Chapter 904
The Quantum Foundation Wants to Drag Lin Haoran Down
Just as Lin Haoran was welcoming back his top general in Hong Kong, a meeting of financial elites was being held in a skyscraper in New York, USA.
This is the senior management conference room at the headquarters of Quantum Fund.
In the conference room, Soros sat in the main seat, looking at more than a dozen senior executives of the Quantum Fund.
The long oval conference table was covered with dark velvet, and each person had neatly arranged documents and three copies of charts in front of them.
The Manhattan skyline outside the window gleamed in the afternoon sun.
But the blinds in the conference room were half-closed, filtering the glaring light into thin stripes that reflected on the solemn faces of the attendees.
“Mr. Chairman, everything is ready in Mexico, except…” David, the chief trading officer of Quantum Fund, paused here.
"Just what?" Soros asked.
The others also looked at David.
"Our investigation revealed that Mexico's foreign debt is growing increasingly large, while its fiscal revenue is simply insufficient to cover that massive debt. Furthermore, the gradual decline in international oil prices has led to a sharp drop in fiscal revenue, which has exacerbated Mexico's debt risk."
"So we predict that the Mexican government is about to collapse. With just a push from an external force, the entire peso system will crumble. However, our financial resources are not large enough to significantly influence the entire peso market," David said with some regret.
Quantum Fund, now considered a rising star among Wall Street hedge funds, has achieved considerable success in several raids in the foreign exchange and stock markets over the past few years.
However, compared to those giant investment banks that manage billions or even tens of billions of dollars in assets, their capital size is still limited.
Soros has big ambitions, and the current size of the Quantum Fund is naturally not enough to satisfy him.
Developing steadily and cautiously is simply too slow.
Soros never believed that a steady, methodical approach could lead to true great achievements.
In his view, investors who follow the steps and rely on compound interest to slowly accumulate wealth are essentially just stewards of capital, not its masters.
Buffett, for example, disagreed.
Stock market guru?
In his view, it was nothing but empty fame!
A true master must dare to bet everything at critical junctures in history.
For example, someone like him!
A year ago, Soros's team noticed Mexico's foreign debt problem.
Therefore, throughout the year, he kept a close eye on Mexico's developments and dispatched three different teams of analysts to conduct a comprehensive survey of Mexico from three dimensions: macroeconomics, fiscal revenue and expenditure, and international capital flows.
Ultimately, he concluded that Mexico was bound to fall into a debt crisis; it was only a matter of time.
A few months ago, he even went to Hong Kong in person to invite Lin Haoran to participate in the upcoming grand event.
Based on his previous research on Lin Haoran, Soros believed that Lin Haoran was the same kind of person as him!
Such a person would never miss such a good opportunity as the Mexican debt crisis.
In Soros's vision, Lin Haoran was the ideal partner, with abundant funds, extensive channels, great influence, and remarkable judgment in several major market turning points in the past.
More importantly, Lin Haoran, like him, is the kind of person who can see through appearances and get to the heart of the matter.
Therefore, to show his sincerity, he personally traveled thousands of miles to Hong Kong to attend the wedding, hoping to find a perfect business partner.
However, the meeting at the Peninsula Hotel gave him a completely unexpected answer.
"I will not enter an unfamiliar market rashly."
"My roots are in Hong Kong and in the Asia-Pacific region."
"Business ethics and long-term partnerships are more important than short-term profits."
"I don't do anything illegal."
Soros didn't believe a single word of those high-sounding words.
He believed only one fact: Lin Haoran had rejected him.
It wasn't because of the risks, or because of unfamiliarity, but because I didn't want to be associated with Soros.
This realization stirred a complex mix of emotions in Soros as he left the Peninsula Hotel: disappointment, anger, and a hint of admiration.
Few people dare to refuse him.
Even fewer people would dare to refuse him in such a dignified manner.
Lin Haoran is the first person who, after being rejected, could prevent Soros from retaliating and force him to silently accept the situation.
Although he was somewhat disappointed not to receive Lin Haoran's support, he naturally did not stop planning for the Mexican debt crisis.
During this period, he secretly approached several Middle Eastern oil tycoons and European bankers with whom he had good relations, and raised nearly $500 million through personal connections.
With the Quantum Fund's existing capital and leverage, it would be able to make a fortune should the Mexican crisis erupt.
However, no one can say for sure when the Mexican government will finally give up.
If the Mexican government receives support from the United States, it might be able to hold out for a while longer, and may even be able to avoid defaulting on its debt.
This is Soros's biggest concern and one of the core topics of today's meeting.
"The attitude of the United States is a variable we must pay close attention to," Soros said slowly, his gaze sweeping over every face on both sides of the long table. "Mexico and the United States have a very close relationship."
A 2,000-mile border, millions of Mexican immigrants, and massive American corporate investments in Mexico make it impossible for Washington to ignore the crisis in Mexico.
Chief analyst Mark Schwartz nodded: "George is right. As far as we know, the U.S. Treasury Department has been secretly assessing the situation in Mexico."
There were two voices within the Reagan administration. One advocated for aid, arguing that a collapse in Mexico would trigger a massive influx of illegal immigrants and could even lead to border security problems.
Another group opposes aid, arguing that this is Mexico's own problem and shouldn't be addressed with American taxpayers' money.
"So what we need now is to try to trigger the premature outbreak of the Mexican debt crisis, to prevent them from having any chance of being saved!" Soros said in a very calm voice. He didn't care how serious the consequences of the Mexican debt crisis would be for Mexico; he only knew that this was a golden opportunity for him to make a fortune, one he absolutely couldn't miss, and he couldn't let Mexico have any chance to catch its breath.
