Chapter 769 QE2

Outside Europe, there are also more and more news indicating that the Federal Reserve is likely to start the second round of quantitative easing after 2008...

The first round of quantitative easing (QE1: a first round of quantitative easing) was launched after the collapse of Lehman Brothers in 2008. In order to avoid more financial institutions following the footsteps of Lehman Brothers, the Federal Reserve hurriedly launched a quantitative easing policy.

In the following three months, the Federal Reserve created more than $1 trillion in reserves, mainly by lending reserves to their affiliates and then directly purchasing mortgage-backed securities.

In this way, the destructiveness of some subprime mortgage crises was finally reduced, so that major Wall Street players including Goldman Sachs and JPMorgan Chase did not collapse.

But at the same time, this also led to a certain depreciation of the US dollar and an increase in the prices of many raw materials and commodities...

Moreover, although the Federal Reserve released $1 trillion in funds in this round of quantitative easing, its effect is also time-limited.

Since April this year, the economic data of the United States has begun to disappoint, and the overall economic recovery has also faltered.

Under such circumstances, the Federal Reserve has been increasingly pressured by various parties, including Wall Street, to launch a new round of quantitative easing policies to increase the market's capital surplus and accelerate the pace of economic recovery.

As early as August, Federal Reserve Chairman Ben Bernanke had already revealed his inclination to launch a second round of quantitative easing policies in a speech at a gathering of Federal Reserve officials, although he also cautiously pointed out that quantitative easing policies are not a mature remedy.

Yes, at this time, not everyone in the economic decision-making level of the United States supports quantitative easing policies, and everyone understands that quantitative easing policies are only a temporary solution and have many consequences.

But when Wall Street and many capital tycoons are calling for the start of a new round of quantitative easing policy, I am afraid that even as the chairman of the Federal Reserve, Bernanke can not do much...

Barron knows that in his previous life, the second round of quantitative easing policy (QE2) of the Federal Reserve was officially announced in early November this year. At that time, the Federal Reserve Open Market Committee (FOMC) announced that it would implement a $600 billion "quantitative easing" plan again. The Federal Reserve issued currency to purchase long-term bonds issued by the Treasury Department, with a monthly purchase amount of 75 billion until the second quarter of 2011.

This is the QE2 of the original time and space, the so-called second quantitative easing policy of the Federal Reserve.

The purpose of QE2 is to boost the US economy by purchasing a large number of US Treasury bonds and lowering long-term interest rates, especially to avoid deflation and reduce the unemployment rate as high as 9.6%.

However, judging from the current situation, the Fed will definitely not be able to hold out until November this time. I am afraid that the second quantitative easing policy will be implemented at the latest next month, that is, in October, and the scale will be even larger...

Correspondingly, the quantitative easing policy will still bring many adverse effects, such as the dollar will flood again, and bring exchange rate fluctuations and asset bubbles to many countries.

In the case of the active "water release" of the US dollar, if a series of countries including Europe and Asia want to avoid greater losses, the best choice is to actively "release water" together, which will also cause a new round of price increases for raw materials and various commodities...

For Barron, this round of quantitative easing policy will also have a lot of impact on him.

"We need to increase investment in various markets, including stock and securities investment, and the acquisition of high-quality assets!"

This is a choice that Barron and Daisy both agree with.

At this time point, their DS Group and other investment funds have obtained rich returns on shorting in Japan, South Korea and Europe.

But it is obvious that with the Fed's "water release", the US dollar is about to usher in a depreciation after flooding - not only the US dollar, but also other currencies such as the pound and the euro will depreciate accordingly.

This means that the cash held by Barron and others will also have its real value diluted in this round of quantitative easing policy.

This is just like the US debt and US dollar assets held by many countries now, which will definitely depreciate with the Fed's quantitative easing policy.

The best way to fight this depreciation is to exchange the US dollars and other currency cash in hand for high-quality assets before the depreciation occurs.

These high-quality assets include high-quality company stocks in various markets, as well as "hard currencies" such as minerals and real estate.

Even for Barron, it is not satisfactory to just add the funds in hand to the investment. A large amount of loan financing is required to buy high-quality assets. In this way, after the currency depreciates, it means that the funds that need to be returned have actually shrunk passively in value...

After this decision is determined, it means that they will start a new round of large-scale acquisitions, and the targets will include assets with clear "value preservation" attributes such as energy, minerals, basic public services and cutting-edge manufacturing...

In fact, this round of "acquisitions" has already begun, including the West African Mining Group's acquisition of Chile's lithium mining giant SQM, and...

At present, British Gas, a subsidiary of United Energy Group, has made an offer to Total Energy of France to acquire their gas pipeline and storage subsidiary Total Infrastructures Gaz France (TIGF).

In fact, after Total intended to sell TIGF, they received more than 7 offers for the company, including private equity investment companies under French insurance company AXA, nuclear funds under Electricite de France, French state-owned bank BCI and Spanish utility Enagas...

Including British Gas, a subsidiary of United Energy Group, a total of five companies will participate in the second round of auctions for TIGF. According to their estimates, the final transaction price will be around 2.5 billion euros.

United Energy hopes to expand its natural gas business to France through the acquisition of TIGF, and use this as a starting point to enter countries on the European continent.

There are currently two natural gas long-distance pipeline operators in France. One is GRT gaz, which is 75% owned by the French Engie Group (Engie Group is a vertically integrated energy utility company that dominates the French natural gas market and has the largest natural gas pipeline network in Europe), and the remaining 25% is owned by a public consortium.

GRT gaz is the largest natural gas long-distance pipeline operator in France, with 32,000 kilometers of natural gas pipelines, controlling nearly 85% of France's long-distance pipeline network (trunk pipelines), and supplying gas to nearly 50 wholesalers.

The other company is TIGF, the acquisition target of United Energy Group this time.

TIGF controls nearly 15% of France's long-distance pipeline network, operates 6,000 kilometers of natural gas pipelines and storage facilities in southwest France, and supplies gas to 14 wholesalers.

In the natural gas storage facility business in France, two companies are mainly involved in the operation, namely Storengy (a subsidiary of Engie) and TIGF under Total.

Storengy operates 13 underground gas storage facilities in France, including 10 aquifer storage facilities (centered in the Paris Basin) and 3 salt cavern storage facilities (in southeastern France), with a total storage capacity of 10.4 billion cubic meters (about 80% of France's storage capacity).

TIGF is a wholly-owned subsidiary of Total and operates 2 underground gas storage facilities in France, aquifer storage facilities in Izaute and Lussagnet in southwestern France, with a total storage capacity of 2.7 billion cubic meters (about 20% of France's storage capacity).

It can be said that although TIGF is still far behind Engie Group in terms of France's natural gas pipeline network and storage, for United Energy Group, TIGF is still the most suitable and possible choice for them to enter the French natural gas market.