Rebirth of the Financial Overlord

The Man Who Broke the Bank of England - The Untold Story Behind It

On September 19, Anatoly Kellys, a well-known economic editor and contributor to the "Taiwan Shibao", published an exclusive interview article. Because Kellys enjoys a high reputation in the media industry and the shocking title makes this article The first newspaper was sold out not long after it was published, and the "Taiwan Shibao" had to add millions of copies to ensure the supply of the market.

"This month, the Bank of England failed to intervene in the foreign exchange market, and the value of the British pound fell by more than 30%. With the depreciation of the British pound, Shen Jiannan, an international investor, earned 4.7 billion US dollars on the British pound."

"I am very honored to be qualified to interview Shen Jiannan by chance."

"He is very young, young makes me feel unbelievable. When I saw him for the first time, I still couldn't believe it. It was this young man who defeated the most powerful central bank in the world - the Bank of England."

"In the interview, I asked him why he chose the pound as an attack target. He told me that it was not an attack, he just wanted some big names to hear his voice and use the results to tell them that the value of the pound was too high. , is a very serious mistake."

"As a traditional Englishman, I was outraged to hear him say that."

"A foreigner, he was blaming our government, but after I heard all Shen Jiannan said, I fell into deep thought."

"Flies don't bite seamless eggs. The total circulation of British pounds is as many as trillions, while Shen Jiannan's company only has a position of selling British pounds of 40 billion pounds."

"But as a result, the Bank of England failed, and the value of the British pound fell by 30%, which cost every taxpayer at least 50 pounds of wealth."

"Obviously, this is an unequal contest. But why, the pound, which has always been strong, has been hit hard?"

"I asked Shen Jiannan this question. He told me that, in fact, the Bank of England does not need to bear this loss. If the UK had not joined the European Community, it would not have to be kidnapped by Germany's high interest rates and could easily cope with this crisis. Take a step back , even a week ago, the Bank of England had more options, they could leave the ERM at any time, and that would save a lot of money."

"But it's clear that the Bank of England didn't do that, and they chose to die stupidly to the end."

"I can't understand why the government would do this, but there is no doubt that this is a very stupid act. In the end, we have not stayed in the European Community, but we have to suffer huge losses."

"Shen Jiannan told me that he had already closed his position on the British pound."

"I am deeply surprised by this answer. The Bank of England has lost its foreign exchange and can no longer support the price of the pound. Knowing the selling position of the pound at this time is tantamount to giving up the wealth it has acquired."

"He told me he didn't want to see more of that happen, he was a foreign exchange trader, he was a speculator, he was shorting the pound, it was his job, it was like a butcher in a slaughterhouse, from work There's nothing wrong with that, in a sense. But that doesn't mean he likes the job."

"The devaluation of the UK also means that the Bank of England has also realized its mistake, so there is no need to continue to short for the sake of short."

"."

After writing hundreds of words eloquently, Anatoly Keris wrote the article at the end.

"Shen Jiannan is a very knowledgeable person and a philanthropist. If I hadn't seen it with my own eyes, it would be unimaginable. He spent a lot of time in Eastern Europe engaged in political and educational philanthropy. Jiuding Bank, a subsidiary of Capital One, The amount of aid to Ukraine even exceeded 30 million U.S. dollars."

"It's just unbelievable."

"But he is also the world's largest currency dealer. In the week that eventually led to Black Wednesday, Shen Jiannan dealt the most brutal blow to the cabinet government in history."

Kerris wrote.

"Shen Jiannan knew that he had profited as much as $4.7 billion from the slump in the pound. When describing his actions before Black Wednesday, he told me: "We did a lot of short selling of the pound, so we made a lot of money. Before the exchange rate mechanism collapsed, we became the most important dealers in the market. Before Black Wednesday, we were doing £40 billion in the market. We plan to sell most of them. In fact, we were delighted when Lemon said before the currency devaluation that he would borrow $15 billion to defend the pound, because that's what we planned to sell.

And the amount he said was not even a third of the size of our position. "

"But the development of things exceeded our expectations. Before we had time to occupy a large enough market share, the British pound withdrew from the currency mechanism. The 4.7 billion US dollars was also our estimated gain earlier. Although it was US dollars rather than British pounds."

