The 1997 economic crisis is a topic that cannot be avoided by anyone who pays attention to the economy in the future. When the economic crisis broke out, Wen Liang had just entered university. He studied economics, so he naturally paid attention to this major event. Through the media and the mouthpieces of experts and experts, he watched the thrilling war throughout the whole process. Then, with the prevalence of various decryptions and inside stories, he also had a detailed understanding and grasp of the general trend. The sentence that I remember most clearly was what Mahathir, the then Prime Minister of Malaysia, said: The economic system we spent 40 years to build was destroyed in an instant by this idiot with a lot of money.
This idiot with lots of money is George Soros.
Ning Xi felt it was strange that she asked Wen Liang such a big question. Fortunately, she herself became famous at a young age and had seen countless geniuses in Wharton. She would not ignore the other person's ability and insights because of her age.
"Since the early 1990s, major developed countries in the West have been experiencing economic recession, while Southeast Asian countries such as Thailand, Malaysia and Singapore have experienced rapid economic growth and have been hailed as the Asian miracle. Many economists say that the future of the world lies in Asia, and naturally they are optimistic that Asia will continue to be a new growth point for the world economy in the next decade. I personally study international finance, and I share this view."
Ning Xi graduated from one of the most famous business schools in the world, and her major was international finance, so she must have a deep understanding of the Asian economy and the world economy. But at that time, the Southeast Asian economy had been developing rapidly for ten years, and there were also the four Asian tigers, which were highly praised by international organizations as a model of reform and development. In 1995, the situation in various countries was very good, and the entire Asian market and major countries were filled with optimism. Coupled with the advocacy of some mainstream economists, the crises and hidden dangers hidden under the prosperous times were reduced to an undetectable level.
Ning Xi's opinion was within Wen Liang's expectations. It was inevitable. Paul Krugman, an economist at Princeton University in the United States and winner of the 2008 Nobel Prize in Economics, mainly researched international trade, international finance, currency crises and exchange rate theory. He boldly predicted the Asian financial crisis in his book Popular Internationalism. Not to mention that it did not attract much attention at the time, more importantly, the book was not published until 1996.
That is to say, there may have been people who could accurately and affirmatively predict the outbreak of the Asian financial crisis in 1995, but Wen Liang must have been one of them.
This crisis that swept across Asia had a profound global background. There are generally three schools of thought in the analysis of this crisis in later generations: structuralism, marketism and new economics. In fact, to put it simply, from a monetary perspective, East Asian countries maintained a fixed exchange rate system on the one hand, and expanded financial liberalization on the other hand, which gave the international hot money of up to 7 trillion an opportunity to take advantage of it. From 1993 to 1996, the amount of funds flowing into East Asia each year was as high as 50-100 billion US dollars. The consequence of this was a surge in credit, banks took on excessive risks, and the debt situation worsened. Once faced with speculative attacks, the central bank raised interest rates to a level sufficient to defend the exchange rate, and the monetary system was easily collapsed.
Wen Liang smiled and said, "Not long ago, I saw a research report made by Crosby Securities in Singapore. It made a very detailed analysis of the economic conditions of seven Asian countries. It said that Southeast Asian countries have low labor quality, deteriorating trade balances, and rising inflation, and are facing the risk of economic overheating. On the other hand, these countries will experience a growth recession due to excess production capacity, high corporate debt, and lack of higher education and skilled labor. I think it makes sense. You majored in finance, so you naturally know that the result will inevitably be high inflation..."
Wen Liang used the arguments and evidence of later economists studying the 1997 economic crisis to fool Ning Xi. There is a saying: hindsight is wise, but beforehand it is like a pig. Although these people are not good at predicting crises, their ability to analyze after the crisis is really first-rate. A large amount of evidence, convincing data, interlocking reasoning, and seamless views all clearly pointed out that this is how the economic crisis broke out.
Wen Liang's words were considered unique at the time, and Ning Xi frowned from time to time, obviously not convinced by him. Because these things can be collected if you are careful, but if you can draw such a sensational conclusion from them, economists all over the world can go to hell.
Wen Liang had no intention of getting Ning Xi's approval. He just wanted to deepen her impression of him in the shortest possible time. Samuelson said that economics is actually a probabilistic event. In other words, before it happens, anyone can talk nonsense. After it happens, they can analyze and summarize. Anyway, right or wrong is not a problem. I will do the same next time. This is also the main reason why there are so many people in the economics field who just want to make a living and can always do so.
