The Red Era: Living in Seclusion in a Siheyuan as a Boss

Chapter 793 The Rothschild Family of Asia!!!
Soros decided to have a showdown of the century with Liu Shudong in Hong Kong.

He secretly joined forces with several hedge funds on Wall Street, raising tens of billions of dollars in preparation for a full-scale attack on the Hong Kong dollar.

If Hong Kong really does become the next Thailand, we can imagine the following scenario:
The assets of the wealthy have shrunk dramatically, their stocks have become ticking time bombs, and they have been forced to close some companies and factories, or even transfer large amounts of assets, further exacerbating the financial turmoil.

The middle class is filled with anxiety, and all their efforts have come to naught.

Some people are trying to sell their houses, but they can't sell them even after lowering the price repeatedly; some people are canceling their enjoyment of life, such as travel; some people are transferring their children from private schools to public schools.

As for those at the very bottom, they were already struggling to survive, and now they have lost all hope.

For them, life might mean going from having three meals a day to going hungry, from working for minimum wage to being unemployed and having no income, from being able to survive to seemingly having no way out...

In mid-July, a small amount of international capital began to test the waters with the Hong Kong dollar.

In this test, the Hong Kong Monetary Authority only used US$10 billion in foreign exchange reserves, along with some routine policies, to stabilize the situation.

Ordinary Hong Kong residents barely had time to react before the incident was over, and it did nothing to prevent them from continuing to immerse themselves in the city's prosperity.

At that time, Hong Kong was the world's fourth largest financial center, the sixth largest foreign exchange trading market, and the second largest stock trading market in Asia.

Hong Kong's major banks and other deposit-taking institutions hold nearly one trillion US dollars in overseas assets, accounting for 8% of the global total.

In the first half of the year, Hong Kong's economy maintained rapid growth, with the property and stock markets continuously reaching new highs.

Whenever a new property goes on sale, long queues form the night before.

The Hang Seng Index, a "barometer" of Hong Kong's economy, has been soaring and broke through 16000 points for the first time on the last day of July.

All indications suggest that the financial crisis seems to have been kept out of Hong Kong.

But is that really the case?

Compared to other Asian markets, Hong Kong certainly has a rich history, but its shortcomings are also obvious: a huge property bubble, high household debt, excessive corporate reliance on borrowing, and a serious trade deficit, among others.

These issues are also clearly understood by international speculators.

Therefore, although they did not make any major moves, they had already begun to secretly hoard Hong Kong dollars and futures contracts, waiting for the right opportunity to act.

Sure enough, in mid-August, they launched their first attack on the Hong Kong dollar.

On August 15th and 16th, speculators dumped HK$4 billion worth of shares.

The Hong Kong dollar is linked to the US dollar through a pegged exchange rate system (a type of fixed exchange rate system), which ensures the stability of the Hong Kong dollar.

Since 1983, the exchange rate of the US dollar to the Hong Kong dollar has remained fixed between 7.75 and 7.85.

As a result of this shock, the exchange rate of the US dollar against the Hong Kong dollar reached the warning line on the 15th, and the Hang Seng Index fell by 2.43%.

On the next trading day, the Hang Seng Index fell below 16000 points and then dropped to just over 13000 points in early September.

But Hong Kong and Taiwan are not the same.

It's important to know that Hong Kong's foreign exchange reserves at the time amounted to over 1000 billion US dollars.

Therefore, just like last time, the Hong Kong Monetary Authority used US dollars to absorb excess Hong Kong dollars in the market and raised interest rates, thus resolving the crisis once again.

Over the next month or so, Southeast Asian financial markets began to recover, with exchange rates and stock markets rebounding. The annual meetings of the World Bank and the International Monetary Fund were also successfully held in Hong Kong.

Some international investors have also publicly declared that Hong Kong's economy is very stable.

However, the good times didn't last long. On October 17, news broke the calm again: the T Province Special Zone abandoned the T-currency to US dollar exchange rate, and within a few days, it fell to a new low in 10 years.

This time, Soros, along with other international speculators, seized the opportunity and prepared to launch a powerful attack on Hong Kong.

Because they knew that the Hong Kong dollar would not be so easily defeated.

Therefore, they prepared another trap specifically for the Hong Kong dollar.

In mid-October, Soros began a massive sell-off of Hong Kong dollars, while simultaneously spreading rumors in international media that the Hong Kong dollar was about to abandon its linked exchange rate system, triggering market panic.

International capital sold off a total of HK$1000 billion over three consecutive days, an unprecedented scale.

Soon, the exchange rate of the US dollar to the Hong Kong dollar approached the warning line again.

Some citizens were gripped by panic.

They have witnessed firsthand the plight of the people of Thailand, and if the Hong Kong dollar were to fall to the level of the Thai baht, their lives would be destroyed.

Suddenly, crowds of citizens gathered in front of major banks, rushing to exchange their Hong Kong dollars for US dollars.

For them, the most direct consequence of the economic crisis is that their money is no longer worth anything.

Unable to consider anything else, converting their assets into foreign currency was their last straw for self-preservation during the financial crisis.

