Vol 5 Chapter 136: Dig another hole

"The Man Who Broke the Bank of England-The Untold Story Behind"
On September 19th, Anatoly Kellys, a well-known economic editor and writer of "Tao Di Shi Bao," published an interview article. Because Kellys enjoys a very high reputation in the media industry, and the shock of the title, this The newspaper sold out not long after it was published, and the "Tao Di Shi Bao" had to add millions of copies to ensure the market supply.
"In this month, the Bank of England failed to intervene in the foreign exchange market, and the pound depreciated by more than 30%. Following the depreciation of the pound, international investor Shen Jiannan earned $4.7 billion in the pound."
"I am honored to be qualified for an interview with Shen Jiannan by chance."
"He is very young, and his youth makes me feel incredible. The first time I saw him, I still couldn't believe that it was this young man who defeated the Bank of England, the most powerful central bank in the world."
"In the interview, I asked him why he chose the pound as an offensive target. He told me that this was not an offense. He just wanted some big shots to hear his voice and use the results to tell them that the pound is too high. , Is a very serious error."
"As a traditional Englishman, I felt very angry when I heard him say this."
"A foreigner, he was accusing our government, but after I heard all Shen Jiannan's words, I was lost in thought."
"Flies don't bite seamless eggs. The total circulation of pounds sterling is trillions, while Shen Jiannan's company has only 40 billion pounds in the position of selling pounds."
"But in the end, the Bank of England failed. The pound depreciated by 30%, causing every taxpayer's wealth to lose at least 50 pounds."
"Obviously, this is an unequal contest. But why has the pound, which has always been strong, been hit hard?"
"I asked Shen Jiannan about this question. He told me that, in fact, the Bank of England does not have to bear this loss. If the United Kingdom does not join the European Community, it does not need to be kidnapped by Germany's high interest rates and can easily cope with this crisis. Take a step back. Even a week ago, the Bank of England had more choices. They could withdraw from the European exchange rate mechanism at any time. That way, they could save a lot of money."
"But it is clear that the Bank of England did not do this. They chose to die stupidly."
"I can't understand why the government wants to do this, but undoubtedly, this is indeed a very stupid behavior. In the end, we did not stay in the European Community, but we had to suffer huge losses."
"Shen Jiannan told me that he has settled his position in the pound sterling."
"This answer surprised me deeply. The Bank of England has lost foreign exchange and can no longer support the price of the pound. Knowing the pound's selling position at this time is equivalent to giving up the wealth."
"He told me that he didn't want to see more difficulties happen again. He is a foreign exchange dealer and a speculative businessman. It is his job to short the British pound, just like a butcher in a slaughterhouse. In the above, there is no right or wrong. But it does not mean that he likes the job."
"The devaluation of the United Kingdom also means that the Bank of England is aware of the mistake, so there is no need to continue to short in order to be short."
"..."
Hundreds of words were written eloquently, and Anatoly Kairis wrote at the end of the article.
"Shen Jiannan is a very knowledgeable person and a philanthropist. If I hadn't seen it with my own eyes, it would be hard to imagine. He spent a lot of time in Eastern Europe engaged in political and educational philanthropy. Jiuding Bank, a subsidiary of Capital One, The amount of aid to Ukraine even exceeded 30 million U.S. dollars."
"This is incredible."
"But he is also the world's largest currency trader. In the week that finally triggered Black Wednesday, Shen Jiannan caused the cabinet government to receive the cruelest blow in history."
Kairis wrote.
"Shen Jiannan knows that he has made a profit of up to 4.7 billion U.S. dollars from the collapse of the pound. When introducing the action before Black Wednesday, he told me: "We have done a lot of short-sales of the pound, so we made a lot of money. Before the collapse of the exchange rate mechanism, we became the most important dealer in the market. Before Black Wednesday, our business volume in the market reached 40 billion pounds. We plan to sell most of them. In fact, when Leman said before the currency depreciation that he would borrow 15 billion US dollars to defend the pound, we were very happy because this is what we planned to sell.
And the amount he said is not even one-third of the size of our position. "
"But the development of the matter exceeded our expectations. Before we had time to capture a large enough market share, the pound withdrew from the monetary mechanism. US$4.7 billion was also the benefit we had estimated earlier. Although it was the US dollar instead of the British pound."

