Chapter 16 4. Case Analysis

Of course, in order to make this chapter more exciting, I found three more case studies for everyone to see.See how Russia is calculated. Russia's Deripaska Group has a large enterprise called Rusal, which is one of the world's three largest producers of aluminum and aluminum alloys; in April 2008, it acquired Russia's Norilsk Nickel Company, The latter is the world's largest nickel producer.How much did you buy? 25% stake.Do you know what the total value is?The total value is 13 billion U.S. dollars, and they have provided 8.5 billion U.S. dollars themselves, and the other 4.5 billion U.S. dollars are borrowed.Note, who did they borrow from?Borrowed $4.5 billion in credit from Goldman Sachs, Morgan Stanley and the Royal Bank of Scotland.Then what to use as collateral?Because Rusal acquired a 25% stake in Norilsk Nickel, these banks demanded that all of the acquired 25% stake be used as collateral.Now, Rusal can't pay back the money.Fortunately, on October 30, 2008, the company received a last-minute financing of $4.5 billion from Putin.But the Western consortium refused to return the stock at the current market value.Why not pay it back?If you give me money, I don't even want to pay you back.I want your company, it doesn't want money, what it really wants is equity.

Alfa Bank is the fifth largest bank in Russia. October 30, 2008.A Russian bank called VEB provided Alfa Bank with a loan of 2 billion US dollars to repay the loan owed by Alfa to Deutsche Bank.Because Alpha Bank borrowed $2 billion from Deutsche Bank, what is the collateral?It is the equity of the second largest mobile phone operator in Russia.That is to say, the holding company of OAO Vimpelcom is Alpha Bank, so Alpha Bank took 40% of the equity of the mobile phone company and mortgaged it to Deutsche Bank of Germany, thereby borrowing 2 billion US dollars, and now Alpha Bank has not paid it out.What about the result?There is no way to borrow 2 billion US dollars through VEB Bank to redeem these bonds, otherwise 40% of the company's equity will fall into the hands of Deutsche Bank.This is the second case.

The third one, related to China, is called Eurasia Group, which produces steel and coal.The company borrowed US$10 billion from a syndicate of Western banks and in February 2008 acquired a 51% stake in a metallurgical company in Xingtai, China.Now that the Eurasian Group is in a financial crisis, and the Russian government is also paying for it, how much do they want to borrow? In November 2008, Eurasia Group submitted a loan application of US$1.8 billion to Russia's Foreign Trade Bank. On November 27, the two parties signed a loan agreement, of which US$200 million will be used to repay the short-term debt of Eurasia Group.In the end, the Eurasia Group received another US$1 billion in support.

From the three examples I gave readers, it can be seen that the commonality of these companies is that the equity has been mortgaged. In January 2009, the most interesting news was that the Russian government was busy saving companies.What is the purpose of salvation?It is to redeem the shares.In order to prevent the equity of these large Russian companies and banks under the impact of this financial crisis from being completely controlled by foreign capital. The content of my two chapters is about the result of rising oil prices and then suppressing them. It is the international financial speculators who calculated China and Russia.Neither outcome is what we foresee, nor is it what I would like to see.But we would like to tell readers that you should not treat the international financial crisis as a single event.Please note that under such a big impact of the international financial crisis, it has caused such a big impact on the world, especially European and American banks, but they still have room for it.

And, you see, the high level of operation makes us shudder, why?This high level of operational craftsmanship will make it easier for them to obtain funds, so they may use the calculated money from China and Russia to slowly get them out of trouble and make us enter depression and enter difficulties.What does it mean?This is a transfer of resources. Therefore, I now believe that under the impact of the international financial crisis, the result of cooperation between banks in Europe and the United States and international financial speculators is to sweep a large amount of funds from China and Russia for its recovery, and make us fall into difficulties.I think our enterprises and our government should pay more attention to this point.This is what I call financial unrestricted warfare.

Before our society can take effective steps to prevent the impending energy crisis, we must first understand what is at stake.We know that the tech bubble hit most investors hard. In fact, the consequences of this crisis could have been much worse. If we were not lucky, the United States may have suffered a major economic collapse- — not the general poverty of history, but the downfall of whole civilizations.The impending energy crisis will bring us such a crash within our lifetime if we do not take preventive measures. This prediction may sound alarmist, but in fact, today's crisis is no different from those in history that have destroyed entire societies.You only need to compare the world maps of different eras to find that the replacement of countries is so frequent that a civilization is as fragile as a business.If we humans let our egos go unchecked, we will be caught off guard when the next crisis hits.

Of course, it is difficult for us to accept the statement that "civilization may collapse".Just imagine, the United States has existed for about 231 years, and no one alive has seen what it was like before the founding of the country.In addition, Western civilization, along with Judaism and Christianity that have existed for centuries, have always inspired us to believe that we are a unique race in this world.By extension, we are used to thinking that our civilization is as special as our country, and therefore our civilization cannot be destroyed as easily as ancient civilizations, pagan civilizations or other civilizations.

Yet science—a powerful tool to dismantle this wonderful illusion of ours—reminds us that we are not special.Because anthropology tells us that those civilizations that have declined in history also think they are better than their neighbors and ancestors.Just as no investor in 1999 believed the tech bubble would burst, no one at the time could have imagined that their civilization would suddenly collapse.Do we really believe that the United States, which has only existed for 231 years, is stronger than the Roman Empire, which lasted for more than 1,000 years? (This article is excerpted from "The Coming Economic Collapse" by Stephen Lieber and Glen Stracy)