In order to stabilize the market and public sentiment, Hong Kong responded swiftly.

However, he underestimated the determination of the people of Hong Kong.

With the support of the motherland, then Financial Secretary Mr. Ren decisively used foreign exchange reserves to intervene in the market.

In order to prevent the Hong Kong dollar from being shorted, the interbank lending rate for the Hong Kong dollar was urgently raised while buying up the Hong Kong dollars sold by speculators.

The Hong Kong Monetary Authority has used this method to combat speculative capital on numerous occasions, earning it the nickname "Any Move".

The interbank lending rate refers to the interest rate for short-term lending between banks.

Raising interbank lending rates can increase the cost of borrowing Hong Kong dollars for international capital, thereby curbing the risk of the Hong Kong dollar being shorted, but it will also harm the real economy and the financial system.

Normally, this interest rate is less than 5%.

But on that day, the figure reached a staggering 300%!

A few days later, the one-month Hong Kong dollar interbank lending rate fell back to over 10%, but it was still much higher than normal.

Thanks to the Hong Kong Monetary Authority's actions, the Hong Kong dollar's exchange rate was preserved.

On October 23, the Hang Seng Index plummeted by more than 1200 points; on the 28th, it fell by another 1400 points. The Hang Seng Index thus fell to the 9000-point mark.

The Hong Kong Monetary Authority (HKMA) is buying Hong Kong dollars around the clock and has also significantly increased interbank lending rates, causing the cost of short selling to soar.

This thrilling financial defense battle lasted for a full month, with the Hang Seng Index fluctuating wildly and the market filled with the smoke of battle.

At the critical moment, "Liu's Overseas Capital," which was originally on the short side, unexpectedly turned its guns on them.

Instead of continuing to short-sell Southeast Asian stock markets, Liu Shudong turned his massive funds around to cooperate with the Hong Kong government in supporting the market.

It turns out that "Liu's overseas capital" had long been preparing to confront Western capital led by Soros in Hong Kong.

When Soros's funding chain was on the verge of collapse, Liu suddenly launched a counterattack in both the London and New York markets, putting Soros's side in a difficult position.

The battle ultimately ended in a victory for Hong Kong.

Soros's side suffered heavy losses, with the Quantum Fund alone losing US$63 billion in Hong Kong.

Liu Shudong, through precise operations, earned nearly 10 billion US dollars in the defense battle.

More profoundly, this battle further enhanced the reputation of "Liu's overseas capital," which rose to prominence on the international stage as a "stabilizer of Asia-Pacific finance."

Soros had to admit that in this financial battle, he ultimately lost to this emerging financial behemoth. Although international capital suffered heavy losses in Hong Kong, it frequently made huge profits elsewhere.

Apart from Hong Kong, other regions in the Asia-Pacific region were not so lucky.

Under this round of attacks by financial giants like Soros, many countries in the Asia-Pacific region can be described as "scorched earth".

The Thai baht depreciated by 56%, the Borneo rupee by 85%, the South Korean won hit a record low against the US dollar, Malaysia implemented foreign exchange controls, and the Japanese won faced increasing pressure. Thailand, Borneo, and South Korea had to seek help from the International Monetary Fund.

In particular, South Korea used almost all of its foreign exchange reserves, but to no avail, and the entire government was on the verge of bankruptcy.

In early 1998, a nationwide gold donation campaign was launched in South Korea.

In the past year, affected by the financial crisis, major companies in South Korea such as Hanbo, Sammi, and Jinro went bankrupt one after another.

On July 2, the Thai baht collapsed; two weeks later, the peso and rupee depreciated sharply.
The financial crisis spread rapidly internationally.

On July 15, Kia Motors, the 8th largest company in South Korea, went bankrupt and was later acquired by Liu's Overseas Capital.

Meanwhile, South Korea's delay in making a decision regarding Kia has increased the concerns and panic among foreign investors.

Subsequently, South Korea fell into its most severe economic crisis: businesses went bankrupt one after another, financial institutions ran out of cash, loans and funds were restricted, the money market was not smooth, and a vicious cycle of business failures ensued.

Foreign investors began to withdraw loans from South Korean financial institutions, leading to a sharp depletion of South Korea's foreign exchange reserves, a dramatic drop in the Korean won, and the withdrawal of nearly $180 billion in foreign capital from South Korea.

In less than a year, South Korea's annual unemployment rate rose to nearly 7%, its economic growth rate fell to -6.7%, the number of unemployed approached 200 million, more than 6000 homeless people took to the streets, and businesses almost stopped hiring.

The economy of "Korea" can be said to have been both made and destroyed by chaebols.

Behind the seemingly thriving "Kimchi Prosperity Model" lies a "iron triangle" relationship forged between the government, banks, and conglomerates.

With its conglomerates having high debt ratios and being heavily reliant on foreign investment, South Korea's booming economy is actually quite fragile.

During this financial crisis, foreign institutions in South Korea withdrew one after another, foreign exchange reserves were depleted, many large companies went bankrupt, and the entire country was on the verge of collapse.

