CHAPTER 399: CHAPTER 379: ARBITRAGE_2

Arbitrage is the simplest profit model in financial markets, almost anyone who can do math would figure out where it is most cost-effective to send their money.

When the interest rates for US Dollar or Euro are low, I borrow on a large scale, then look for which country’s bank offers high interest rates, and I lend money to them.

Because when you deposit money in a bank, it is actually like lending money to the bank!

Seemingly simple, but in fact, only real big capital can ensure profitability.

Because there are very few places that can handle large amounts of capital right now...

The island country is one, but to combat the harvesting by the US Dollar tide of Daddy United States, they have been implementing negative interest rates for many years.

East is another one, but they have implemented strict capital control policies, with strict controls on both the inflow and outflow of funds.

Europe also counts, but since 2008, Europe has been engaged in the Euro defense war, and the Euro has entered a zero interest rate era; at the same time, in order to protect the value of their assets, they firmly defend the Euro exchange rate.

To earn money through massive arbitrage by injecting capital in these three places, you need astronomical funds and the extraordinary means to stir the opponent’s exchange rate.

On the contrary, for these three places, it’s relatively simpler to flee to the United States for arbitrage when the US Dollar raises interest rates.

This is why all capital in developing countries runs off!

Because during the period when the US Dollar raises interest rates, even if they do nothing, just putting money in the United States, they can earn huge profits through arbitrage when Daddy United States hikes rates.

Isn’t this much easier than the hassle of handling a real business?

This is why developing countries are so vulnerable to the harvesting by the US Dollar, because not only do foreign capitals that entered at low points run, but even the comprador capitals that have fully reaped the benefits of national development will also take flight.

Once they flee, the domestic asset values will depreciate, and liquidity will diminish, leading to a decrease in financial activity, instantly putting a country’s economy into a vicious cycle.

Once the common people of the country stabilize the economy through hard work, it will once again become an area of undervalued interest to the big crocodiles.

Then, when the Federal Reserve announces a rate cut, that hot money would flow into these places, kickstarting a new cycle.

Mountain Eagle wanting to engage in such arbitrage transactions, it is unrealistic to cling to big entities like Goldman Sachs, because this is a low-risk transaction, and his capital is also very limited; after deducting management fees and transaction fees, the profits fails to meet Mountain Eagle’s needs.

Thinking about Mountain Eagle’s methods in the past, Mr. Poincaré sighed and said, "If you want to profit in those so-called undervalued areas, you first have to ensure they can keep their promises.

What’s your target? Malaysia? Indonesia? Brazil? Colombia?

Do you think Arctic Fox is enough of a security weight that you need?"

Mountain Eagle gave Mr. Poincaré a thumbs-up...

Old ginger is spicier indeed!

The elderly gentleman had only heard the beginning and had retrofitted his thoughts, pointing out the key!

With Mountain Eagle’s identity and volume, going to the island country, East, to achieve stable long-term arbitrage is impossible; only those countries with unstable economies could be his target.

And these unstable countries have one problem: a butt full of bad debts...

To complete the final transaction, one needs a strong collection ability, that is, to get the money out of the other party’s bank.

This is no joke!

In this world, swindle is the norm, you aim for someone else’s interest, they aim for your principal.

Without strong measures, and not clinging to big legs, nor generating social value, once financial capital reaches nine figures, it easily attracts attention and becomes a target for swindling.

And a powerful squad like Arctic Fox is exactly a very good security weight!

It’s no exaggeration to say, if you gather all of Arctic Fox together, they can easily blood-wash the government buildings of small countries in Central North America or South America and easily stage a coup.

This is exactly the kind of work Mountain Eagle thinks a Mercenary should do!

Making policy money!

The giant security companies of the United States earn special military funds from the United States!

And the top Mercenaries he understands should earn money from financial policies issued by relatively chaotic local governments!

Loan sharks are not afraid of bad debt, Mercenary’s debts cannot be welched on!

Looking at the old gentleman’s worried appearance, Mountain Eagle said with a laugh, "Placing Arctic Fox anywhere in South America or Central North America should be a decisive chip.

They just don’t know how to correctly use their strength!

But I’m not in a hurry, after all, the policy bonus from the Federal Reserve is enough for us to last a few more years, and my capital is not enough right now...

It’s okay if they don’t understand, trust is not something that should be expected overnight, maybe two years, maybe three years, I have the patience!"

Mr. Poincaré frowned and looked at the ambitious Mountain Eagle, and said, "What’s your target?"

Mountain Eagle spread his hands with a smile and said, "The next step is to plant a stake in Cyprus, after getting reliable financial channels, I want to go to Central North America or South America...

Cuba, Venezuela, Costa Rica, Nicaragua, these places could all become my destination.

I come from a trade background, I’ve previously discussed with Eddie’s wife Amelia about setting up a Shadow Fleet...

And to earn the interest spread, it’s not about blindly throwing money at a place with high interest, in my understanding, the best approach is to use trade as a means to open up the market first, then after expanding the transactions, try to add some financial elements.

For example, using the identity of a third country, helping Venezuela conduct oil trade, assisting Cuba with some export trade, and at the same time purchasing things they need for them...

As long as the volume of import and export trade rolls to a certain level, establishing strong connections and political relationships, one can engage in some financial operations to earn interest differentials."

Mr. Poincaré listened and sighed with admiration, "Just like what you did in Thailand?"

Mountain Eagle shrugged his shoulders and said with a smile, "Thailand was just an accident, but the result was better than I anticipated.

And I was just thinking about it, there’s still some time before I actually take action..."

Mr. Poincaré nodded slightly and said, "I think you left out a part about money, but these are already enough for me...

You had better..."

Just as Mr. Poincaré was speaking, Mountain Eagle’s phone rang...

He looked at the number, answered the call, and was about to speak when he heard an anxious voice coming from the other side...

"Anna has been kidnapped, the kidnappers are demanding the release of Philip Royce who is in custody..."

Mountain Eagle sprang up to his feet...

"Are you guys useless?"