Wen Liang was playing such a role at this time, the only difference was that after the economic crisis broke out, this seemingly powerful Miss Ning Xi would be completely impressed by his foresight. Uncle Wen had a serious and formal face, but he was shamelessly fantasizing in his heart: Maybe two years later, in a dream at midnight, she would sigh like this, I was once so close to the greatest economist in the world, and I was the second person to know that all this was going to happen.
“If that’s not enough, look back at the Chilean crisis of 1982 and the Mexican crisis of 1994…”
Ning Xi shook her head again: "These are not enough to prove your point. The economic structure and development path of Latin American countries are not exactly the same as those of Southeast Asia. The politics and background are also very different. They are not meaningful for reference. Especially in 1992, when the Thai government liberalized capital market controls, the scale and effect of foreign investment introduced over the years have been significant. The role of promoting the economy is obvious. The expectation of future prosperity is the consensus of most people."
"Thailand? Ha," Wen Liang sneered, "The economy is an organism, and it is often breached at its weakest point. The Thai government has not even cleaned up its own backyard, yet it dares to open its doors rashly. In the short term, it may seem that the business is booming with many customers, but what if robbers come? With his weak arms and legs now, can he resist?"
Ning Xi had already looked up to Wen Liang after hearing his words. Apart from his fallacies, his ability to analyze problems from a macro perspective in terms of economic theory was no less than that of many scholars. Unconsciously, she had completely regarded him as an equal or even higher level. Hearing his disdainful words, she couldn't help but frown and said, "Hedge funds? No, East Asia's economy is known for its export-oriented nature and is the main beneficiary of the rapid growth of international trade. Why has it been able to create the Asian miracle in recent years? It is because of the active international capital flows. The annual growth rate of cross-border bank loans has remained at 12%, and the annual growth rate of foreign direct investment is close to 14%. Even if there are unstable factors, they are completely within the controllable range."
Ning Xi's thoughts were exactly what many people thought, but they could not imagine what a painful lesson Soros would teach this seemingly prosperous country. "That's right! But some people can always do what others can't do, mobilize funds beyond anyone's imagination, and break through the defenses of these strong-looking but weak-hearted countries in one fell swoop."
"Like what?"
Ning Xi's expression was completely different from what it was at the beginning. It was obvious that Wen Liang's words had caused her some shock.
“For example, Soros!”
"Soros? Ha," Ning Xi laughed, and said, "It's not like he hasn't come to cause trouble before, but didn't he always leave in disgrace in the end?"
Ning Xi was talking about 1993, when Soros believed that the Malaysian ringgit was undervalued and decided to use it as a breakthrough point to launch a siege, but Mahathir's counterattack left him no chance to take advantage and he temporarily withdrew his troops. This failure also misled Asian countries, who believed that similar attacks could be completely defended, but they did not expect that what followed was actually a war.
Wen Liang, however, did not smile at all: "In 1993, it was just a test run. The funds used by the accomplices he contacted were negligible. But if the current situation is allowed to develop, once the time is ripe, a thunderous blow will inevitably follow. You have eaten the bread and milk of capitalism for so many years, you must know the terrible power of these big sharks..."
Ning Xi was ultimately not convinced by Wen Liang, but Wen Liang also achieved his goal, and the subsequent negotiations seemed much easier.
"… Let's change to a lighter topic. You know the lipstick theory? With the severe inflation in China, just as women cannot afford luxury cosmetics and have to buy lipstick to vent, many ordinary people are also willing to make a little improvement in their diet. This is one of the reasons why I chose to develop Qinghe at this time."
"Secondly, although the catering industry is highly profitable, the market is not segmented enough, and the breakfast industry has not yet started. The most profitable market is the new market with huge prospects, which is in urgent need of exploration but has not yet formed fierce competition. The breakfast industry, or the Chinese fast food industry, is still a big blue ocean in China at present."
"Blue Ocean?" Ning Xiaoning had been listening at the side, and this was the first time she interrupted to ask a question. Wen Liang knew that the little girl didn't understand 90% of the topics he talked about with Ning Xi, but she didn't find it boring, instead she listened attentively.
The little money-grubber is indeed a little different.
Wen Liang's attention was on Ning Xi, and he didn't notice that Ning Xiaoning looked at him differently after the debate just now. Her usually cold eyes contained a strange look that he had never seen before, and sometimes, she would be shy and gentle, as if she was thinking of something.
Not to mention Ning Xiaoning, even Ning Xi asked: "What is the blue ocean? Why haven't I heard of it?"
Wen Liang then remembered that the book "Blue Ocean Strategy" was not completed and published until 2005 by Professor Qian Jin and Ms. Mauborgne. The only drawback of living two lives is that one may inadvertently confuse the past and the future. That feeling is a bit confusing, but also a bit charming!