Mu Lin pondered for a moment, gazing at Claire without speaking for quite some time. Claire sensed that Mu Lin had something more to say, and in her impatience, she blurted out, “Just say whatever you want to say directly. Don’t beat around the bush!”
Mu Lin smiled slightly and said, “When you calculated the funds we can control and utilize, there was definitely one portion you didn’t include!”
Claire was momentarily taken aback and replied, “No, I’ve included all our companies. Let me show you—our real estate holdings can currently liquidate 6.5 billion dollars. Our clinics can mobilize 2.5 billion, and our mobile phone factory is already in production, though the revenue hasn’t come in yet. It’s expected to generate about 200 million. That brings the total to around 9.2 billion.
“If you give me half a month, our real estate company can recoup 5 billion, our investment company another 1.5 billion, and our clinics an additional 500 million. That would bring our total controlled funds to 16 billion. I haven’t made any miscalculations!” Claire said innocently.
“Haha! That’s not what I’m referring to! You’ve forgotten about the families we control!” Mu Lin chuckled. “Remember, those families can mobilize no less than 5 billion dollars. Also, our Douglas Law Firm under our name can mobilize at least 1.5 billion. That brings our directly controlled funds up to 22 billion. Adding Cross’s 3 billion, we’ll have around 30 billion in total. With that kind of capital, we can definitely win this battle without any doubt.
“It’s a serious mistake to forget about those families under us when there’s such a safe opportunity to make a huge profit. With this capital, those subordinate families can experience significant growth, making our foundation even stronger. In the future, these families in Boston alone, with this capital, will be able to develop legitimately and support you even more. You can’t think of distancing yourself from your families just because you’re now a senator. That’s impossible, because you already carry their mark.
“Remember this: in the future, you must strongly support any endeavor that benefits these families, as long as it’s within the law. Otherwise, these subordinate families will eventually become disloyal and drift away from us,” Mu Lin said solemnly.
The next morning, when Cross learned that the total funds at their disposal could reach 30 billion dollars, he could no longer contain his excitement.
“Dr. Daniel, rest assured, with such a massive amount of capital, if I still fail to accomplish the mission you’ve entrusted to me, I’ll jump off the World Trade Center myself. Because with your plan and this enormous capital, even someone with just basic financial knowledge could easily succeed. If I fail, I won’t have the face to show myself to you anymore.
“But I have one condition: I need absolute control over these funds, the timing of the operation must be decided by me, and I need your full representative to gain the trust of the powerful financial group behind you.”
After hearing Cross’s statement, Mu Lin readily agreed to his conditions. Soon after, Cross and Claire left Y country and returned to U country. They came and went in haste, leaving no trace for anyone to detect.
In February 1988, Cross began attacking the weaker currencies in the European Exchange Rate Mechanism, including the British pound and the Italian lira. Cross, along with some long-term currency arbitrage mutual funds and multinational corporations, started selling off these weak European currencies, forcing these countries’ central banks to spend huge sums to prop up their currencies.
The Y government planned to borrow funds from international banking organizations to prevent further depreciation of the pound, but this was like trying to put out a fire with a cup of water. Cross alone deployed 20 billion dollars in this battle against the Y government. In this massive gamble, Cross sold 17 billion dollars worth of pounds and 7 billion dollars of lira, while buying 6 billion dollars of strong currency—Deutsche Marks. Additionally, considering that a country’s currency depreciation (appreciation) often leads to a rise (fall) in its stock market, Cross also purchased 4 billion dollars worth of Y stocks and 1 billion dollars of Italian stocks, while selling German stocks. If it were only Cross against the Y and Italian governments, perhaps there would still be a glimmer of hope for the governments, but the participation of numerous global speculators made the imbalance of power insurmountable, sealing the fate of the two governments’ defeat.
Cross was the biggest gambler in this “betting game.” After placing his bets, Cross began to wait. In mid-March 1988, the crisis finally erupted. Rumors of an imminent devaluation of the Italian lira spread across the markets, causing a flood of sell orders. On March 13, the Italian lira depreciated by 7%, still within the fluctuation range set by the European Exchange Rate Mechanism, but the situation appeared bleak. This convinced Cross that some member countries of the European Exchange Rate Mechanism would eventually refuse to let the system determine their currency values, leading them to exit the mechanism.
On March 15, 1988, Cross decided to heavily short the pound and the lira. The pound-to-mark exchange rate plummeted to 2.80. Although rumors suggested the Bank of England had bought 3 billion pounds and the Italian central bank had bought 250 billion lira, the downward trend of the pound and lira couldn’t be halted. By the end of the trading day, the exchange rates of both the pound and lira against the mark had nearly hit the lower limit set by the European Exchange Rate Mechanism. The pound and lira were on the brink of exiting the European Exchange Rate Mechanism.
The two finance ministers took various measures to deal with the crisis. First, they once again requested Germany to lower its interest rates, but Germany refused again. Helplessly, the two finance ministers asked their respective prime ministers to raise domestic interest rates by 2% to 12%, hoping that higher interest rates would attract currency inflows. The Bank of England raised interest rates twice in one day, pushing the rate up to 15%, while the Italian central bank’s rate soared to 17%, yet still with little effect—the pound’s exchange rate still couldn’t hold above the minimum threshold of 2.778. In this battle to defend the pound, the Y government used up 26.9 billion dollars of foreign exchange reserves but ultimately suffered a crushing defeat and was forced to withdraw from the European Exchange Rate Mechanism. The Y and Italian people referred to March 15, 1988—the day their countries exited the European Exchange Rate Mechanism—as “Black Tuesday.”
Cross emerged as the biggest winner in this assault on the pound and lira, hailed by *The Economist* as the man who defeated both the Bank of England and the Italian Central Bank, and celebrated as a financial genius of the century. Cross made nearly 3 billion dollars from the pound shorting trade and another 1 billion from the Italian lira trade. His total profit from long positions in interest rate futures on Y, French, and German bonds, and short positions on the Italian lira, reached a staggering 10 billion dollars, of which Mu Lin personally earned 2 billion. That year, Cross’s fund grew by 67.5%.
Mu Lin’s attack operation achieved a complete victory!
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