Chapter 672 Long-term plan

"Your Highness the Duke, our short selling in Japan and South Korea has already made good profits..."

After accepting Sun Zhengyi's hospitality, Barron met Phelan O'Neill, who was in Tokyo at this time.

After ending his short selling in the U.S. market in response to the subprime mortgage crisis through the Black Swan Fund, Phelan O'Neill, after receiving a generous profit share, happily accepted another task, which was to cooperate with other Wall Street capitals to carry out Short-selling actions against Japan and South Korea.

After all, Wall Street capital had suffered a lot in the subprime mortgage crisis this time and needed to make amends elsewhere. Their first targets were Japan and South Korea - after all, colonies were for looting.

Of course, if we were to short-sell in Japan and South Korea at this time, the rate of return would naturally not be as good as the Black Swan Fund's original short-sell in the United States.

But there is also an advantage, that is, in these two areas, at least they can act more without scruples and have more means at their disposal.

This time, including the approximately US$20 billion Barron’s raised through IE Fund, Rich23 Capital and other channels, plus other Wall Street capital, the total funds they used for short selling reached US$50 billion.

So far, according to Phelan O'Neill, their profits have exceeded 10 billion US dollars, and this is still not the final result...

"We have formulated a complete long-term plan. Even if the short selling is completed this time, when the Japanese and South Korean markets enter the recovery period, it will still be difficult to continue to make profits in these markets."

Phelan O'Neill excitedly introduced Barron.

It can be said that what they have formulated is a long-term plan with a cycle of several years or even ten years!

Taking the Japanese market as an example, Phelan O'Neill and those Wall Street capital will use the principal and profits of this short sale to purchase corporate bonds of some large companies in the United States through Wall Street banks - you know, after the subprime crisis , even though the Federal Reserve is about to launch a quantitative easing policy, the financing channels of many companies have not yet been fully restored, so the interest rates on these corporate bonds will be above 5%.

Then, they used these corporate bonds as collateral to issue a large number of bonds in Japan - as we all know, the interest rates in Japan are very low. The interest rates on these 5-year Japanese yen bonds are often less than 0.5%!

The interest rate on a 30-year long-term bond is only 1.5%, which is almost like free money!

At the same time, in addition to Japan launching a quantitative easing policy and injecting a large amount of capital into the market, in order to further improve the transmission efficiency of monetary policy, the central bank of Japan has carried out a series of innovations, one of which is to expand the scope of asset purchases.

When central banks generally implement quantitative easing policies, they basically only purchase treasury bonds or bonds with government credit - for example, the Federal Reserve purchased more than US$3 trillion in treasury bonds, agency bonds and MBS during the subprime mortgage crisis.

In addition to purchasing a large amount of Japanese government bonds, the central bank of Japan also purchased risky assets such as corporate bonds, commercial papers, exchange-traded funds (ETFs), and real estate investment trusts (REITs). The main purpose was to reduce risk premiums and long-term interest rates, and improve Corporate financing environment.

Then these Wall Street capitals can completely make Japan's central bank purchase the bonds they issue, so that they can obtain sufficient funds, or Japanese yen funds!

At that time, because Japan's stock market has been shorted by them, they can then use the yen obtained from bond issuance to buy large amounts of money at the bottom of Japan's stock market, and buy a large amount of their five major trading companies and other large companies. of shares.

Next, after quantitative easing is started, the Japanese yen will enter a long-term depreciation channel, and the Japanese yen will depreciate in a huge proportion relative to the US dollar. So the key point is that the funds for their large-scale purchases of Japanese stocks come from the Japanese stocks. The Japanese yen obtained from the bonds, and their own funds were used to purchase corporate bonds in the United States. In the end, when it was necessary to repay these bonds issued in Japan, because the Japanese yen depreciated relative to the U.S. dollar, repaying them in U.S. dollars would be equivalent to repaying the debt. Got a huge discount!

And their US dollar principal has been paid high interest for so many years in vain!

After the Japanese economy recovers, in addition to making a profit and leaving, they can also find opportunities to short-sell again!

So ideally, they can repeat this process over and over again.

And the Japanese country’s financial policy will also cooperate with their entire course of action... It’s not that they do this voluntarily, the main reason is that if they don’t do it, a mysterious department of the Japanese country will be dispatched - the Special Investigation Department of the Tokyo District Prosecutor’s Office, those who do not An obedient politician will inevitably be found guilty of bribery and fraud and will be removed from office.

In the political arena of Japan, the Special Investigation Department of the Tokyo District Prosecutor's Office is very powerful, because behind the entire department, there is always the presence of the United States. It can even be said that they are the knife inserted by the United States in Japan.

Because the Special Investigation Department of the Tokyo District Prosecutors' Office and ordinary Japanese politicians are originally "two trees growing from different roots."

The origins of the Special Search Department are closely related to the US military stationed in Japan.

During World War II, the Japanese army hid a large amount of supplies when they were defeated. On the one hand, it may be for the Japanese army to make a comeback if possible. On the other hand, it also became the personal confinement of powerful people.

In order to search for various materials hidden by the Japanese army, the Allied Command, headed by MacArthur, established an organization called the "Raiders", most of whose members were Japanese staff members of the original American consulate and Japanese employees of the Allied Command.

Most of them are fluent in English and admire and accept the concepts of British and American society.

After special training, this group of personnel put into work. Relying on the advantage of being far more familiar with Japan than Americans, the Rangers seized a lot of hidden assets for the US military and made great contributions.

Since then, this organization has been retained, specifically investigating corruption and bribery in the political and financial circles of Japan. This is the predecessor of the Special Investigation Department.

To this day, the Tokyo District Public Prosecutors Office Special Investigation Department is still a way for the United States to exert influence on Japan - this is not difficult to understand. After all, in order to "please" the United States, this department once seized countless hidden properties of Japanese nobles and consortiums, which greatly offended the local forces in Japan. In order to continue, they can only get closer to the United States.

In addition, after becoming the "direct line" of the United States in Japan, the Tokyo District Public Prosecutors Office Special Investigation Department also obtained "privileges" that surpass many big figures. The taste of this power will also make it difficult for people in it to give up.

And even the Prime Minister of Japan is servile to the United States. For the members of the Tokyo District Public Prosecutors Office Special Investigation Department, there is no psychological barrier for them to act in this way.