Chapter 284： European debt crisis
During this time, the media's attention, in addition to the ever-closer wedding date of William Chen and Ivanta, also focused on Greece's sovereign debt crisis.
On June 24, after Greece once again asked the EU for help due to its sovereign debt crisis, the EU had four options.
The first option is for countries in the euro zone or even the entire EU to join the International Monetary Fund (IMF) to help Greece out of the crisis.
If this option works, it is the easiest and least harmful method.
The need to do so is:
If Greece is not rescued, once the Greek sovereign debt crisis expands, it will endanger its own economic security and even lead to the disintegration of the euro area, which will be extremely unfavorable to most euro area countries.
And in the case that hedge funds are aggressively shorting the euro and European stock markets, the slower the rescue action, the more serious the crisis will be. At present, except for Greece, due to the promotion of short-selling behavior, the economies of other weaker euro zone countries have also appeared unstable. sign.
So even if a crisis breaks out in only a few countries, it will form a "butterfly effect", which will lead to major shocks in the global financial market and even the real economy.
But making this choice also faces difficulties.
Taking Greece as an example, no one, including the Greek government, can say exactly how big the real losses involved in this crisis are. EU countries have been afraid to really fully trust the data they have disclosed.
Moreover, this kind of assistance will also be opposed by the people of both the donor and recipient countries at the same time.
Yes, you read that right. It is normal for people in rescue countries to object. After all, no country is willing to use the wealth accumulated by its people to help those lazy and uncreative countries with extremely low returns.
But the Greek public was equally strongly opposed to the EU rescue operation.
On Monday, June 29, a large-scale strike movement took place across the country to protest against the bailout that the government is negotiating with the European Union for the country!
The reason is that as a condition of aid, Europe and the United States require the Greek government to make a commitment to effectively reduce the fiscal deficit, including spending cuts, lowering the salaries of civil servants, freezing measures including social security and other benefits, and requiring them to use most of their state-owned assets as collateral in exchange. aid funds until they are fully returned.
Uh, in fact, these contents have been reported on Friday night, but the "lovely" Greek people, even the strike, must wait until Monday to start the working day.
In the face of such popular opposition at home, Greece's finance minister immediately issued a strongly worded speech, claiming that Greece would never accept such "humiliating" aid from the European Union, which would be a loss of sovereignty.
The general meaning is that although our people are lazy, we have dignity. If you don't give me money for nothing, I will never want it!
Faced with such a rotten Greece, the EU is also helpless.
So is there any other option besides bailout for Greece? Of course there is.
The second option is to expel Greece from the euro zone or wait for Greece to withdraw from the euro zone on its own initiative.
After the outbreak of the Greek sovereign debt crisis, German Chancellor Angela Merkel immediately proposed the idea of expelling Greece from the euro zone, but this idea was opposed by the president of the German central bank and did not receive a response from other countries in the euro zone.
Because, in the design plan and institutional arrangement of the euro area, there are no regulations and mechanisms for expelling a sovereign country from the euro area!
As for Greece taking the initiative to withdraw from the euro zone? That is simply not possible.
The Greek government is not really stupid, or it is not stupid enough to say that it will face the punishment of high interest rates if it exits the euro zone, and will bear huge debts in euros, and the national currency will also face the risk of large-scale devaluation. Unemployment and recession will follow, and the economic outlook will face even more catastrophic consequences.
More importantly, according to the EU constitution, leaving the euro zone means leaving the EU at the same time, which will undoubtedly make countries that leave the euro zone face extinction. Therefore, although this option cannot be said to be impossible, it will be difficult to implement.
The third option is to implement a large-scale international rescue, or to increase the fund share of the IMF by major countries, and then expand the scale of the rescue by the IMF.
The biggest flaw of this approach is that there is no legal and effective security guarantee for the rescue funds, and it does not comply with the corresponding regulations of the IMF. Unless it is a last resort, the possibility of implementing a large-scale global rescue is not too high.
The fourth option is the collapse of the euro and the disintegration of the euro area.
