Vol 5 Chapter 127: Frightened

Jemin Disraeli once said: There are no eternal friends, only eternal interests.
During World War II, Britain and the Soviet Union reconciled. Prime Minister Churchill extended this sentence: There are no eternal friends or enemies, only eternal interests.
"Mr. Brooke. The market's bearish perspective on the pound is based on the weak economic foundation of the United Kingdom. Even Germany believes that the pound needs to be devalued. Now, you are persuading us to give up the profits we get."
"Mr. John. From an objective point of view, our proposal is not entirely based on the interest of the pound sterling. It is a balance.
I don’t think there is more room for the pound to fall, although the Bank of England’s foreign exchange reserves have fallen. But this also means that the central bank has a more liberal monetary policy to adjust the economy. "
"But it takes time."
"Yes, time is what we need, but it's also what you need, isn't it? This is not a contradiction."
"..."
There are no accidents.
During the weekend, Norman Lamont brought a special economic advisory group headed by Pound Brook and the Capital One Financial Research Group headed by Robert John to launch a private meeting in the reception room on the top floor of the Navy Building. discuss.
Pound Brook put forward the requirement for Capital One to gradually clear its short position on the British pound, and he chose the sharpest offensive point as the bargaining chip for this negotiation. The reason is very good. After the British government announced its withdrawal from the European exchange rate system, the Bank of England has no obligation to maintain the value of the pound against the mark, and the international hot money attack on the pound has also come to an end.
This was supposed to be the logic of a bearish bearish pound, but Brooke was regarded as the most advantageous breakthrough.
Some people may ask that the Bank of England is no longer obliged to buy the pound, which means that the market lacks more funds to buy, which is more negative for the pound and will further depreciate the pound. How can it become a bargaining chip for the Bank of England to negotiate with the shorts.
the reason is simple.
The price of currency is based on a country's sovereign reputation, and the determining factor is the purchase of capital, and this purchase depends on different judgments of market prices.
From a larger point of view, it is like the relationship between two connected reservoirs. The currency exchange rate between countries is like two different pools. The water between the two pools flows with each other, and the two maintain There is a relative equilibrium, and the price at this equilibrium is the normal exchange rate level.
However, in order to keep the British pound in the European exchange rate system, the British pound was forced to set up a dam between the two ponds to prevent the inflow of water from the German central bank's continuous interest rate hike.
The logic of the market's bearish pound sterling is based on this relationship. It uses funds to continuously push up the prices of the US dollar and the German mark to keep the balance tilted, making the Bank of England more and more pressured. When this pit reaches a certain limit, the British water level It is tantamount to rising and the balance being broken, and British pool water will involuntarily flow into Germany, which has dug a large pit, until the boundary of the dam formed by English foreign exchange bursts to achieve the flood discharge effect.
Now the UK is forced to withdraw from the European exchange rate mechanism, but this also means that the water between the UK and Germany and the linked currency can flow freely again. Although there will be a short-term plummet in the initial flood discharge, the lower exchange rate is bound to Stimulate the British economy to strengthen, and the water level will return to a balanced level.
In other words, after the Bank of England announced that the pound will no longer be pegged to the mark, the pound will depreciate sharply in a short period of time, and then reach a market recognized equilibrium price. As the market price stabilizes, both foreign exchange buyers and sellers in the market will be in a relative position. The level of balance.
Human beings are born in nature, it is destined that all derived social structures cannot escape from nature.
After all, the United Kingdom is one of the most powerful countries in the world. The daily transaction value of the British pound is also in the hundreds of billions of dollars. Whether it is Capital One, Wall Street or other sellers, shorting the British pound is standing at a high point of the general trend. .
And now, this trend has undergone a huge transformation with the withdrawal of the Bank of England from the European exchange rate mechanism.
It means that as time passes, the market buyer will no longer be the Bank of England, but a buyer and seller composed of countless foreign exchange dealers, and the transaction amount will not be comparable to an investment company.
In other words, even if you hold more pounds and continue to short, there will be no casual follower in the market, but there may be more multinational trading companies or foreign exchange transactions doing arbitrage in the opposite direction.
Of course, this is just a bargaining chip used by the British Economic Special Advisory Group.
In fact, the market has been beaten to death.
Yes, he was killed.
Because the pound fell completely beyond market expectations, all the longs who participated in the purchase of the pound market were killed, throwing their helmets and abandoning their armor, and strangling fatally one after another. The longs who bought the pound had a deep fear of buying the pound just like the horrified bird. ~EbookFREE.me~ A weak market volatility, there will be longs buying the pound at the bottom and choose to stop loss immediately, making the pound price like a dwarf falling into the abyss, with no signs of rebound at all.
Across the other room of the reception room, Shen Jiannan took Qina Kanowski and Yulia Sidorov to talk with John Major and several finance ministers.
"Mr. Brooke is right, but the UK currently needs lower interest rates to stimulate the economy. Compared to time, the UK needs more time, at least, more time than we need to settle our positions."
"I don't think it is more in our interest to settle the position we hold now. Unless you can make more concessions."
Rascal.
Rogue and hooligan through and through.
Shen Jiannan's face did not have the humility that he should have when meeting with a big person like the prime minister. Apart from the polite greetings at the beginning, it was completely a hooligan posture that a dead pig is not afraid of boiling water.
The muscles of John Major's eyes shook involuntarily when he spoke, and the Minister of Commerce and Finance, the Minister of Finance and the Cabinet Advisers were all angered by the speech.
The dignified British Empire has suffered such humiliation for some time.
Finally, John Hancock, Chief of the Interior and Speaker of the Privy Council, couldn't bear the arrogance and rogue attitude of this servant.
"Shen. This is Great Britain. Haven't you considered how this will end?"
Threatened.
Outright threat.
Shen Jiannan's momentum suddenly withered, showing a look of fear. But Chinakanoski didn't think the matter was too big at all, and slapped him on the table with a palm.
"Your Excellency Hancock, are you threatening us?"
""