Chapter 77 7. Asian Currency Strangling

In the early 1990s, the axis of London︱Wall Street was on the eastern front, which severely set back the aggressive momentum of the Japanese economy. On the western front, it crushed the economies of Eastern Europe and the Soviet Union. Soros disrupted the situation and temporarily ran aground. Latin America and Africa have long been in the bag. Satisfied, looking around the world, the Asian economic model in the thriving Southeast Asia region is getting less and less pleasing to the eye.This kind of government-led economic development policy, the state's concentrated resources to focus on breakthroughs in key areas, export-oriented, and people's high savings as the main feature of the development model have been rapidly popular in Southeast Asia since the 1970s. As a result, the economies of all countries have experienced unprecedented prosperity, people's living standards have greatly improved, the average level of education has steadily increased, and the number of people in absolute poverty has dropped rapidly.This alternative model, a complete departure from the free-market economy so strongly promoted by the Washington Consensus, is increasingly attracting interest from other developing countries, seriously thwarting the basic strategic approach of controlled disintegration formulated by international bankers.

The main strategic goal of launching an Asian currency strangling war is to smash the signboard of the Asian development model and let the Asian currencies depreciate severely against the US dollar. The core assets of the company were sold to European and American companies at a low price to speed up the progress of the controlled disintegration.There is also a very important purpose, which is to stimulate the demand for US dollars in Asian countries.For Asian countries that have experienced the financial turmoil, dollar reserves are so precious at critical moments, and the painful lessons will make them never dare to abandon the idea of ​​dollar reserves.

In December 1994, Grumman's masterpiece, The Myth of the Asian Miracle, was published in Foreign Affairs. The article predicted that the Asian economy would inevitably hit a high wall.The point that the article points out, such as the general underinvestment in productivity improvement in Asian countries, and that there will eventually be a limit to expanding the scale alone, is of course reasonable.But the problem is that the starting point of Asian countries is generally very low. The key to development lies in adapting measures to local conditions, adapting measures to current conditions, making the best use of the situation, and utilizing strengths while avoiding weaknesses.These problems themselves are also natural phenomena in the rapid rise of these countries, and it is entirely possible that they can be resolved benignly in the process of development.Judging from the effect of Grumman's article, its function is equivalent to the signal flare of the Asian currency strangling war.

International bankers are targeting Thailand first. Time magazine once interviewed a financial hacker who directly caused the Thai baht to plummet. His description was cruel and true. We are like a pack of wolves standing on a high ridge, looking down on a herd of elk.Thailand's economy looks more like a wounded prey than a young Asian tiger.We select the sick ones to keep the herd healthier overall. Since 1994, under the pressure of the depreciation of the RMB and the Japanese Yen, Thailand's exports have been weakened, and the Thai baht linked to the US dollar has been dragged to an extremely empty level by the strong US dollar. A crisis has already taken shape.While exports are declining, a large amount of foreign hot money continues to pour in, pushing up real estate and stock market prices.At the same time, although Thailand's foreign exchange reserves are as much as US$38 billion, its total external debt is as high as US$106 billion. Since 1996, Thailand's net outflow of funds has been equivalent to its GDP. eight percent.To combat inflation, the Bank of Thailand had to raise interest rates, a measure that made the situation of the deeply indebted Thailand even worse.

There is only one way out for Thailand, and that is to actively and quickly devalue the baht.International bankers estimate that the loss is mainly due to the more expensive U.S. dollar debt and the reduction of foreign exchange reserves by about US$10 billion. However, this loss will be quickly recovered as the international financial market affirms its decisive response.But the financial hackers concluded that the Thai government would fight to the death to protect the baht, and would never let it go. The development of the situation later proved that the judgment of the financial hacker was very accurate.Different from the situation with Japan in the past, Japan has extremely strong financial strength and foreign exchange reserves, directly attacking the Japanese currency is tantamount to hitting a stone with a pebble, so the international bankers adopted new financial derivative tools and adopted long-distance and super-sighted measures in terms of time. Its effect is just like using the new aircraft carrier tactics during World War II to deal with battleships, so that the powerful naval guns of the Japanese giant battleships could not be used.In the case of disparity in the strength of the enemy and ourselves, Thailand fought desperately in positional warfare, its strategic intentions were completely exposed, and its tactics lacked flexibility and suddenness. Ultimate failure was inevitable.In the battle against Thailand and other Southeast Asian countries, financial hackers mainly attacked the currency itself, forming a pincer offensive through local currency forward contracts and stock index futures, sweeping across Southeast Asia and South Korea within six months.

