The next day, Li Weidong arrived at the meeting place and saw that Situ Jian had already arrived in the conference room.

Li Weidong hurried forward to say hello. After exchanging pleasantries, he asked, "Teacher Situ, you said on the phone that international financial speculators have arrived. What's going on?"

Situ Jian immediately explained: "Didn't you say before that once Thailand abandons its fixed exchange rate, the Thai baht will be attacked by international financial speculators?

Although Thailand has not given up its fixed exchange rate, you predicted that international financial speculators would attack the Thai baht. Just in mid-May this year, the Thai baht suffered another large-scale attack.

International financial speculators obtain funds by borrowing Japanese yen and then depositing them in Thai baht to conduct arbitrage foreign exchange transactions. The exchange rate for borrowing Japanese yen is only 3%, while the overnight interest rate for depositing Thai baht is as high as 17%. The interest rate is 14% every time.

Difference.

The Bank of Thailand directly invested tens of billions of dollars and sought assistance from the Monetary Authority of Singapore and the Hong Kong Island Monetary Authority, ultimately repelling international financial speculators and stabilizing the exchange rate of the Thai baht.

However, after calculation at that time, international financial speculators only used about 300 million US dollars to leverage Thailand's tens of billions of US dollars in foreign exchange reserves. If the other party had used more funds, Thailand would have lost this battle.

The details of this incident were only announced at a summit of Asian central banks in late May. At that summit, the Bank of Thailand hoped that other countries could help Thailand and fight against international financial speculators.

To put it bluntly, they want to borrow money from various countries and borrow U.S. dollars to maintain the exchange rate of the Thai baht. However, central banks of various countries are not fools. Who is willing to use their own money to fill Thailand's holes! In the end, the summit ended without any resolution.

According to information released by Thailand, the international financial speculators attacking the Thai baht this time mainly come from Wall Street, including investment banks such as ****, Citigroup, and Goldman Sachs, as well as hedge funds such as Quantum Fund and Tiger Fund.

You should be familiar with investment banks such as Citi and Goldman Sachs. You may not be familiar with Quantum Fund and Tiger Fund. They are all internationally famous hedge funds. They are like vultures on Wall Street, treating the world's financial markets as

It’s my own prey!”

"I have also heard about these two hedge funds. The Quantum Fund was founded by George Soros. This guy became famous by shorting the British pound when Germany was reunified and made a billion dollars."

Li Weidong paused and then said: "Tiger Fund was established by Julian Robertson, who is like a godfather in the hedge fund industry. Tiger Fund has always focused on investing in 'value investment', investing in the stocks of listed companies.

.

But this time, the profits from attacking the Thai baht were obviously large enough that even the godfather of hedge funds could not resist the temptation and started arbitrage foreign exchange transactions."

"I didn't expect that you also researched foreign hedge funds!" Situ Jian lowered his voice and asked with a serious face: "Tell me honestly, have you also participated in the investment of foreign hedge funds?"

Li Weidong shook his head quickly: "I am in the industry and I don't touch finance."

"That's good. If you are really involved with foreign hedge funds, I really don't dare to let you attend today's meeting." Situ Jian said.

Li Weidong continued to ask: "Teacher Situ, you were attacked again just now. Does that mean the Thai baht has been attacked before?"

Situ Jian nodded: "This time in mid-May was the second attack on the Thai baht this year. The first was in February, and the earlier one was in July last year. The attack methods were the same.

Borrow funds in Japanese yen and deposit in Thai baht to earn overnight interest.”

"Who made the Thai baht's interest rate so high! Moreover, Japan is Thailand's largest creditor. I remember that more than half of Thailand's foreign debt is in Japanese yen. It is easier to attack the Thai baht with Japanese yen than to attack the Thai baht with US dollars." Li Weidong said.

Situ Jian sighed lightly: "Yes, if Thailand wants to stabilize the exchange rate of the Thai baht, it can only keep using US dollars to fill the hole. But now Thailand's foreign exchange reserves are almost unsustainable. At the end of last year

, Thailand still has more than 37 billion U.S. dollars in foreign exchange reserves. After the recent two attacks, their current foreign exchange reserves may be less than 7 billion U.S. dollars.