There may be two ways for the disintegration of the euro area: one is that the crisis continues to break out on a large scale, and it has reached the point where it cannot be saved. Finally, the disintegration of the euro area and the disappearance of the euro have to be announced; It may reach a level of 1:1 or even lower. In this case, Germany, France and other countries will suffer huge economic losses, and Germany may be the first to announce its withdrawal from the euro zone.
Since Germany is the largest economy in Europe and the euro area, if Germany withdraws from the euro area, it will have a fatal blow to the euro, and the euro mechanism will be difficult to maintain, and finally it will have to announce its disintegration.
So among these four options, the best option is the first option, and the worst option is the fourth option. The EU has to hold its nose and continue to put pressure on the Greek government to bail out Greece.
And Greece itself is not easy, but because of the demonstrations of the people, the finance minister made a tough speech to the EU, and now they are on the top.
In this regard, William Chen is also happy to see this, because not only did he short the euro using his offshore account, but Tianshu Fund also shorted the European stock market with the remaining US$5 billion, together with the capital of Wall Street.
In particular, Greece, which is deeply engulfed in the sovereign debt crisis, along with other weaker euro zone members, are their main targets for shorting. It's just that for the sake of safety this time, he didn't use too high leverage, and he didn't have much profit expectations. Anyway, if he took a bite, these funds would be idle if they were idle.
After the outbreak of the economic crisis caused by the subprime mortgage crisis, Huaguo has taken the lead out of the trough through four trillion incentives, forming a V-shaped inversion. Under the stimulus of the Fed's quantitative easing policy, the US economy is slowly improving. Only the European Union has suffered another blow to its economy due to the sudden outbreak of the sovereign debt crisis in Greece.
However, for Wall Street capital, it was originally a blood-sucking Europe, and it was a good opportunity to return blood to itself. Naturally, it would not be missed.
At the same time, taking advantage of this opportunity, Caitlin Fund bought 3% of the shares of Hermès Group with a total investment of 350 million US dollars, which enabled William Chen to control the shares of Hermès Group to 51%. The luxury goods company is in its hands.
In the face of more and more short-selling funds, the EU knows that it cannot continue to hesitate, and Greece is even more unbearable. Because it has become the main target of capital short-selling, their economy has been hit even more severely. Therefore, the Greek government announced that the Minister of Finance resigned. , quickly took office as a new finance minister and reopened negotiations with the European Union on bailout Greece's economy.
This is also something that can't be helped. The tough statement of the previous minister has been released. If the government wants to turn around, it can only abandon it.
This time the Greek government is aware of the danger, and the EU has relaxed the bailout conditions. Now, Greece is not required to mortgage their state-owned assets to receive assistance, but only requires the right to sell state-owned assets to be mortgaged, which means that their State-owned assets are still in the hands of the state, but the right to sell is locked and cannot be sold.
The step that the EU gave Greece was eventually accepted by Greece.
On July 5 Chairman of the Eurogroup and Prime Minister of Luxembourg Juncker announced that the Eurozone member states agreed to provide Greece with a three-year rescue loan of 110 billion euros, of which 80 billion euros came from the euro area member countries, with the remaining 30 billion euros coming from the International Monetary Fund (IMF).
The bailout is the largest to date for a single country.
But first, in order to get this bailout from the EU, Greece must meet the preconditions that the EU and the IMF put forward to provide Greece with a bailout loan.
The Greek government also announced an unprecedentedly severe fiscal austerity plan to save 30 billion euros in three years, and promised to reduce the fiscal deficit from 13.6% of last year's GDP to EU regulations by 2014. within 3%.
To this end, the Greek government will take a variety of specific measures to increase income and reduce expenditure, including freezing public sector spending for three years, further reducing civil servant benefits, increasing value-added tax from 21% to 23%, raising fuel taxes, raising the actual retirement age, and reducing retirement Kim et al.
These measures will inevitably make the current Greek government attacked by the people, but at this time, they can't care about it, because even if they don't do it, I am afraid that Greece will not have so much money to provide welfare that can satisfy the people.
