Mediterranean hegemon

Francisco shook his head: "It is difficult for him to stop him now, otherwise he would not have telegraphed me and asked me to tell you. He believes that only you can persuade the leader, and this news is very important to us, so it is not done well." It will hit the group itself.”

He then explained to Contini the economic reasons why this cannot be done: United Group's current external liabilities are nearly 1.1 billion US dollars. If the local currency appreciates forcibly, it seems that United Group's liabilities can be reduced by 10% in lira, but there is a problem. The lira is not an international currency. Two-thirds of the debt owed by the United Group is in U.S. dollars, more than a quarter is in lira, and the remaining part is in pounds. In other words, about 75% is foreign debt, which must be paid in dollars and pounds. Or the debt cannot be repaid with real money and lira, so the overvaluation of the local currency will affect the other quarter. What's worse is that once the lira is overvalued, a large amount of arbitrage funds will inevitably flow into Italy to borrow lira in exchange for foreign exchange. This will cause the Italian currency to tighten and interest rates to rise, which is not conducive to the current rapid development.

And Francisco made it very clear that most of the US$800 million in foreign debt of the United Group has been turned into machinery, equipment, technology or raw materials. If arbitrage funds are allowed to evacuate domestic foreign exchange, there will not be enough foreign exchange to repay it in the future. At that time, it will cause a credit collapse. If the credit of a giant like United Group collapses, it will be no less than an earthquake in Italy. So Volpi sent a telegram to ask Francisco to persuade Contini to dissuade Mussolini no matter what.

"On the one hand, the appreciation of the lira will stifle the international competitiveness of Italian goods. On the other hand, it will stifle the domestic loose environment. It will also worsen the domestic foreign exchange environment. It is only for the sake of a nominally good-looking increase in workers' income calculated in local currency." It is completely undesirable to increase the value,” Francisco said, “You must tell the leaders about this danger.”

Contini suddenly laughed: "I find that you and Count Volpi are the same kind of people. Your professional knowledge is impeccable, but politically...how should I say, a bit naive."

Francisco had a big question mark in his mind: Naive? This word is almost enough to describe little Betty, she is already in her 50s!

"If you are trying to persuade a leader like this, he will definitely not listen. Leaders often focus on politics and the country's image more than anything else. To use a Chinese saying I recently learned, they like to make a fool of themselves and look fat. You should persuade them like this." Contini thought for 2 minutes and dictated the message:

…Dear leader, I heard that you are considering promoting the appreciation of the lira currency to increase the purchasing power of the working class and all sectors of society, and further consolidate and enhance Italy’s international image and status. I personally agree and support this, and I also understand your support for the working class. With a caring heart, more than 7 million working class people and more than 30 million middle class people in Italy will sincerely support your wise decision, further heartily identify with the great idea of ​​"three flags", and further sincerely recognize the "four greats", It is the only way for the party to move from victory to victory and not only lead the entire Italian people to common prosperity.

However, now we have a small problem. Italy's second largest bank, Unibanco, has just been listed in the United States, with a market value of nearly US$900 million. It will soon become the largest bank. 54% of the shares will be owned by foreign investors. They bought the stocks out of admiration for the leader's ability to govern and recognition of the new Italy's national image. Union Bank's main business all occurs in Italy. If the currency appreciation method is adopted, these stocks will be

Of course, there is an even more exaggerated side. The cost of oil guards, laying mines, and using tanks are all charged to the Algerian Petroleum Company. Although it is understandable, this price is a bit high.

In the final analysis, it can be summed up in two sentences: the United Group used the method of "low in, high" to withdraw funds from Algerian Petroleum and into other subsidiaries; it adopted the method of sharing the whole with parts to quickly squeeze out the liquidity of Algerian Petroleum Company. Dry.

Finally, there is the hidden erosion: the crude oil production reported by Contini to France and registered in the company's accounts is only 86-88% of the actual production, and the extra one-eighth is directly the net profit of the United Group. So the British felt uncomfortable with this, and the French also felt uncomfortable, and tried every means to get it over.

Of course, these did not create any sense of moral guilt in Contini's mind: I was the one who took you to play. If it weren't for me, who would have known there was a big oil field here? I haven’t released the reserves yet! Furthermore, in order to resist the French pressure on the oil fields, I have paid a huge political and military price at home. Shouldn't more of this invisible guarantee and competition be allocated to me?

The United States also has such considerations, but they have more ideas: they do not want to control the oil field like the United Kingdom or France. Wall Street is not interested in the oil field itself. What they are interested in is the capitalization operation behind the oil field. In other words, as long as the oilfield shares can maintain independence and conduct an IPO under the strong promotion of the president, and then achieve a strong rise, they do not mind the Italians sneaking away some through small actions.

Are all Americans fools?

Of course not. They see it clearly. Whoever controls the oil fields may get a little more benefits like Italy. This is the natural impulse of the major shareholders who control the company. The British and French may not be better than Contini. But then again, if Britain and France are in power, then American capital will have no say at all. The Italians control the oil fields. In order to compete with Britain and France, they may have to rely on the power of Wall Street. What's more, the president himself has a lot of loans on Wall Street!

I discussed this news with Francisco, who nodded first and then shook his head: "President, what you see may not be all, we have other hidden dangers."

"What do you mean?"

"I just received a telegram from the country. The leader is dissatisfied with the current exchange rate of about 100 lira to 1 pound. He hopes to promote the realization of 90 lira to 1 pound and increase the exchange rate with the United States."

"He wants to promote the appreciation of the local currency?"

"Yes, this is a very troublesome thing."

The current exchange rate between the US dollar and the pound is about 5:1, so the lira roughly maintains the pattern of 20 lira to 1 US dollar and 100 lira to 1 pound, but if we extrapolate from this idea, in the future it will be 18 lira to 1 US dollar and 90 lira to 1 pound, and the local currency will directly appreciate by 10%.

"Who gave this advice?" Contini's face immediately darkened. "Doesn't the finance minister, Count Volpi, understand? Such an appreciation will seriously undermine the export competitiveness of Italian goods."

Volpi was the second finance minister appointed by the Fascists after they came to power. He successfully resolved the British and American demands for war reparations from Italy. The price he paid was to try to keep tariffs and currency stable and import as much as possible from Britain and the United States. He has performed well since taking office. In addition, Contini has continuously introduced complete sets of equipment from the United States, and the import volume from the United States has continued to rise, so all parties are satisfied. It is a bit incredible to suddenly promote the appreciation of the local currency.

Francesco smiled bitterly and said, "The telegram was sent by the Count. He said that the idea was completely decided by the leader himself, and no one could stop him."

"Did he say why the leader did this?"

"Yes, the leader gave two reasons. First, the trade deficit has continued to rise in recent years, and the appreciation of the local currency is conducive to reducing trade losses; second, the fascists have been in power for 5 years, and the lira has remained at its previous level. The average salary of Italian workers has not increased much. In horizontal comparison, it is at a medium-to-low level in Europe, which does not match Italy's image as a great power."

Even Contini could only laugh and cry. He knew that the first reason was not Mussolini's true idea. His understanding of economics might not be able to explain the triangular relationship between cash flow, capital operation and foreign trade balance. What he really cared about was the second question of how to maintain the face of a great power.

"This is not an economic or financial issue, it is a political issue." Contini thought for a while, "You call the Count back and ask him to find a way to stop the leader's impulse."