America's Road to Wealth

The policy announced by the Neon Central Bank certainly does not mean to cut interest rates.

How dare the neon cabinet ignore Daddy's request.

Neon central bank announced policy.

It is they who will purchase more than 30 trillion yen of neon medium and long-term government bonds in the next three months.

Generally speaking.

A country's national debt is issued by the country's Ministry of Finance.

The banking platform is only responsible for underwriting, which is the process of selling government bonds to investors.

Before the Neon Central Bank began to purchase its own country’s national debt on a large scale.

There are very few central banks in the world that would purchase a large amount of government bonds issued by their own finance ministries.

The main thing is that doing this is equivalent to borrowing money from the left hand and the right hand.

This right hand can still print money.

It is no different from printing money directly, it just looks better in name.

The result of this will be a significant reduction in the yield on domestic government bonds.

The side effect is that buyers of other countries' national debt will have doubts about their own national debt.

The more direct effect is to release a large amount of the country's local currency in the market.

In economics terms, this behavior is called "quantitative easing."

In later generations, the United States also used quantitative easing on itself many times.

But the inventor of the policy of quantitative easing is actually Neon.

Quantitative easing releases large amounts of money into the market.

That is to say, under quantitative easing, the monetary policy implemented by the Neon Central Bank to its own country's economy is not a fine-tuning, but a direct dose of strong medicine.

The decision of the Neon Central Bank was announced.

The USD/JPY currency pair has gone short in an instant.

Almost within five minutes of the announcement.

USD/JPY has risen from 104.300, the lowest during the day on January 6, to 107.500.

There is a time difference of about thirteen hours between Tokyo and New York.

Neon Central Bank announced the news at 7:30 pm Tokyo time.

When this news was announced, it was approximately 6:30 in the morning on January 6th, New York East Coast time.

As soon as the news came out that the Neon Central Bank was about to start quantitative easing.

The phone numbers and contact information of most of the heads of investment banks on Wall Street have been blown up.

Manhattan, New York.

Located in a luxury apartment next to Central Park.

Paulson was pushed awake by his wife, and his lover pointed to the ringing phone opposite the bed.

"Phone, phone! Hurry up and answer the phone, I'm almost disturbed to death!"

As the wife of the CEO of Goldman Sachs. Paulson's wife is often woken up in the middle of the night or so early, or at other times.

Although she was used to it, she would still complain a few times when she got up and got angry.

Paulson had long been accustomed to it. He patted his face lightly a few times to wake himself up completely.

The CEO answered the phone and heard the voice of the head of Goldman Sachs' market surveillance department on the other side.

"Mr. Paulson! Just now, the Neon Central Bank announced that it will purchase a large amount of Neon Treasury bonds today!!"

This huge black swan event suddenly woke Paulson up.

Paulson took the cordless phone and walked quickly to the bathroom, shouting: "Are you sure?"

"It's confirmed! Just now, in a few minutes, the Japanese yen rapidly depreciated by more than a hundred points!"

"Oh! Madfak! Didn't they just come two years ago?"

Paulson cursed as he walked to the bathroom door.

Paulson suddenly remembered...

Goldman Sachs does not seem to have invested in Japanese yen assets recently.

He was a little unsure and asked the head of the supervision department.

The person in charge replied: "Because of your request, Goldman Sachs has indeed not invested in Japanese yen assets on a large scale recently."

Paulson breathed a sigh of relief.

His washing movements in the bathroom also slowed down a lot.

Since Goldman Sachs does not have large-scale Japanese yen asset investments.

Then the central bank's quantitative easing will not have such a big impact on Goldman Sachs.

Paulson was naturally not in a hurry.

"Hey~" Paulson, holding the cordless phone, said in a relaxed tone.

"I will rush to the company soon. Ha~ But at this time, Richard and the others must be more anxious than me~ Ha~ I hope they won't get too anxious."

The person in charge also smiled on the other side of the phone and said:

"Yes. They have really invested a lot of money in Japanese yen assets these days! Especially, most of them are shorting the US dollar!"

Paulson heard a hint of schadenfreude in the tone of the person in charge.

In fact, Paulson felt the same way at this moment.

The president smiled and hung up the phone, then started dressing up in a leisurely manner.

Just like what Paulson said in his chat with the person in charge.