Soros's voice was calm, but the coldness in his words made everyone present clearly realize what kind of game they were participating in.
This is not a simple market game; this is a real financial war.
War means there will be losers and victims.
Mexico was the victim they chose.
Mark Schwartz took a deep breath, trying to keep his voice steady: "George, how exactly do you plan to trigger a crisis earlier than you suggested? We can't just go and protest in front of the Mexican central bank, can we?"
A low chuckle rippled through the conference room, but there was a tension in the laughter; everyone wanted to hear what Soros's specific plans were.
"So, this is one of the core issues of our meeting: how do we trigger this crisis to break out sooner?" Soros said, looking at the entire room.
If Lin Haoran had agreed to cooperate with him back then, there wouldn't have been any problems at all.
Because he knew that Lin Haoran had abundant funds, and as long as he got involved, it would be easy to trigger the crisis in advance, so that the Mexican government would have enough time to seek foreign aid or introduce self-rescue measures.
But Lin Haoran rejected him.
Soros has accepted this reality.
But he won't let this reality affect his plans.
“To trigger a crisis earlier,” Soros began slowly, his gaze sweeping over everyone present. “It’s not about brute force, but about skill. What we need to do is not to attack Mexico’s foreign exchange reserves ourselves, but to let the market do the attack itself.”
He stood up, walked to the wall, and pointed to the huge world map.
“Look, what is Mexico’s most vulnerable point right now? It’s not the economy, it’s not the finances, it’s confidence. As long as they have confidence, they can borrow new money to pay off old debts and buy time.”
But once confidence collapses, the speed of capital flight will far exceed our imagination.
He turned around and faced his team.
"So, how do we break Mexico's confidence?"
Soros stopped there.
A meeting is a place for everyone to discuss and brainstorm together, not for one person to make decisions unilaterally.
Soros was well aware of this.
Although he has the final decision-making power, he needs the wisdom of the team and for each member to offer their insights from their own professional perspective.
Only in this way can a complete battle map be pieced together.
A brief silence fell over the meeting room as everyone pondered.
Trading director Jack Peterson cleared his throat and spoke first: "Mr. Chairman, I think we can start with the Mexican banking sector."
Mexico's banking system is highly dependent on foreign capital. Even a small-scale bank run targeting just a few small banks could quickly spread throughout the entire financial system.
He opened the documents in front of him and continued, "We have reliable contacts in Mexico City who can spread information that foreign shareholders of certain banks are withdrawing their investment, or that the non-performing loan ratios of these banks are far higher than the official figures."
These messages don't need to be verified; simply discussing them is enough to trigger panic among depositors.
Soros nodded but didn't speak, signaling the others to continue.
Chief analyst Mark Schwartz adjusted his glasses and continued, "I suggest starting with international rating agencies. Standard & Poor's and Moody's currently rate Mexico's sovereign credit at investment grade."
However, if they were to release a watchlist or adjust their outlook at this time, even just placing Mexico on a negative watch list, it would trigger a chain reaction within the institutions.
He paused, then added, "Of course, getting rating agencies to make adjustments requires some technical justification. For example, we could provide rating agencies with alternative analyses of Mexican fiscal data through various channels, highlighting the fragility of its external debt structure and the decline in oil revenues."
These analyses don't require fabrication; they only need to choose a specific angle to arrive at pessimistic conclusions.
At this point, fund manager Richard raised his hand: "Regarding public opinion, I have a more specific idea. We can focus on the corruption issue in Mexico."
The Mexican government has recently undertaken several large infrastructure projects involving international contractors.
"If we can expose the illicit gains behind these projects through the media, and then link these gains to the government's financial difficulties, it will be very damaging."
He continued, “The public is always the most sensitive to corruption. Once they believe that government money is being taken by corrupt officials instead of being used to pay off debts or develop the economy, their confidence in the government’s ability to repay its debts will collapse.”
And what will they do after their confidence collapses? They'll withdraw their money from the bank, exchange it for dollars and hide it at home, and try to transfer it abroad—that's what we want.”
A risk control manager also chimed in, "In Washington, I think we can add fuel to the fire. In addition to what we've already discussed, we can also consider publicly supporting the Mexican democratic movement through some American politicians who have connections with the Mexican opposition."
These politicians can criticize the Mexican government for corruption, authoritarianism, and incompetence, and call on the United States to reconsider its aid to Mexico.
Such pronouncements, ostensibly political statements, actually influence market perceptions of Mexico's stability.
He paused, a cold smile appearing on his lips: "Moreover, this is what the Mexican government fears most. They can tolerate economic criticism, but political questioning directly threatens the legitimacy of the ruling party."
In their efforts to preserve power, they may make hasty decisions, which often accelerate the outbreak of a crisis.
Chief analyst David remained silent, but the expression on his face showed that he was thinking seriously.
Soros noticed this and turned to him, asking, "David, what are your thoughts?"
David raised his head and said slowly, "I'm thinking about Lin Haoran's situation."
Soros raised his eyebrows slightly.
David continued, "Mr. Chairman, your meeting with Lin Haoran during your last trip to Hong Kong for a wedding has already been exposed by the media."
Although the specific content of your meeting was not made public, it is widely known that you took the initiative to visit him. As the chairman of the board of Quantum Fund on Wall Street, your trip all the way to Hong Kong to proactively visit this super-rich man is enough to spark much speculation.
The atmosphere in the conference room was subtly shifting.
David continued, "If at this time we release some information, not directly, but insinuating, letting people speculate, saying that Lin Haoran shares your views on Mexico, that his Renaissance Fund is making some moves, that he has reached some agreement with the Quantum Fund..."
He didn't finish speaking, but everyone present understood his meaning. (End of Chapter)