Chapter 264: Parade Formations

International relations are sometimes simpler, more brutal, and more dramatic than a street brawl.
Take this recent incident, for example. Japan, seemingly enjoying a comfortable life to the east, was poised to engage in diplomatic friction with us. They threw a powerful right hook, but what happened?
Before we even got a chance to react, they were already sprawled on the ground, convulsing.
Initially, the executives at Jiangjin Group were worried, racking their brains daily about how to deal with Japan's attempts to strangle them.
But within a few days, the agenda in the meeting room took a complete 180-degree turn, becoming utterly surreal.
"What the hell is going on? It was clearly Japan who struck first, all ready to take us down, but in the end, they're the ones who got taken down first? It's like they're trying to scam us!"
The whole thing started when Japan righteously brandished the big stick of "trade controls on key semiconductor materials." Their initial stance and power certainly intimidated many, creating a sense of impending doom.
Who would have thought that the situation would take such a sharp turn, and that Japan would be the first to fall!
"The reasons are complex, yet also simple.
Japan's economy is heavily reliant on imports and exports. This time, their ports suddenly experienced massive, inexplicable congestion, completely collapsing their entire logistics system!
All industries came to a standstill, and market panic escalated rapidly!
To make matters worse, the US raised interest rates, leading to a massive sell-off of the yen and Japanese government bonds, causing a complete collapse in stocks, bonds, and the currency!
But that's not the most fatal blow,"
a well-informed executive analyzed the situation at Jiang Jin's board meeting, a hint of awe on his face.
"The truly deadly threat comes from those 'short-selling funds' that roam freely on Wall Street—those most bloodthirsty and ruthless 'financial vultures'."
"It's said they've already sharpened their knives and are all swarming to the entrance of the Japanese stock market!"
"Sharpening knives?"
"Yes, they've sharpened their knives, just waiting for a signal, a trigger that can ignite everything!
As soon as the signal rings, they'll plunge their knives into Japan's vitals without hesitation!
Those short-selling funds are no pushovers.
Whether it's the fund managers operating the market or the investors pouring money in, they're all ruthless characters who believe in 'it's either you die or I perish.'
Once they start, it's a fight to the death!"
High risk, high reward.
Funds seeking this kind of thrill are countless.
But short-selling funds, especially the "vulture funds," take this philosophy to the extreme.
Their existence is solely for reveling on the corpses of the economy; they are vultures at the top of the financial food chain, filled with destructive aggression and near-mad gambling.
Qin Han asked, puzzled:
"But even if these lunatics get together, how much power can they possibly have?
How could they possibly force Japan to abandon its 'YCC (Yield Curve Control)' policy, which it has upheld for so many years?"
You see, Japan has treated its zero-interest-rate policy like a sacred tablet for many years in order to stimulate its economy.
The YCC policy is the core move in this combination of measures.
Now, facing the precipitous drop in its own government bond prices, Japan desperately realized they couldn't protect the market!
So, the central bank governor held an emergency press conference late at night, trembling as he raised the white flag before the world, not only abandoning YCC (Yen Chancery) but also preparing to raise interest rates!
"That's the problem! The scale—these vulture funds pooled hundreds of billions to short sell—that's only one aspect.
The truly terrifying thing is the domino effect.
Massive short orders dumped shares, causing prices to plummet;
Price plummeting triggered investor panic;
Panic spread, and everyone sold even more frantically…
When everyone runs in the same direction, a stampede becomes the only outcome."
Even more tragically:
At the press conference, the governor declared he would raise interest rates all the way to 3% or even 5%.
This statement immediately turned the Japanese stock market into a living hell on the second and third days, with widespread devastation.
In the meeting room, some still didn't understand: It's just a three or five percentage point increase in interest rates, why the fuss like the sky is falling?
“Heh, the problem is, they’ve maintained zero interest rates for too long!” the executive sneered.
“This has led to a proliferation of ‘zombie companies’ in their economy.”
Zombie companies, as the name suggests, are those barely surviving, clinging to life solely to virtually cost-free loans in a zero-interest-rate environment.
They borrow money to get by, without even having to worry about paying interest.
Now, what does it mean when interest rates suddenly spike by 5%?
This means they have to repay all the money they borrowed in the past, principal and interest!
The interest will drain them dry!
Who can withstand that?
Not to mention ordinary people who bought houses with loans, and companies that borrowed heavily to invest overseas—they've also fallen from heaven to hell overnight.
If this were a gradual interest rate hike, the market might have had a buffer, and everyone could adapt slowly.
But now, under the sudden and fierce attack of short-selling funds, they were forced to abandon YCC (Yield Controlled Currency) to protect themselves. Coupled with this precipitous interest rate hike, it will only lead to a hard landing for the economy, or even a collapse!
"Even so, the Bank of Japan still has to do it, even if it means holding its nose.
Because they know that if they don't cut their losses now, it won't just be economic turmoil, but the entire country will be in danger of collapse."
Everyone finally understood how Japan had ruined itself, but Qin Han, chairman of Jiangjin Group, still had one major question unanswered:
"But I still don't understand. These short-selling funds, each one like a lone wolf, none of them willing to submit to anyone else.
How did they suddenly band together to attack a country, as if they had planned it all along?
When did they learn teamwork?"
"You're right, Chairman Qin.
These people are notoriously secretive. Forget cooperation, they rarely share even investment information, keeping it tightly guarded.
They're all thoroughgoing egoists.
But this time, it's as if they received the same command, their actions as synchronized as a military parade—it's simply unbelievable!"
The implication was clear: behind these unruly financial beasts, there was an even more formidable commander!
"A bunch of lone lunatics, not just one or two, but so many short-selling funds, acting in droves under someone's orders?"
Qin Han found this more unbelievable than listening to gibberish.
Those short-selling fund managers are all fanatics, ignoring even the emperor's will, believing only in their own judgment, and willing to risk everything to defy the world.
But now, someone has actually put collars on these lunatics and is leading them around!
"I know this is hard to believe, but it's already spread on Wall Street.
Everyone's saying that these short-selling funds are following the instructions of some mysterious figure."
"Who?"
"Nobody knows exactly who.
But the first one we can find to have built a massive short position and sounded the charge is our domestic firm, Fanghuan Investment!"