In this USD/JPY big market.

Wall Street investment banks are heavily shorting the USD/JPY currency pair.

Their person in charge really can't sleep in anymore at this time.

Wall Street's bulldog, Mr. Richard Fuld, chief executive of Lehman Brothers.

He was dragged directly into the company by his subordinates' fatal calls from his beautiful secretary's fragrant bed.

Due to time constraints, Richard Fuld didn't even have time to dress up.

He only changed into a suit and didn't even wash up.

We rushed to Lehman Brothers, located at its headquarters on Seventh Avenue near Times Square in Manhattan.

Halfway through, Richard Fuld figured out the reason.

This made the bulldogs of Wall Street couldn't help but curse Neon Central Bank all the way.

"Madfalk Neon Cabinet Madfalk!"

At this moment, Richard Fuld, who was yelling loudly, was no longer as relaxed as he was the previous two days. Just like the joyful look I felt when I saw the exaggerated figures on the Lehman Brothers foreign exchange account before I fell asleep last night.

When he came to the trading department of Lehman Brothers Bank.

Lehman Brothers' foreign exchange account.

The floating profit has dropped from US$950 million yesterday to US$79 million.

"Madefak! Close the position! Close the position! Close the position!" Richard Fuld yelled.

A few minutes ago, when he last obtained this floating profit number.

They still have about $150 million left.

It had only been less than five minutes and they had already fallen by half.

It only took twenty minutes from the time he was called up from the phone and rushed to the company.

In twenty minutes, the floating profit of US$950 million was about to turn into a floating loss.

Chief Financial Officer Bryn Bulley, who was on duty last night and stared at this transaction all night, said helplessly:

"Sir, the short stampede has formed. Fifteen minutes ago, I ordered the position to be closed. But until now, we have not even successfully closed the position in one thousand lots."

In international foreign exchange, futures, etc. transactions, whether it is long or short.

If you want to close a position, there will be a prerequisite.

That is, the short/long on the other side of the bet against the long/short is willing to take your order.

Because to put it bluntly, whether it is foreign exchange or futures, what you are playing is betting.

Since it is gambling, it is naturally zero-sum.

That is to say, in betting, one person must lose money before the other person can make money.

Almost losing money, short/long want to close their positions.

The opposing camp must also choose this number to take your order.

If no one takes the order, you will have to keep losing money until the margin is insufficient and the position will be liquidated.

This is a bit like a phenomenon in the stock market.

That's when a stock is sought after by everyone.

It started to rise crazily, but those who held it refused to sell.

There will be price but no market in the market, and the stock price will continue to rise sharply because the buying orders are much greater than the selling orders, or there are basically no selling orders.

In turn, a stock plummets. When everyone is selling stocks and no one is buying them.

Then the stock will plummet.

The stock will not stop falling until the number of buyers and sellers is about the same.

The difference is that when buying stocks, you don’t need leverage as long as the money is not borrowed.

No matter how much the stock falls, it is still there in the end.

Even if the stock ends up rotting in your hands, it is still a stock.

As long as the company does not go bankrupt, close down, or delist, there will eventually be some hope for the stock.

But if you lose in betting on foreign exchange and futures, your position will be liquidated directly. All the principal was lost, and even after the liquidation, I still owed money to the middleman!

If leverage is used

This is the case with the current short position at Lehman Brothers.

A short-seller exodus has formed. The short sellers who had an absolute advantage before wanted to flee as soon as possible to ensure profits.

In an instant, hundreds of thousands or millions of people were short-handed and wanted to close their positions.

There is no corresponding response from the bull side.

As for these short orders, there is no way to close the position immediately and end the betting contract.

The current market situation is coupled with the inevitable quantitative easing policy of the Neon Central Bank.

A bear carnage has taken hold.

No bull will choose to close their position and leave at this time.

This means the vast majority of short orders.

There is no way to close the position immediately.

Compared with other Wall Street investment bank managers, Richard Fuld is more decisive.

After getting this news from the CFO.

Richard Fuld immediately made up his mind:

"If you cut your flesh, you have to leave the scene! Try to minimize the losses!"

Richard Fuld means.

It is directly based on the current USD/JPY exchange rate, directly thanks to some points.

I would rather let the bulls on the opposite side make more money directly at this time.

