Reborn Millennial Gamer

Chapter 603 The Bear Stearns Moment (4k)

In early February, American colleges and universities start the school season.

The whole family was mobilized to accompany Zeng Yu to report to New York University.

With the endorsement of the tenth richest person in the world, Zeng Yu’s master’s tutor assigned by New York University is the head of the Department of Computer Science, the head of the Data Science and Artificial Intelligence Center, and the winner of the Turing Award.

That is the Nobel Prize in computing.

After arranging everything, Zeng Li specially brought her great mother, Lu Xia, and three generations of grandparents to Florida to travel and relax.

Lu Fei stayed in New York and stayed at the Millennium Broadway Times Square Hotel. The next day, the New York Times Group held a new book launch conference for Lewis in the conference hall as scheduled.

"The Big Short" was published on New Year's Eve. On the day of listing, the "New York Times" spared no effort to promote it, which was not as good as John Paulson and Bill Gates on Twitter and Facebook. Understand the whole picture of subprime mortgage in America.

Coupled with the celebrity effect of Master Lu, it was on the bestseller lists of Amazon, The New York Times, etc. in less than three days.

The well-known Lewis was suddenly taken away by Master Lu and became a new best-selling author in the financial circle.

Naturally, being willing to be Master Lu's mouthpiece is equivalent to the "public knowledge" of the United States.

Facing the lens of long guns and short guns, facing the readers here, especially the senior executives and elites of Wall Street investment banks, as well as funds and institutional investors, he described subprime mortgages endlessly:

"This year, the G[-] finance ministers and central bank governors' meeting statement pointed out that the impact of the subprime mortgage crisis has gradually increased.

"Whether we can't see it or pretend not to see it, a fact stands in front of us, that is, the cut-off of P2P and subprime mortgage customers has caused MBS, CDO, and P2P fund pools to lose their source of cash, just like a faucet lost water supply..."

"The default rate of mortgage loans keeps soaring, and the number of unemployed people across the country keeps increasing. I think the abnormal prosperity of the US stock market is coming to an end. According to my prediction, it will be as soon as 2008."

"That is to say, there will be an economic crisis this year!"

"The power is completely far beyond the Southeast Asian economic crisis in 97, because this time it will be a global crisis. It originated in the United States and will affect the entire world economy..."

World economic crisis? !
Many people here couldn't help exclaiming. You must know that today's media is still applauding subprime mortgages. It is all good news, but according to the analysis in the book, it seems to be very reasonable.

Is the US stock market really going to crash this year?
"Hehe, nonsense!"

In the middle of the whispering crowd, a voice suddenly erupted. Lu Fei turned his head and looked, and a tall, thin man with a hooked nose stood up. John Paulson came over and introduced:
"Alan Schwartz, the executive president of Bear Stearns, my former boss, now Bear Stearns has the final say. Kane has been dismissed by the shareholders' meeting because he is obsessed with bridge and doesn't care about the company's operations."

"Kane made a good plan and jumped out of the fire pit by himself."

Lu Fei smiled coldly, "Let him be a firefighter."

"Subprime mortgages are the cornerstone of American finance. America will never sit back and watch subprime mortgages collapse. You are completely alarmist!"

Schwartz stretched out his finger, "Not long ago, the six major banks on Wall Street launched a 'lifeline' plan, as long as homeowners who are more than 90 days overdue in repayment apply, they can get a 30-day buffer period, and the Fed cut interest rates again up 50 basis points..."

"But so what?"

Lewis got hints from Lu Fei's eyes and said with a smile: "Recently there have been more and more rumors about Bear Stearns on Wall Street. I heard that some fixed income and stock traders have begun to withdraw funds?"

"The China Securities Regulatory Commission has clarified for Bear Stearns."

Schwartz said in a serious tone: "Our capital ratio is kept above 10%, and we have sufficient buffer capital. Listen carefully, it is personally certified by the China Securities Regulatory Commission!"

Letter to the SEC?It is better to believe that I am Qin Shihuang.

A contemptuous smile appeared on the corner of Lu Fei's mouth.

"Lu! It has fallen below $70."

John Paulson elbowed and handed over the phone.