On June 24, after Greece once again asked the EU for help due to its sovereign debt crisis, the EU had four options.
The first option is for countries in the euro zone or even the entire EU to join the International Monetary Fund (IMF) to help Greece out of the crisis.
If this option works, it is the easiest and least harmful method.
The need to do so is:
If Greece is not rescued, once the Greek sovereign debt crisis expands, it will endanger its own economic security and even lead to the disintegration of the euro area, which will be extremely unfavorable to most euro area countries.
And in the case that hedge funds are aggressively shorting the euro and European stock markets, the slower the rescue action, the more serious the crisis will be. At present, except for Greece, due to the promotion of short-selling behavior, the economies of other weaker euro zone countries have also appeared unstable. sign.
So even if a crisis breaks out in only a few countries, it will form a "butterfly effect", which will lead to major shocks in the global financial market and even the real economy.
But making this choice also faces difficulties.
Taking Greece as an example, no one, including the Greek government, can say exactly how big the real losses involved in this crisis are. EU countries have been afraid to really fully trust the data they have disclosed.
Moreover, this kind of assistance will also be opposed by the people of both the donor and recipient countries at the same time.
Yes, you read that right. It is normal for people in rescue countries to object. After all, no country is willing to use the wealth accumulated by its people to help those lazy and uncreative countries with extremely low returns.
But the Greek public was equally strongly opposed to the EU rescue operation.
On Monday, June 29, a large-scale strike movement took place across the country to protest against the bailout that the government is negotiating with the European Union for the country!
The reason is that as a condition of aid, Europe and the United States require the Greek government to make a commitment to effectively reduce the fiscal deficit, including spending cuts, lowering the salaries of civil servants, freezing measures including social security and other benefits, and requiring them to use most of their state-owned assets as collateral in exchange. aid funds until they are fully returned.
Uh, in fact, these contents have been reported on Friday night, but the "lovely" Greek people, even the strike, must wait until Monday to start the working day.
In the face of such popular opposition at home, Greece's finance minister immediately issued a strongly worded speech, claiming that Greece would never accept such "humiliating" aid from the European Union, which would be a loss of sovereignty.
The general meaning is that although our people are lazy, we have dignity. If you don't give me money for nothing, I will never want it!
Faced with such a rotten Greece, the EU is also helpless.
So is there any other option besides bailout for Greece? Of course there is.
The second option is to expel Greece from the euro zone or wait for Greece to withdraw from the euro zone on its own initiative.
After the outbreak of the Greek sovereign debt crisis, German Chancellor Angela Merkel immediately proposed the idea of expelling Greece from the euro zone, but this idea was opposed by the president of the German central bank and did not receive a response from other countries in the euro zone.
Because, in the design plan and institutional arrangement of the euro area, there are no regulations and mechanisms for expelling a sovereign country from the euro area!
As for Greece taking the initiative to withdraw from the euro zone? That is simply not possible.
The Greek government is not really stupid, or it is not stupid enough to say that it will face the punishment of high interest rates if it exits the euro zone, and will bear huge debts in euros, and the national currency will also face the risk of large-scale devaluation. Unemployment and recession will follow, and the economic outlook will face even more catastrophic consequences.
More importantly, according to the EU constitution, leaving the euro zone means leaving the EU at the same time, which will undoubtedly make countries that leave the euro zone face extinction. Therefore, although this option cannot be said to be impossible, it will be difficult to implement.
The third option is to implement a large-scale international rescue, or to increase the fund share of the IMF by major countries, and then expand the scale of the rescue by the IMF.
The biggest flaw of this approach is that there is no legal and effective security guarantee for the rescue funds, and it does not comply with the corresponding regulations of the IMF. Unless it is a last resort, the possibility of implementing a large-scale global rescue is not too high.
The fourth option is the collapse of the euro and the disintegration of the euro area.
