in Asia,” the head of the second! 5. A Hundred Years of Hong Kong’s Financial Industry, Feng Bangyan