After Thailand failed in the frontal battle with financial hackers, it mistakenly took the initiative to fall into the trap of the IMF.Blindly trusting international organizations and easily handing over the safety of the country to outsiders for judgment, once again committed an irreparable mistake. Huge external debt is the main reason why developing countries are in crisis.Governing a country is actually the same as running a family. High debt will inevitably lead to a fragile economic health. When the external financial environment is completely uncontrollable, survival can only be based on luck.In the real world, international bankers manipulate international geopolitical trends, and can easily reverse the originally seemingly reliable financial environment, thereby greatly increasing the debt burden of developing countries. Financial hackers then take advantage of the momentum to launch a fierce attack. The probability of success is quite high.

There is no sense of risk at all, especially no psychological preparation for the undeclared war that may be encountered by the huge and invisible London-Wall Street forces.This is the second important reason for Thailand's financial defeat. The judgment of the enemy's main attack direction was completely wrong, which led to the first defeat by financial hackers, and then the tragic slaughter by the IMF, which was equivalent to two failures.Southeast Asian countries have generally repeated the process of Thailand's financial defeat. Wolves have their own logic, and wolves have their own division of labor.After the Soros and others began hunting under the support of a large number of prestigious banking groups such as Citibank and Goldman Sachs, the injured and fallen prey were handed over to the International Monetary Fund for slaughter and auction. Salivating European and American companies.

If investment bankers who buy a company and sell it to other companies can earn hundreds of millions of dollars, then they can earn at least ten times, or even a hundred times, the money by spinning off and auctioning off the core assets of a sovereign country. When Asian countries try to establish their own Asian funds to provide emergency assistance to troubled countries in the region, they naturally encounter widespread opposition from Western countries.U.S. Deputy Secretary of State Talbot said that we believe that the appropriate institutions to address such issues are inter-regional and international organizations, rather than handing over to newly established regional organizations, because the issue itself has far-reaching implications beyond the Asia-Pacific the boundaries of the region.Speaking to the Japan Association in New York, US Treasury Secretary Larry Summers insisted that there are real risks to the notion of financial regionalization that relies on regional aid in times of crisis.Such an approach, he noted, would reduce the resources available to deal with future storms and weaken the ability to deal with transcontinental crises.This is an important reason why we believe the IMF must play a central role.

Fisher, the first vice-chairman of the International Monetary Fund, warned that regional funds could not strictly require the countries concerned to make overall economic reforms in exchange for aid, as the International Monetary Fund did."We don't think it would be helpful to have a huge fund or a long-term institution with different conditions," Fisher said. Japan was originally an active advocate of the Asian Fund, but under pressure from London︱Wall Street, it had to succumb. Japanese Finance Minister Hiroshi Mitsuka said that the International Monetary Fund has always played a central role in maintaining global financial stability among international financial institutions.The fund proposed by Asian countries will serve as an auxiliary agency of the International Monetary Fund.The new concept, designed by Tokyo, will be an unfunded fund.According to Tokyo's new concept, it will be a rescue agency that can quickly mobilize funds in a planned way to aid those currencies that have been sniped by international speculators.When the proposal to set up an Asian fund was put forward at the annual meeting of the World Bank and the International Monetary Fund held in Hong Kong, it immediately aroused the vigilance of the United States and Western countries, who worried that it would undermine the work of the International Monetary Fund.

In the end, Japanese Prime Minister Ryutaro Hashimoto had no choice but to say that we are not too arrogant to think that we have the ability to act as a locomotive for the recovery of the Asia-Pacific region (economy); It does, but pulling Asia out of the economic quagmire is not its role. When talking about the Asia Fund, Singapore Deputy Prime Minister Lee Hsien Loong believes that if the Asia Fund is to replace the role of the International Monetary Fund, the establishment of the Asia Fund will have moral hazard. It is natural for Asian countries to establish their own funds to support each other in times of crisis, but it is extremely unreasonable to be firmly opposed by the London-Wall Street axis. Japan, as the largest economy in the region, is completely controlled by others. The lack of at least the courage and courage to lead the Asian economy out of the predicament cannot but chill the hopeless Southeast Asian countries.Most puzzling is Singapore's point of view, how does giving oneself and one's neighbors the minimum right to help each other in the face of looting create moral hazard?Whose morality is such a risky morality?