Therefore, they have only two ways to go. One is to restrict the free flow of capital and control foreign exchange. As long as the exchange of foreign exchange is restricted, it will be impossible for international financial speculators to use the means of lending Japanese yen and depositing Thai baht to carry out arbitrage.

Forex trading.

The second is what you said before, abandoning the fixed exchange rate and switching to a floating exchange rate. Once the Thai baht depreciates, the 14% interest difference will not be eliminated, and arbitrage foreign exchange transactions will naturally be unprofitable.

Our symposium this time is also to discuss these two possibilities, and also discuss the negative impacts these two possibilities will have on our financial system."

"No matter what kind of response Thailand adopts, the negative impact on our national financial system should not be big, right?" Li Weidong frowned slightly and continued;

"Our country's finance is not in line with the world. The country has controls on foreign exchange, and the exchange rate can also be intervened through regulatory measures. To put it simply, people eat steak, and we eat cabbage. Whether the steak is delicious or not depends on the cabbage.

What does it matter!”

"Xiao Li, when I say 'we', I don't mean what you understand. Don't forget, it will be July 1st soon. By July 1st, we will take back Hong Kong Island.

Finance is also related to us!"

Situ Jian smiled slightly and continued, "Hong Kong Island's financial system is completely open, and Hong Kong Island is also the financial center of Asia. If the Thai baht is attacked, it will inevitably affect Asia's finance, and it will naturally affect Hong Kong Island.

"

Li Weidong thought about it carefully and said: "Hong Kong Island also has a fixed exchange rate. The Hong Kong dollar is always stable at around 8.3 to 1 against the US dollar. Are the leaders above worried that things in Thailand will also fall on Hong Kong Island?"

"You guessed it right, the leaders are worried about this. Hong Kong Island has just returned and stability is most needed." Situ Jian nodded.

"The leader is indeed far-sighted!" Li Weidong said.

Situ Jian said: "Okay, now that you know the content of this meeting, get ready. When everyone is here, we will have a meeting!"

…

After a while, almost all the participants arrived. Most of them were experts in the domestic economic field. Professor Huang Liwei from the Central University of Finance and Economics, whom Li Weidong knew before, also came.

Some of these economic experts were known to Li Weidong, while others were not. Situ Jian introduced them one by one.

In addition, there were some observers sitting around. These people were probably of no importance, so no introduction was made.

At the beginning of the meeting, the first thing everyone discussed was whether Thailand would adopt foreign exchange controls or floating interest rates in order to respond to attacks from international financial speculators.

Many economists believe that Thailand will resort to foreign exchange controls. This method is simple and effective, and will not cause much harm to the country's economy.

After all, the country adopts a strategy of foreign exchange control. People judge others by themselves, and instinctively think that foreign exchange control is a normal thing.

Moreover, at that time, China's economy had not yet integrated with the international economy. Domestic economists had limited information, and few could go abroad to understand foreign economic conditions in depth. Most of them were based on paper talk.

After discussing for a long time, Situ Jian finally asked Li Weidong: "Chairman Li, you predicted a few years ago that international financial speculators would attack the Thai baht and believed that Thailand would abandon the fixed exchange rate system. Now your prediction is correct.

Half of it has come true, so you have to explain the basis for the other half, right?"

Li Weidong stood up and said, "All the teachers are experts in the field of economics. My level in this area is limited. Among you, I am even more skillful. If I say something wrong, I should be ashamed of myself!"

After being modest, Li Weidong continued: "I think Thailand will give up its fixed exchange rate. The main reason is that Thailand believes in Western economic liberalism."

"Chairman Li, this is not an economic judgment!" someone next to him said.

"Teacher Liu, I know that you are saying that the basis of my judgment is not scientific, but only a subjective judgment." Li Weidong smiled slightly and continued;

"For so many years, the West has been advocating their economic liberalism, and capital controls are not in line with the values ​​of the Western world. If you talk to a Western economist about capital controls, he will definitely laugh at you!

Thailand has always implemented economic liberalization policies, and its financial openness is not inferior to that of Singapore. If currency controls were to be implemented in Thailand, it would be unthinkable to the Thai people.