When we found that the pound market’s revenue was close to 2 billion U.S. dollars, our revenue was still increasing due to operations in other currency markets. The long-term share of the interest rate market in the UK, France and Germany, as well as the short-term Italian lira business, will Brings our profits to 4.7 billion US dollars."
"I asked him why he invested his money in a policy that was so stubbornly implemented in the UK that ultimately fell short. If the UK changes its policy, then such a high position size is enough to ruin him."
Shen Jiannan said, "I believe the Bundesbank wants the lira and the British pound to depreciate, not the franc. I feel that it is safer to place the bet on the Bundesbank. The Bundesbank has made it clear that it wants the lira and the pound to depreciate, and it is prepared to protect the franc. Finally, the Federation The bank scored 3:0 and the speculators scored 2:1. I did a better job than other businessmen because I stood firmly on the side of the Bundesbank."
When I asked if Major would raise interest rates before Wednesday, it might be better, Shen Jiannankou replied:
This is absolutely nonsense. If interest rates rise, this will encourage us to increase selling in the stock market because the operation of the market Interest rates increase and accelerate, which will allow us to get more profits and short the pound.
In fact, we didn't want the currency to depreciate until the week of the week, but when interest rates were raised on Wednesday, we realized that we could not wait any longer and we had to sell quickly to occupy our market. "
"In our conversation, Shen Jiannan, like a financial analyst, believes that speculation is harmful, especially in the currency market."
"But he believes that the measure to stop this kind of speculation is not to stop speculation. Just like a rapist, if he wants to make him truly aware of his mistakes and correct them, the best way is to punish them in accordance with the law, rather than ignore them. His criminal behavior even selectively ignored.
The error itself The error comes from the error itself. Even if I give up the attack on the pound, it will still cause problems.
What I did with the British Pound was to correct the mistakes earlier.
Obviously, the Bank of England did not realize this until the end. They had been trying to restrict currency liquidity until then, which turned out to be usually more harmful. Limiting liquidity will make capital feel panic and uneasy, and will shake investment. The simultaneous decline in the stock market and interest rate market is the best proof. "
"When it comes to the exchange rate issue, I have to ask whether a fixed exchange rate is more suitable for the current currency market."
Shen Jiannan told me: "Fixed exchange rate systems are also flawed, because they will eventually fall apart."
He used a theory that I don't understand very well-the main road is fifty, and its use is 49.
Fortunately, although I didn't understand what it meant, he explained it to me.
"In fact, any exchange rate mechanism is flawed. The longer they exist, the greater the flaws. Avoiding speculation is not about avoiding the exchange rate mechanism, but using only one currency in Europe, like in the United States. This will make Speculators like me cannot operate, but I am willing to sacrifice for this."
In the conversation with me, Shen Jiannan seemed calm and composed.
"He told me that he has no interest in money. In his eyes, money is just a symbol. I believe he is serious because he looks absolutely calm and rational. I didn't even feel his obvious Mood swings."
"..."
"In his opinion ~EbookFREE.me~ making money is just a means...but the purpose of making money is not necessarily because of the need for money."
"I asked him why he was willing to accept my interview."
He said that he was proud of his success, which is why he decided to talk about it with me. ... He is pleased with his wit in recognizing what will happen, challenging authority and winning. But he also wants to use public propaganda, because this propaganda can make his charity work in Eastern Europe also known to the public, and at the same time, it can allow governments to get enough experience from this crisis to avoid making such mistakes. .
postscript:
Before leaving, Shen Jiannan looked very happy, much more happy than when he talked about making money. His challenge to the pound sterling was confirmed by his business theory.
This result proved that blind self-confidence and representativeness and wrong feelings can cause corresponding transactions in the market. He realized that on the eve of the currency exchange rate mechanism crisis, there was a major misunderstanding, that is, the false hope that the Bundesbank would The pound sterling will be supported under any circumstances.
But obviously, the Bundesbank has fully stated that it will not adopt the Bank of England’s proposal to cut its interest rates.
His theory also convinced him that speculators are always trying to make consistent transactions in the market.
He said: "In a mechanism where the exchange rate is relatively freely floating, the volume of speculative transactions is gradually increasing, and speculation has the characteristics of long-term expectation. As the scale of the electronic zerg grows, this will lead to an increase in the exchange rate and eventually trigger the mechanism. Because Internet information can report transactions into the market in milliseconds, the central bank’s tens of billions of foreign exchange reserves are completely out of the era."
"Obviously, this is ignorant and seriously backward thinking."