Malaysian Prime Minister Mahathir is an Asian leader who has seen the essence of the crisis more clearly. Mahathir said: We don't know where their money comes from, and we don't know who is making the transaction, let alone Know who else is behind them?We don't know if they pay taxes after earning money?Also, who are these taxes paid to?We also don't know who is behind them?He believes that under the current currency trading system, no one knows whether the money comes from legitimate channels, or whether someone is laundering money, because no one can ask, and there is no way to investigate.As long as these people launch an offensive against any country, countless money will flow into that country or conduct selling activities, and no one can resist it.Whether it is the commodity market, futures or securities trading, it must be carried out under a legitimate system. Therefore, we must control currency transactions and make them transparent.Mahathir was immediately surrounded by Western media circles.Mahathir's pointed question may not be suitable for a diplomatic occasion, but he did ask the doubts in the minds of all Asians. After South Korea, another staunch partner of the United States during the Cold War, was swept away by the financial turmoil, it extended a helping hand to the United States. It never thought that the United States would reject it so quickly and so firmly.In the eyes of international bankers, the close relationship with South Korea has become a leftover wreck of the Cold War.The U.S. government had a heated debate on this matter. According to the opinion of the Secretary of State Albright and the National Security Advisor, they should extend a hand to the little brother. The Treasury Department, representing Wall Street, firmly opposed it and even accused Albright of not understanding economics. study.In the end, Clinton defied the view of the Treasury Department. In the view of Treasury Secretary Lubin, this crisis is an excellent opportunity to open the door of South Korea's economy. He strictly ordered the International Monetary Fund to impose stricter measures on South Korea than the traditional harsh conditions to deal with this former ally who begged for help. Under the pressure of the U.S. Department of the Treasury, the IMF increased its conditions for aiding South Korea, including that South Korea must immediately resolve all trade disputes with the United States on terms favorable to the United States. put forward various unreasonable conditions. Stiglitz, chief economist of the World Bank, believes that South Korea's financial crisis stemmed from the U.S. Treasury's efforts to force South Korea to open its financial and capital markets comprehensively and quickly.Stiglitz, Clinton's chief economic adviser, was staunchly opposed to such recklessness, arguing that such an openness would not serve America's security interests but would benefit Wall Street bankers. The South Korean government was forced to accept many harsh conditions of the United States, allowing the United States to establish bank branches, foreign companies can own the shares of listed companies from 26% to 50%, and foreign individuals can own the company's shares from 7% to 50%. Fifty percent, Korean companies must use international accounting principles, financial institutions must be audited by international accounting firms, the Central Bank of Korea must operate independently, currency convertibility under full capital account, import license procedures are transparent, corporate structure supervision, labor market reforms, etc.American bankers have long coveted South Korean companies, and they are ready to swarm in and tear their prey to pieces as soon as South Korea signs an agreement. However, international bankers have underestimated the strong national consciousness of the Koreans, and a country supported by this consciousness is difficult to be ruled by foreign forces.The isolated and helpless Koreans have donated their gold and silver to the country one after another. When all foreign exchange reserves are exhausted, gold and silver, the final means of payment of money, have become very acceptable to foreign creditors without hindrance. debt repayment method.What surprised international bankers even more was that South Korea did not experience the collapse of large-scale companies and banks that they had imagined. Western companies have hardly been able to acquire any large Korean companies.When South Korea finally survived the most difficult spring of 1998, South Korea's export surplus quickly recovered, and the South Korean government, which had completely seen through Wall Street's tricks, resolutely abandoned the poisonous IMF.All cases of large companies that were about to file for bankruptcy were frozen. The government decisively wrote off 70 to 150 billion US dollars of bad debts from the banking system. When the government took over these bad debts, the control of the banks was returned to the government. , thereby excluding the IMF from rebuilding the banking system. International bankers and the U.S. Treasury Department not only cheered in vain, but also made South Korea more aware of the absolute necessity of government-led economics.Microsoft's attempt to annex South Korea's largest software company fell through, and eight local South Korean software companies eventually succeeded.Ford's plan to acquire South Korea's KIA Motor Company was aborted, and the local company broke Ford's dream.The takeover of two large regional banks by foreign banks has been halted, and the South Korean government has put them under temporary administration. Under the full leadership of the government, South Korea's economy has rebounded strongly. It's funny that South Korea was advertised by the International Monetary Fund as a model of successful rescue. When in 2003, Thailand paid off its US$12 billion debt ahead of schedule and finally redeemed it from the International Monetary Fund, Thai Prime Minister Thaksin stood in front of a huge national flag and swore that Thailand would never do it again (International Capital) Wounded prey will never again beg for IMF assistance.The Thai government even privately encouraged Thai companies to refuse to repay the debts of international bankers in retaliation for the crazy plundering of foreign banks in 1997.In September 2006, Thailand launched a military coup and Thaksin stepped down.