You should also close your position in advance to avoid possible greater losses in the future.

"Understood." Bryn Buley responded immediately.

Then the CFO of Lehman Brothers took a look at the latest market conditions.

USD/JPY has risen to 108.560.

Bryn Bulley was a little desperate, because at this time Lehman Brothers had begun to suffer massive losses.

"Sir, what value should we choose to close the position?!" Bryn Bully asked Mr. CEO again.

The value of 108.560 made Richard Fuld equally desperate.

But he had only been desperate for a few seconds when the value above had changed from 108.560 to 108.590.

The bulls have gone crazy and don't even give the bears a chance to surrender.

At this time, it can be said that the bullish trend has become established.

Those short sellers in the market who do not have full positions are expected to turn into long positions at this time.

"111!!" Richard Fuld gritted his teeth and bleeds profusely. He shouted hoarsely: "Immediately close all positions with leverage at 111 yuan!"

If you choose to close the position at USD/JPY 111.000.

Lehman Brothers' investment in USD/JPY is really a cut.

The loss is almost half.

Since the CEO was willing to take on such a responsibility, Bryn Bulli naturally took action immediately and prepared to cut off the meat and close the position.

In addition, Richard Fuld also immediately went from idle to long.

He ordered Bryn Buley to open long positions again, and used high leverage, hoping to offset the short-selling losses.

Go long and short at the same time, with different leverage ratios.

This is known in the industry as "hedging."

That's what hedge funds do.

There are many decisive people like Richard Fuld on Wall Street.

Moreover, a long order does not mean that it can be opened as soon as it is opened.

It's okay if the number of hands is small, but if the number of hands is large, there are not many new short-order bets on the market.

Starting to turn long at this time is not as easy as the previous stalemate stage.

Lehman Brothers finally closed 10,000 short positions when USD/JPY rose to 109.950.

For Lehman Brothers' highly leveraged long orders, only a few hundred positions were successfully opened.

The massacre of short sellers has taken place. How can there be so many stubborn short sellers?

At this time, 111's meat-cutting warehouse was a bit immobile.

Bryn Buley turned around to ask Mr. President for countermeasures, but saw the President slumped in his chair, his eyes already dull.

US East Coast Time.

January 6 (Asia time zone is earlier than America time zone).

On the New York Stock Exchange, those investors who held short positions in USD/JPY foreign exchange futures lost more than half of their value in one day.

The second day and the third day were Saturday and the weekend.

U.S. futures markets are closed for trading.

January 9th.

On Monday, the US futures market opened and USD/JPY broke above 118.950 a few hours later.

After twelve o'clock, major U.S. exchanges were briefly closed.

The financial giants on Wall Street are experiencing both joy and sorrow at the moment.

Tower 3, World Financial Center, New York.

PNC Financial Services Group, located in the same building as Merrill Lynch, has its New York branch.

Snapped! !

"Honey, pop a bottle of champagne!" Sally Winston, CEO of PNC Financial Services Group.

He happily leaned back on the office chair, crossed his legs, held a cigar in one hand, and moved his other hand around the back of the female secretary, and suddenly gave her a hard pat.

"Keep it chilled! Lincoln is coming over later, and I have to celebrate with him!!"

"What do you want to eat for lunch? My dear boss, let me help you organize it!"

The female secretary laughed crazily and deliberately raised her figure to make her boss play more comfortably.

"Besides money, I only have an appetite for you. But Lincoln is a Puritan and he doesn't like playing with you with me."

Sally Winston laughed.

Last week, he and Lincoln, the investment fund manager in the company, discovered that Abel Smith and Smith Capital suddenly went from idle to long.

He and Lincoln, the head of BlackRock, the company's investment arm, spent the afternoon discussing behind closed doors.

In the end, the two giants of PNC Financial Services Group unanimously decided to place heavy bets on multiple contracts.

Initially, USD/JPY turned from long to short due to the U.S. dollar interest rate cut.

The drop was so severe that the eyes of two giants of PNC Financial Services Group jumped.

When Abel's losses reached about two billion US dollars.

He didn't know that PNC Financial Services Group was optimistic about his investment style.

PNC Financial Services Group also lost nearly $500 million with him.

Just when Sullivan and Lincoln were a little doubtful about life.

