How to bring Hangland to its knees?

Discussion in 'Trading' started by marsman, Jul 30, 2016.

  1. marsman

    marsman

    A fictitious case:
    Let's say there is a country named 'Hangland' :), and you hate it so much (b/c of past colonialism of your own country, lost opportunities etc...).
    How can you best/easiest bring Hangland to its knees with only legal actions?
    Ie. much like what Soros (*) did to the British currency in Sep 1992.
    Would such an action still be legal, and possible?
    Other alternatives?

    (*):
    https://en.wikipedia.org/wiki/Black_Wednesday
    http://www.forbes.com/sites/stevesc...lashback-george-soros-british-pound-euro-ecb/
    http://www.investopedia.com/ask/answers/08/george-soros-bank-of-england.asp
     
    Last edited: Jul 30, 2016
  2. marsman

    marsman

    "
    ...how Soros made $1.5 billion in just a single month by betting the British pound and several other European currencies were priced too richly against the German deutsche mark. ...

    ... Soros played a complex game. Here’s how it went. Soros expected the following: the breakdown of the ERM and a substantial realignment of European currencies; a dramatic drop in European interest rates; a decline for European stock markets.

    So, rather than simply shorting the weak currencies, he also placed simultaneous bets on interest rates and securities markets that would be affected by the currency realignments.

    In carrying out this operation, Soros and his aides sold short sterling to the tune of about $ 7 billion, bought the mark to the tune of $ 6 billion and, to a lesser extent, bought the French franc. As a parallel play they bought as much as $ 500 million worth of British stocks even while they were shorting sterling, figuring that equities often rise after a currency devalues. Soros also went long German and French bonds, while shorting those countries’ equities. Soros’ reasoning on the French and German markets was that upward valuation was bad for equities but was good for bonds because it would lead to lower interest rates.

    “When the Italians finally devalued the lira and the Germans lowered rates slightly,” says the Soros spokesman, “it was almost like we’d been preparing for an exam for six months and now were finally taking our test.”

    After the lira was battered, Soros read that Helmut Schlesinger, president of the Bundesbank, had openly stated that Germany’s central bank would not go to the wall for the pound. Soros has said that he saw this as a “clarion call for everyone to get out of sterling.”

    Because of his strong credit, Soros was able to maintain all these positions with just $ 1 billion in collateral. He was margined to the eyebrows, but he wasn’t really gambling. “The profits that people like Soros recently made seem astronomical,” says Gilbert de Botton, chief of London’s $ 5-billion-plus (assets) Global Asset Management. “But do not rap them on the knuckles on one of the few occasions where they actually could make money. Even the pros have lost their shirts from time to time because of the absolute power of the central banks.”

    Soros knew this, but all his experience, all his instincts told him that this time he was betting with odds overwhelmingly in his favor.

    Here’s how his leveraged positions worked out: The pound dropped 10%, the mark and franc both rose roughly 7%, the London stock market gained 7%, German and French bonds were up about 3% apiece, and the German and French stock markets briefly rallied, but basically remained flat.
    ..."
    http://www.forbes.com/sites/stevesc...lashback-george-soros-british-pound-euro-ecb/
     
  3. marsman

    marsman

    "equities often rise after a currency devalues"

    This happened 1992, and again recently after the Brexit...
    And it is logical from economic POV: when the currency devalues then the exports become cheaper, meaning more exports, meaning stock market rises...
    But I'm afraid it's not sustainable... :)
     
  4. AbbotAle

    AbbotAle

    As to your question, you can't bring a country down legally.

    But if you want to bring it down illegally then just figure out a way to stop the TV and internet being broadcast, then you'd have the politicians begging for your help as the population would probably start to riot within 24-48 hours.

    Anyway, Soros did the British a big favour as he a) forced something unworkable to stop working for good, and b) the aftermath resulted in a semi-boom for the UK economy. I wouldn't be surprised if some of the politicians were drinking and toasting to him 6 months later.

    Soros wasn't interested in bringing a county to its knees, he's not some James Bond bad guy, all he was interested in was making returns which he did very well. Plus, don't think he gets it big-time right all the time because a few years later he lost $1billion on a big Yen trade that went the other way.