By November 11, South Korea's foreign exchange reserves had dwindled to less than $4 billion, while two weeks later, its foreign debt, which urgently needed to be repaid, had reached $10 billion.

Furthermore, the $120 billion budget for South Korea to import food and daily necessities from abroad for the following year is simply out of the question.

At this point, "Kimchi" tried to ask its allies "Japanese Pirates" and "Big Brother Sam" for help, but was refused.

Other foreign banks not only refused overnight loans from South Korean banks, but later they even stopped answering phone calls from South Korea.

With no one to turn to for help, South Korea is on the verge of despair.

Therefore, South Korea launched a "voluntary donation campaign to save the country" to help its government overcome its difficulties.

Under the call of the "Kimchi Nation," they launched a deeply moving "donation to save the country" movement from the bottom up.

Later, it became a perfect example of how, in times of crisis, the people actively chose to stand with the country through thick and thin, and how the government and the people trusted each other.

In fact, the gold that came from the people was not given to the "Korean government" in the form of a "donation" as the media claimed.

Instead, they provide aid to "Kimchi Country" through individuals actively "selling" their goods.

Of course, the settlement currency is the South Korean won, whose exchange rate has been steadily declining.

Therefore, although it was called a sale, the people received Korean won that had been severely devalued.

They voluntarily lined up to do this "loss-making business" for the country, exchanging valuable metals that held their value for Korean won, which risked devaluing to the point of being worthless like toilet paper.

This spirit and cohesion are truly admirable.

According to South Korean media reports, 300 million people contributed a total of 227 tons of gold, which was worth approximately US$22 billion at the time.

This seems like a very large sum of money.

However, this is only a drop in the ocean for a country.

It's worth noting that back then, South Korea had a massive amount of foreign debt of over 580 billion US dollars that it urgently needed to repay in the short term.

A distant source of water cannot quench an immediate thirst!
Ultimately, South Korea had no choice but to accept the $580 billion "unconditional" bailout package from the International Monetary Fund.

Obviously, things that are "unconditional" usually happen when people are forced into a corner, such as when a defeated country accepts "unconditional surrender".

South Korea is no exception this time, with the core of its policy being the full opening of its financial sector to foreign investment, with no upper limit on foreign ownership, which can even exceed 51%.

In this way, large enterprises and important industry institutions related to the national economy and people's livelihood in South Korea may be controlled by foreign capital. In the short term, this is indeed a very passive and even shameful thing.

However, the old has been broken down, and the new has been established.

Looking back now, the era when South Korea paid for everything for conglomerates under the intervention of the International Monetary Fund is gone forever.

Although South Korea is still known as a "country hijacked by chaebols," it has improved considerably compared to the last century, and the market is much fairer.

The "Kimchi Country" has now opened its domestic financial market, and the long-awaited opportunity for "Liu's Overseas Capital" has finally arrived.

They followed international capital into South Korea and made huge profits, taking advantage of the situation to invest in groups such as Samheung Group, Hyundai Group, and LG Electronics, and acquiring well-known South Korean companies such as Kia, Hanbo, and Jinro.

From then on, the people of "Kimchi Country" continued to live under the control of conglomerates.

However, some conglomerates in South Korea are under the control of the Liu family.

Later, some people jokingly referred to the Liu family as the "retired emperor" of the "Kimchi Country".

This head-on confrontation made Soros and Wall Street capital realize just how powerful their opponent truly was.

What they couldn't understand was how such a powerful conglomerate family could have emerged from the University of Tokyo, which had only been rising for a few years.

The victory in this financial defense battle not only consolidated Hong Kong's status as an international financial center, but also brought unprecedented development opportunities to the "financial empire" of the Liu family in Yanjing.

In the following years, "Liu's Overseas Capital" expanded its territory at an astonishing speed, acquiring several banks, financial institutions and companies in Southeast Asia that were on the verge of bankruptcy.

It successfully entered the Western capital market and acquired stakes in several established investment banks in London and New York.

In the following years, the Liu family's strategic plan became increasingly clear.

They not only consolidated their financial market presence in China and Southeast Asia, but also set their sights on the global market.

Through a series of sophisticated capital operations, "Liu's Overseas Capital" quickly became an important player on the international financial stage.

In London, Liu's Overseas Capital swiftly acquired the century-old investment bank Lane Brothers, shocking the entire European financial community.

In New York, they quietly but aggressively acquired stakes in several hedge funds, subtly penetrating the core circles of Wall Street.

Wall Street is screaming, "The wolf is here! The wolf is here!"

Despite the Wall Street financial giants' high level of vigilance towards "Liu's overseas capital," no one dared to make any rash moves.

After all, this financial behemoth, known as the "Asian Rothschild family," is no ordinary force; ordinary large capital groups are simply no match for them.

As a family comparable to legendary families like the American Rockefellers and Morgans, the Liu family of Xia Kingdom began to build an impregnable fortress in the global capital market.

Its deep capital base, sophisticated investment strategy, and chilling market manipulation capabilities make all potential investors think twice before acting.

(End of this chapter)