The text message shows the current stock price of Bear Stearns, and the staff of the Three Body Fund will send real-time information about the rise and fall of the stock prices of Lehman, Merrill Lynch, Goldman Sachs and other Wall Street giants.

There is almost no suspense, and today's opening is all down.

"John, you must talk about your credibility when you are on Wall Street. If you say that you want Bear Stearns to die violently, you must die violently."

Lu Fei glanced at the sophistry Schwartz, put his hands on his neck, and made a gesture of wiping his neck at Lewis.

At this time, under the watchful eyes of everyone, Lewis took out a research report that had been prepared, mercilessly exposed Schwartz's lies, and took Bear Stearns' bottoms and pants——

Bear Stearns has serious problems, and this problem is probably just a microcosm of the financial market!
The United States must be alert to the immeasurable systemic financial risks brought about by subprime debt and P2P!
The entire report was produced by the Wharton School of Business.

Reliability and authority make it difficult to refute for a while. The key data listed are clear at a glance. P2P, funds, subprime mortgages, debts, leverage, etc. are all-encompassing. Dissecting Bear Stearns is like dissecting a sparrow. See blood.

In particular, it exposed the lies released by Bear Stearns before——

There is simply no $180 billion in cash reserves!

Bear Stearns money keeps leaking!

The chain reaction brought about is that the subprime mortgage bonds held by Bear Stearns and the commercial real estate invested by Bear Stearns are in jeopardy.

Once such a large amount of bonds and projects fell into the hands, the bills in the leverage, bank financing, commercial mortgage claims, and equity bridge loans, Bear Stearns was sitting on the explosive barrel.

One flame, and it was blown to pieces.

From the economic situation, capital data, debt status to project affairs, everything is available, and there are even insider revelations.

"I have a friend from Goldman Sachs. He said that not long ago, he rejected a normal transaction of yours because it has been confirmed that Bear Stearns' credit is not enough to support a normal transaction."

As Lu Fei's mouth instead of the spokesperson, Lewis crazily output: "Is this all fake news?"

"Of course it's fake news!"

Schwartz lacked confidence, and insisted: "It's just that Bear Stearns is a major participant in subprime mortgages, so there are such and such rumors. In fact, they are all fake news. Let me ask you, looking at the financial history of Wall Street, there are some Could an investment bank like Bear Stearns fail? Possibly? No way! Unless you get caught for criminal activity, so I’m still optimistic about Bear Stearns.”

"But now, the stock price of Bear Stearns is about to fall below $60!" The investor sitting in the back seat suddenly stood up.

"what!!"

In an instant, the whole hall was in an uproar.

The investors who had nothing to do with Bear Stearns breathed a sigh of relief, and then gloated at the people who were related to Bear Stearns, with panicked faces and fidgeting.

Only half an hour after the press conference, the share price of Bear Stearns plummeted from 77.32 US dollars to 61.79 US dollars.

The drop reached a terrifying 20.08%!

Since the stock market crash in 1987, the biggest one-day drop in U.S. stocks, even if the Internet bubble burst, is not so exaggerated.

The stock price has plummeted from a high level, and it is impossible to see the bottom at a glance.

Everything that happened in a short period of time made Schwartz's head buzzing, and he hurriedly left the press conference without caring about his demeanor.

One, two, three...

More and more investors left the market one after another, and in a blink of an eye, from full seats to very few seats.

There are only a bunch of media left, staring wide-eyed.

If you say it will fall, it will fall, this is so amazing!
"Lu, the unit price of Bear Stearns' subprime bond CDS contract for every $1000 million has soared from $31.6 to $61.9, and it is very likely to exceed $70."

John Paulson grinned from ear to ear.

"Slowly throw out all the CDS in our hands."

Lu Fei stood up while applauding.

At this moment, the media who smelled the smell swarmed, instead of surrounding Lewis, they surrounded him and John Paulson instead.

"Lu, "The Big Short" is also signed by your name. Can I understand that this is a snipe against Bear Stearns?"

"You said it, not me."

Lu Fei waved his hand, "Actually, I just acted as a consultant to Lewis, just like I served as a consultant to Friedman in "The World Is Flat". Offer it to him."

"There are too many books about subprime mortgages. Are the writers and economists who wrote these books also attacking?"