I also admit that the statement that Thailand believes in economic liberalism has no economic basis. This is not a scientific judgment.

But the reality is that the economies of Western countries are more developed, and they have the right to speak in finance. The economic form they promote is also easier to gain the trust of countries around the world."

Liberal economics is an economic theory and policy system that opposes the country's economic dare and advocates free competition.

In the eyes of liberal economists, the best economic policy for a country is to refrain from any interference in the economy and implement free economy, free competition and free trade. The role of the country is limited to maintaining national security.

In the 19th century, this theory was very popular.

Western countries used free trade to dump goods all over the world. After all, the productivity of Western countries was in a dominant position at that time. Under the system of free competition and free trade, they had an absolute advantage.

During the two world wars, Keynes's state interventionism emerged.

During the Great Depression of the 1920s and 1930s, Roosevelt used state intervention to rapidly recover the U.S. economy. This successful case allowed Keynesianism to replace liberal economics and become the mainstream at the time.

After the end of World War II, the world economy began to recover, and liberal economicism came back again.

At this time, the productivity of the West is still in a dominant position. They need to sell products to the world, and naturally they will start to sell liberal economics around the world.

After the 1980s, the political situation throughout Southeast Asia has been relatively stable, the economy has developed significantly, and the savings rate of Southeast Asian people is relatively high.

Since the people in Southeast Asia have money, it is of course a good place to dump goods, so Western countries began to crazily promote liberal economics in Southeast Asia.

The first country to be deceived was Thailand. Thailand first opened up its economic sector and then its financial sector. By the 1990s, there were almost no restrictions on foreign capital in Thailand's financial sector.

In the 1990s, Thailand opened up foreign banks to directly absorb deposits and borrowings from abroad, and allowed the free use of foreign exchange in Thailand.

Also in the 1990s, Thailand allowed foreigners to freely borrow money, loans and exchange currencies within Thailand.

In addition, Thailand has also opened its domestic stock market and bond market to the outside world, without imposing any restrictions on foreign direct investment.

It’s no big deal that there are no restrictions, but Thailand has also taken the initiative to give the green light. They require financial institutions not to implement controls on the scale of foreign debt, relax supervision, and allow companies to freely borrow foreign debt.

Thailand's foreign exchange market has also opened up forward trading, which is the favorite game of financial speculators.

Looking at this series of financial opening-up policies with the benefit of hindsight, every one of them is a suicide attempt. It is clear that they invite you to do arbitrage foreign exchange transactions.

In the eyes of international financial speculators, this is a dream come true. Thailand has stripped its financial industry naked and sent it to the hands of financial speculators.

In the future, a country's financial sector will not be open as long as it is open. If foreign capital wants to enter these areas of a country, it must exchange things. Such as trade, tariffs, investment, technology, etc., all It is a bargaining chip.

For example, if you want to get free loans in my country, then you should import more of my goods, reduce some of my tariffs, invest in my country, and give me some technology.

To be open, you have to be open to each other. Without mutual benefit, who would talk to you about openness?

How can anyone be as stupid as Thailand, who was deceived into opening up completely just by saying a free economy?

After being brainwashed by Western countries for so many years, the concept of free economy has penetrated deeply into the bone marrow of Thailand. For Thais, such things as foreign exchange controls are completely unconsidered.

Excessive belief in liberal economics also made Thailand the trigger of the Asian financial crisis.

As the saying goes, flies won't bite a seamless egg. Thailand's egg is cracked, and attracting flies is inevitable. Whenever there is a slight disturbance in the world economy, Thailand will definitely suffer.

In addition to the Asian financial crisis in 1997, the Thai economy suffered from the subprime mortgage crisis in 2008; the oil price fluctuations in 2014 caused the Thai economy to suffer; and the global epidemic in 2020 caused the Thai economy to suffer again.

In the future, the Thai economy will definitely suffer from the energy transformation brought about by global carbon neutrality.

…

After listening to Li Weidong's remarks, several economists in the conference room suddenly frowned. They seemed to not agree with Li Weidong's views, but they could not refute it.
To be continued...