There may be two ways for the disintegration of the euro area: one is that the crisis continues to break out on a large scale, and it has reached the point where it cannot be saved. Finally, the disintegration of the euro area and the disappearance of the euro have to be announced; It may reach a level of 1:1 or even lower. In this case, Germany, France and other countries will suffer huge economic losses, and Germany may be the first to announce its withdrawal from the euro zone.
Since Germany is the largest economy in Europe and the euro area, if Germany withdraws from the euro area, it will have a fatal blow to the euro, and the euro mechanism will be difficult to maintain, and finally it will have to announce its disintegration.
So among these four options, the best option is the first option, and the worst option is the fourth option. The EU has to hold its nose and continue to put pressure on the Greek government to bail out Greece.
And Greece itself is not easy, but because of the demonstrations of the people, the finance minister made a tough speech to the EU, and now they are on the top.
In this regard, William Chen is also happy to see this, because not only did he short the euro using his offshore account, but Tianshu Fund also shorted the European stock market with the remaining US$5 billion, together with the capital of Wall Street.
In particular, Greece, which is deeply engulfed in the sovereign debt crisis, along with other weaker euro zone members, are their main targets for shorting. It's just that for the sake of safety this time, he didn't use too high leverage, and he didn't have much profit expectations. Anyway, if he took a bite, these funds would be idle if they were idle.
After the outbreak of the economic crisis caused by the subprime mortgage crisis, Huaguo has taken the lead out of the trough through four trillion incentives, forming a V-shaped inversion. Under the stimulus of the Fed's quantitative easing policy, the US economy is slowly improving. Only the European Union has suffered another blow to its economy due to the sudden outbreak of the sovereign debt crisis in Greece.
However, for Wall Street capital, it was originally a blood-sucking Europe, and it was a good opportunity to return blood to itself. Naturally, it would not be missed.
At the same time, taking advantage of this opportunity, Caitlin Fund bought 3% of the shares of Hermès Group with a total investment of 350 million US dollars, which enabled William Chen to control the shares of Hermès Group to 51%. The luxury goods company is in its hands.
In the face of more and more short-selling funds, the EU knows that it cannot continue to hesitate, and Greece is even more unbearable. Because it has become the main target of capital short-selling, their economy has been hit even more severely. Therefore, the Greek government announced that the Minister of Finance resigned. , quickly took office as a new finance minister and reopened negotiations with the European Union on bailout Greece's economy.
This is also something that can't be helped. The tough statement of the previous minister has been released. If the government wants to turn around, it can only abandon it.
This time the Greek government is aware of the danger, and the EU has relaxed the bailout conditions. Now, Greece is not required to mortgage their state-owned assets to receive assistance, but only requires the right to sell state-owned assets to be mortgaged, which means that their State-owned assets are still in the hands of the state, but the right to sell is locked and cannot be sold.
The step that the EU gave Greece was eventually accepted by Greece.
On July 5 Chairman of the Eurogroup and Prime Minister of Luxembourg Juncker announced that the Eurozone member states agreed to provide Greece with a three-year rescue loan of 110 billion euros, of which 80 billion euros came from the euro area member countries, with the remaining 30 billion euros coming from the International Monetary Fund (IMF).
The bailout is the largest to date for a single country.
But first, in order to get this bailout from the EU, Greece must meet the preconditions that the EU and the IMF put forward to provide Greece with a bailout loan.
The Greek government also announced an unprecedentedly severe fiscal austerity plan to save 30 billion euros in three years, and promised to reduce the fiscal deficit from 13.6% of last year's GDP to EU regulations by 2014. within 3%.
To this end, the Greek government will take a variety of specific measures to increase income and reduce expenditure, including freezing public sector spending for three years, further reducing civil servant benefits, increasing value-added tax from 21% to 23%, raising fuel taxes, raising the actual retirement age, and reducing retirement Kim et al.
These measures will inevitably make the current Greek government attacked by the people, but at this time, they can't care about it, because even if they don't do it, I am afraid that Greece will not have so much money to provide welfare that can satisfy the people.
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