Neon Central Bank announced their quantitative easing policy.

The situation suddenly turned around.

After that, major countries around the world successively announced interest rate cuts along with the US dollar.

The window for dollar depreciation is quickly disappearing.

Combined with the central bank’s quantitative easing policy.

The U.S. dollar has strengthened again, and at the same time, the central bank has taken the initiative to depreciate the yen through quantitative easing.

This caused PNC Financial Services Group's investment in USD/JPY to continue to expand like a wild horse in the following days.

At present, PNC Financial Services Group's floating profits have accumulated to 1.5 billion US dollars.

Sally Winston's gamble with Lincoln resulted in a huge victory.

"What should I do this afternoon?"

Sally Winston thought carefully while tasting the secretary's wine and beautiful lips.

Stanley O'Neill, a black executive at Merrill Lynch, worked in the same office building as Sally Winston.

But not as relaxed as Sally Winston, nor as lucky as Sally Winston.

Stanley O'Neill was sitting on a chair with his eyes bloodshot at the moment, his head in his hands.

The most powerful black man on Wall Street is in a state of infinite regret.

Because just now, Merrill Lynch had a short order of 150,000 lots, when USD/JPY reached 118.900.

Completely wiped out all positions.

Merrill Lynch's margins and funds of more than $3.5 billion were all wiped out.

Forget it about liquidation.

The loss was only US$3.5 billion, which was not serious enough for Merrill Lynch.

but

Since it is a bet, sometimes liquidating your position may not solve the problem.

Because liquidation is just a loss of all the margin in the account.

If there is no way to close the position, the position contracts in the account will continue to lose money.

Just like now, if USD/JPY continues to rise.

Merrill Lynch lost $3.5 billion except for the liquidation.

Position contracts that have not yet been closed will continue to lose money.

There is no longer a deposit with the middleman, and it becomes a debt.

What to do if you owe money? You need to make up the money first.

If the repayment is insufficient, the intermediary has the right to pursue debt collection.

If the arrears are too long, the middleman can also file a lawsuit to collect the debt.

In other words, after losing US$3.5 billion, Merrill Lynch will have to continue to make up money later.

The matter was not over until all short positions held by Merrill Lynch were successfully closed.

Fortunately, after USD/JPY reached the value of 119, it finally stopped its crazy rise.

The butcher knife wielded by the bulls is finally not so sharp in the face of possible profit retracement and counter-short selling.

At this time, Merrill Lynch only needs to replenish the margin of approximately US$500 to US$600 million to basically end the short position contract.

but do this

Never a good thing for Stanley O'Neal.

Stanley O'Neal was in despair at this time and was considering whether to continue the margin call.

Continue to add margin calls if USD/JPY can fall again.

Then Merrill Lynch may reduce losses or even turn losses into profits.

But it is also possible that additional margin will be required to continue to liquidate the position and continue to owe money.

This is a dilemma.

One is to cut off the company completely and leave. Merrill Lynch's losses this time will exceed US$4 billion.

Stanley O'Neill in the previous three years.

In total, it was Merrill Lynch, not to mention losing all the more than two billion US dollars it made on USD/JPY.

Merrill Lynch will pay more than one billion US dollars for this.

If he chooses this, it will basically mean that Stanley O'Neal is completely finished at Merrill Lynch.

Even the second half of his entire life can be a declaration of true social death.

After the company has lost so much money, can you expect Merrill Lynch's shareholders to let Stanley O'Neal go?

Forget it!

How can this be.

Stanley O'Neal also knew that taking another step back would be a dead end.

The black president gritted his teeth and planned to go all the way to the dark side.

However, just as he finished thinking about it, he was about to ask the company to continue the margin call.

Stanley O'Neill had just walked to the trading department and was about to issue an order to continue the attack to the traders who were also in a panic and despair.

At the same time, let other departments of the company adjust more funds to support themselves.

Stanley O'Neill met outside the door of the trading department.

David Komansky, the company's CEO, opened the door and walked in.

Stanley O'Neill saw a smile on David Komansky's face that he had never seen before.

It was a smile that would make David Komansky very happy even if Merrill Lynch lost four billion dollars.

See this smile from David Komanski.

Stanley O'Neill's heart suddenly clicked.

The most powerful black man on Wall Street, he knew he was finished.