"While we have found that the British pound market is approaching two billion dollars, our earnings are still increasing due to operating in other currency markets. The long-term share in the British, French and German interest rate markets, and the operation of the short-term Italian lira business will Bringing our profit to $4.7 billion."

"I asked him why he invested his money in a policy that the UK was so stubbornly implementing and ultimately fell short of. If the UK changed its policy, such a high position size would be enough to bankrupt him."

Shen Jiannan said, "I believe that the Bundesbank wants the lira and the pound to depreciate, not the franc. I feel that it is safer to bet on the Bundesbank. The Bundesbank has made it clear that it wants the lira and the pound to devalue, and it is ready to protect the franc. The banks scored 3:0, the speculators 2:1, and I did better than the other traders by being firmly on the side of the Bundesbank."

When I asked about the possibility that it would be better if Major raised interest rates before Wednesday, Shen Jiannankou replied: "This is absolute nonsense. If interest rates are raised, it will encourage us to sell more in the stock market, because the market operates due to Interest rates rise and accelerate, which will allow us to get more profits to short the pound.

In fact, we didn't want the currency to depreciate until the end of the week, but when interest rates were raised on Wednesday, we realized we couldn't wait any longer and we had to sell quickly to take our market share. "

“In our conversation, Shen Jiannan, like a financial analyst, believes that speculation is harmful, especially in the currency market.”

"But he believes that the measure to stop this kind of speculation is not not to speculate, just like a rapist, if he wants to make him truly realize his mistakes and correct them, the best way is to punish them according to the law, not ignore them. His criminal behavior is even selectively ignored.

The error itself is the error itself, even if I give up the attack on the pound, it will still go wrong.

And all I did with sterling was to get the error corrected earlier.

But apparently the Bank of England didn't realize this until the end, they've been wanting to restrict monetary liquidity until then, and it turns out that's usually more harmful. Restricting liquidity will make capital feel panic and uneasiness, and will shake investment. The simultaneous decline in the stock market and interest rate market is the best proof. "

"When it comes to exchange rates, I have to ask whether a fixed exchange rate is more suitable for the current currency market."

Shen Jiannan told me: “Fixed exchange rate systems are also flawed because they eventually fall apart.”

He used a theory that I can't quite understand-the great way is fifty, and its use is forty-nine.

Fortunately, although I didn't understand what it meant, he still explained it to me.

"In fact, any exchange rate mechanism is flawed, and the longer they exist, the more flawed. Avoiding speculation is not not having an exchange rate mechanism, but having only one currency in Europe, as in the United States. This will make A speculator like me can’t do it, but I’m willing to sacrifice for it.”

During our conversation, Shen Jiannan seemed composed.

"He told me that he had no interest in money, that money was just a symbol in his eyes. I believed he was serious because he seemed absolutely calm and rational, and I didn't even feel his obvious Mood swings."

"."

"In his view, making money is just a means...but the purpose of making money is not necessarily because of the need for money."

"I asked him why he was willing to accept my exclusive interview."

He said he was proud of what he had achieved, which is why he decided to talk to me about it. …he delights in his intelligence in recognizing what will happen, challenging authority and winning. But he also wants to use publicity, because it will make his philanthropy in Eastern Europe known, and at the same time, give governments enough experience from this crisis to avoid making such mistakes .

postscript:

Before leaving, Shen Jiannan looked very happy, much happier than when he mentioned making money. His approach to challenging the pound was confirmed by his business theory.

This result proves that blind self-confidence and a sense of being everything and wrong can lead to corresponding trading behavior in the market. Sterling will be supported in any case.

But apparently, the Bundesbank has made it clear that it will not follow the Bank of England's proposal to cut its rates.

His theories also lead him to believe that speculators always try to make consistently the same trades in the market.

He said: "In a relatively free-floating exchange rate mechanism, the volume of speculative transactions gradually increases, and speculation has the characteristics of long-term continuity. As the scale of the electronic Zerg grows, this will lead to an increase in the exchange rate, and eventually trigger the mechanism The rupture. Because Internet information can report transactions to the market in milliseconds, the central bank’s tens of billions of foreign exchange reserves are completely out of date.”

"Obviously, this is ignorance and serious backward thinking."