Chapter 681 Sovereign Debt

It is worth mentioning that there is a difference between the EU and the Eurozone.

The Eurozone is composed of countries that use the euro as their legal currency. Countries in the Eurozone are generally EU countries, but the reverse is not true.

For example, Britain is now an EU country, but not a Eurozone country, because Britain still uses the pound, not the euro.

The upcoming European sovereign debt crisis mainly occurs in countries in the Eurozone, which is also related to the pros and cons of the Eurozone.

As we all know, a country's monetary policy is related to its economic situation, and it can often adjust the economy by controlling the exchange rate.

But countries in the Eurozone cannot do this.

Because the issuance of the euro and related policies are formulated by the European Central Bank, they are not affected by a single country - in fact, as the core countries of the Eurozone, France and Germany have the greatest influence in it.

So in this case, why are so many countries willing to join the Eurozone?

One of the important reasons is that joining the Eurozone makes it easier for these countries to borrow money. After all, small countries like Greece and Iceland will definitely have much worse conditions than countries like Britain, France and Germany when borrowing money from abroad. Not only will banks charge higher interest rates when lending money to these countries or buying their government bonds, but the amount will also be relatively lower...

But joining the Eurozone is different.

First of all, the Eurozone has relatively high requirements for the financial conditions of the countries that join it, which gives the impression to capital that the countries that can join the Eurozone are relatively stable economically.

In addition, there is a bottom line - if you have joined the Eurozone, then other Eurozone countries will not allow your economy to collapse and will provide assistance, so banks and investors will have more confidence in this country.

Back to Greece, it is for this reason that it hopes to join the Eurozone.

But there was a problem at the beginning, that is, Greece, because it could not meet the standards stipulated in the Maastricht Treaty, that is, the budget deficit accounts for 3% of GDP and the government debt accounts for less than 60% of GDP, it is difficult to join the Eurozone.

So their government hired Goldman Sachs to optimize its finances. Goldman Sachs tailored a "currency swap" for Greece, which covered up a public debt of 1 billion euros for Greece to meet the standards of the eurozone member states, and finally made it join the eurozone smoothly...

Sure enough, with the participation of Goldman Sachs, if there is no accident, there will be an accident...

After joining the eurozone, the Greek government finally began to borrow money boldly, and then they encountered the subprime mortgage crisis. When the global economy fell into recession, the Greek government began to hide their true foreign debt situation more and more.

Of course, the reason why Greece is getting closer to the sovereign debt crisis is also due to its high welfare policy at home. In order to please voters, successive Greek governments blindly increased welfare for voters, and their high welfare benefits were not based on sustainable fiscal policies, but relied on large-scale borrowing to provide.

This led to the expansion of the Greek government deficit and the surge in public debt, and ultimately its debt repayment ability was questioned.

Barron knew that before the end of this year, the Greek government's sovereign debt crisis would break out, and after Greece, the other four countries of the European Five Pigs - Portugal, Ireland, Italy and Spain - would also fall into sovereign debt crises one after another, and the impact of this crisis would eventually spread throughout Europe.

Well, the reason why Portugal, Ireland, Italy, Greece and Spain are called the European Five Pigs is because the initials of their country names can form "PIGS"...

And the public deficits of these countries are all over 3%!

In fact, the European Five Pigs were originally called "The Four Stupid Pigs". The "I" in "PIGS" refers to Italy, but the initials of Ireland added later are also "I", so the "Four Stupid Pigs" became "The Five Pigs of Europe", and "I" corresponds to Italy and Ireland.

Since there is such an opportunity to short, Barron will naturally not miss it - anyway, Britain is not a country in the euro zone, and the "Five Pigs of Europe" at that time will let the leaders of the euro zone, France and Germany, have a headache.

Of course, in addition to Barron, Wall Street will naturally not miss such an opportunity to harvest Europe.

After all, they just lost a wave of blood in the subprime mortgage crisis. Although they have absorbed a small wave of blood from Japan and South Korea, how can they fill their appetite? Of course, they will continue to absorb a wave of blood from old Europe.

With Barron's current influence and strength, it is naturally impossible to avoid the occurrence of the European sovereign debt crisis - and this crisis itself can be said to be the result of the countries' own actions.

Then wealth will not disappear, but will only be transferred.

Since wealth is destined to be transferred, in order to retain Europe's strength, Barron can only let more wealth transfer to himself, rather than all flowing to Wall Street...

It can be regarded as bearing humiliation.

Of course, even if this decision was made, before that, Barron still instructed his think tank to conduct a detailed investigation on the debt problems of these European countries. After all, the current situation may be somewhat different from his previous life.

He can no longer rely solely on the time nodes in his memory of his previous life to make arrangements, and he needs to formulate an action plan for this short-selling after investigation and analysis.

After having sufficient data and intelligence support, these were handed over to Daisy for arrangement.

It is also worth mentioning that Rami has now joined the DS Group and is doing an internship under Daisy.

Rami is the older brother of the Palestinian siblings adopted by Barron. He is 17 years old and has completed his university studies.

Before, Barron gave him 50,000 pounds of funds, and he eventually appreciated the funds by more than 20 times. Before being allowed to enter the DS Group, Rami's account had more than 1 million pounds!

Therefore, he eventually became the youngest employee of the DS Group, and Daisy, who admired Rami's talents very much, was ready to focus on training him.

...

"Have you really made this decision?"

Countess Butt took Bonnie's hand and asked her cousin with concern.

"Yes, Chris, I have thought about it. This is an acceptable result for everyone, isn't it?"

"But what about you?"

Bonnie's expression was very calm at this time. She was silent for a moment and said:

"I have been prepared for this from the beginning. Now I just want to make sure this moment comes."