Chapter 1138: Profits skyrocket

At this time, Léopold Rothschild suddenly said solemnly, 'Mexico is one of the economic leaders in Latin America. Now that Mexico has taken the initiative to default, it is likely that other countries will follow suit.'

'After all, the debts of countries such as Argentina, Colombia, Brazil, and Peru are also very alarming.'

'If these countries also follow suit and default voluntarily, then the 13.68 billion sovereign debt held by our bank will be in crisis, Latin America will also experience an economic crisis as a result, and it may even spread to the whole world.'

'Our bank's total loans to many Latin American companies also exceed 10 billion U.S. dollars.'

'If this adds up to more than 20 billion U.S. dollars in debt problems, then our bank will face the crisis of bankruptcy and restructuring!'

'I'm afraid that once the news is made public, it will cause a huge panic in the country. If there is another run on the bank, then...'

At this point, Léopold Rothschild could not continue. He could not bear to imagine the pressure and trouble that would befall the family if that scenario were to play out.

Jakob Rothschild's face was as dark as water.

After a long silence, he said slowly, 'I know what you are saying. Mexico has defaulted, so the probability of Latin American countries defaulting is over 90%.

'Once they default en masse, the initiative will be entirely in their hands. It is we banks that should be panicking. At that time, if they make excessive demands, we will have to consider them carefully.'

'So now, we must prepare for the worst!'

Evelyn Rothschild hurriedly said, 'Jacob, you are right, we must prepare for the worst, and we must also join forces with other major banks, and even ask the government to intervene on our behalf to suppress the Latin American countries.'

Jacob Rothschild nodded slightly and added: 'This time, we may face the biggest crisis of the family since the Second World War. We must mobilise all the family's funds to guard against risks.'

'Evelyn, you are in charge of the UK side, and I will notify the others one by one.'

Evelyn Rothschild nodded solemnly and said, 'Okay, don't worry, I will do my best to collect funds.'

Jacob Rothschild then looked at Leopold Rothschild and instructed, 'Leopold, Evelyn's work is more tedious and she will be unable to spare the time for the time being, so you will contact the major creditor banks in Europe.'

'As for the United States...'

'I will make the call myself. I think that for this crisis, Rockefeller and Morgan also did not expect Mexico to dare to do this, and they must also be thinking of a way...'

'Otherwise, if we just sit back and let Mexico default, and Brazil and Argentina follow suit, the entire US financial system could collapse if it's not handled properly...'

...

After the urgent discussions were over, the Rothschild family got to work.

Although the Rothschilds are arch-rivals of the Rockefellers and Morgans,

in terms of debt to Latin American countries, practically all the major and minor banks in Europe and the US are in the same boat, and they are already inseparable.

A clear example is Citibank.

When lending to Latin American countries, Citibank's more than 50 billion US dollars in cross-border lending includes at least 20 billion US dollars in loans to sovereign states, with the rest going to governments or private borrowers engaged in commercial activities.

Large banks like Citibank are notoriously strict when it comes to loan approval, and so they have a benchmarking effect in the banking sector.

If the Mexican government needs a loan of 5 billion US dollars, it will generally approach a major bank, such as Citibank, as long as Citibank agrees to lend 1 billion or 2 billion US dollars.

Then the remaining small and medium-sized banks that are waiting in the wings will scramble to divide up the loan amount.

And there is no doubt that Citibank's ability to withstand risks is definitely stronger than those of small and medium-sized banks. Once a crisis occurs, Citibank may be able to ride it out, but a large number of small and medium-sized banks will definitely go bankrupt as a result.

The bankruptcy of these small and medium-sized banks would also have an extremely negative impact, seriously damaging the foundations of the banking industry and triggering a crisis in the entire banking system. Citibank would definitely not be able to escape, and would even be targeted because of its particularly large loan volume.

Almost all the smart people in the financial industry, after realising the seriousness of the situation, took action.

Paul Volcker, Chairman of the Federal Reserve, Donald Regan, US Secretary of the Treasury, the presidents of Citibank, Chase Manhattan Bank and Merrill Lynch... a large number of financial giants met urgently to discuss countermeasures.

After the meeting ended on 6 August, no appropriate measures had been agreed upon.

The adverse effects of Mexico's sovereign debt default further intensified.

Although the print media were unable to report in a timely manner, television stations in various countries had already reported the situation.

The general public in various countries began to worry.

Although the TV stations all stated that the government would definitely come up with a proper solution, many prudent people still rushed to the bank with their bank cards to withdraw their money for safekeeping.

For a time, the pressure on the lending banks involved increased dramatically.

Against the general trend of a surge in US stocks and the appreciation of the US dollar, the share prices of US-listed banks plummeted.

But this is exactly what Xia Yu wanted to see.

By the end of August 6th, Xia Yu had already received the report cards from eight teams.

Tang Yong's team had a floating profit of more than 220 million US dollars.

Xue He's team had a floating profit of more than 210 million US dollars.

Song Yang's team had a floating profit of more than 170 million US dollars.

Li De's team had a floating profit of more than 180 million US dollars.

Liu Feng's team had a floating profit of more than 190 million US dollars.

...

Liu Wei's team had a profit of more than 80 million US dollars.

The combined profit of the eight teams reached more than 1.263 billion US dollars!

If you add the 700 million US dollars in losses incurred by the entire Galaxy Fund, it means that the value of the fund had increased by more than 1.96 billion US dollars in just one day.

That was truly terrifying!

Over the phone, Xia Yu could also feel the excitement of each team.

However, he remained calm and, after encouraging each team, he specifically told them to remain calm and maximise their gains.

In the following days, the adverse effects of Mexico's sovereign debt default became increasingly serious. After being reported by the media around the world, it became almost universally known, of course, not least due to Xia Yu's media empire.

However, in today's situation, it is only natural for the media to compete to report related news, so it did not arouse the suspicion of others. On the contrary, due to various excellent news, the media controlled by the Jiuding consortium behind the scenes tended to stand out, and the sales of many newspapers rose, and the ratings of TV stations also continued to rise.

On August 7, the total floating profit of the Galaxy Fund reached more than 2.55 billion US dollars.

On August 8, the total floating profit of the Galaxy Fund reached more than 3.63 billion US dollars.

By August 9.

While commercial banks and governments in Europe and the United States were still discussing a proper solution to the issue of Mexico's sovereign debt default, another country announced that it was unable to repay its debts despite the obstruction from Europe and the United States.

At 11am.

The Argentine Finance Minister held a press conference, announcing in front of everyone, with a face full of guilt, that Argentina was unable to repay the principal and interest of its sovereign debt of 43.6 billion US dollars, but that Argentina would definitely do its best to find a way...

No one paid attention to the pompous nonsense that followed from the Argentine Finance Minister. Major European and American banks wailed one after the other, and in particular the pressure on banks that had lent to Argentina increased dramatically.

Argentina, on the other hand, after announcing its inability to repay its debts, saw its already volatile and declining stock and foreign exchange markets completely collapse!