Immediately after shrugging, "We don't need to hide when we want to short Bear Stearns, and I wouldn't dare to admit it if I want to snipe, but if there is nothing, there is nothing, and I don't need to deny anything."

Master Lu, you are so bad!

Seeing him talking nonsense with his eyes open, John Paulson suppressed his smile and tried his best to restrain himself in front of the media.

"What kind of impact do you think Bear Stearns' decline will cause? Is Bear Stearns already dead?"

The reporter cast an eager look.

"I don't know, I just know that this is the beginning of Bear Stearns, let the bullets fly for a while, maybe until the 'Bear Stearns moment', Bear Stearns will really be over."

"Bear Stearns moment?"

"That's when Bear Stearns was in real crisis."

"What kind of crisis? When?"

The reporter asked eagerly.

However, Lu Fei only left them with a mysterious smirk, just like God mocking mortals.

When everyone was puzzled, the "Bear Stearns Moment" unexpectedly appeared on the second day.

With the "Wall Street Journal", "New York Times" and other media constantly slandering subprime mortgages and investment banks such as Bear Stearns, Lehman, and Merrill Lynch, investment sentiment is becoming more and more pessimistic.

All kinds of rumors unfavorable to Bear Stearns spread on Wall Street. Even the clarification by the Securities and Exchange Commission of the United States will not help. Public opinion has reached the point where it is out of control, and panic has swept the country.

Not only in the United States, Bear Stearns' customers around the world rushed to withdraw their funds. Within two days, they withdrew 150 billion US dollars one after another, directly running out of cash reserves.

By Thursday night, Bear Stearns only had a measly $10 billion left in his hands, but the house leak happened to rain all night——

The loss of funds is also its own P2P platform.

The borrower has not paid the money, and the lender would rather pay liquidated damages than withdraw the capital before the investment period expires. Bear Stearns also has no extra funds to fill the P2P hole, and the capital chain immediately collapsed.

Finally, the P2P platform of Bear Stearns is thundering!
Hundreds of funds and 10,000+ middle-class Americans entered the deep pit of tens of billions of dollars on the platform, and it exploded with a bang.

The chain reaction of thunderstorms soon spread to 2 to 2 P[-]P platforms across the United States. Small and medium-sized platforms suffered thunderstorms one after another because of lenders’ breach of contract. On the verge of a thunderstorm.

The entire P2P market worth hundreds of billions of dollars was on the verge of collapse because of Bear Stearns' thunderstorm.

But all of this, Schwartz can no longer take care of.

Even ignoring dignity and reserve, he called everyone on Wall Street for help one by one:
For the sake of the same eagle sauce, give me a hand!
As a result, all that was exchanged was the immovability of the friendly troops.

Deutsche Bank, Merrill Lynch, Goldman Sachs and other peers hung up the phone one after another, not only refusing to trade with Bear Stearns, but even making matters worse——

Backhand short Bear Stearns!

Everyone pushed the wall down, and when the repurchase market was announced to be closed to Bear Stearns, it was equivalent to completely closing the door of hope.

The entire company suddenly fell into despair.

Whether you can live to see the sun tomorrow depends on the Federal Reserve and the Treasury Department, otherwise you can only file for bankruptcy.

As the finance minister, Henry Paulson was completely dumbfounded when he received Schwartz's distress call, suspecting that his ears had heard it wrong.

Bear Stearns, No. [-] on Wall Street,

With assets worth hundreds of billions of dollars and cash on hand of only $7811 million, not even $[-] million, he was so embarrassed that the stock price fell to the ground.

Only $21.8 per share is left.

The market value has evaporated by 71.8%!

Henry Paulson put down the phone with mixed emotions.

I have an anonymous share in both the Paulson hedge fund and the Three-Body Fund. The worse Wall Street giants like Bear Stearns lose and the worse the subprime mortgages fall, the more they earn.

Looking at "The Big Short" on the table from the corner of the eye, he couldn't help but sigh: "Why is God always on Lu's side? Is he God's illegitimate son?"

But we can't control so much, bring the supervisory authority headed by the Ministry of Finance, and negotiate urgently with the Federal Reserve led by Bernanke.

The first question is not how to save Bear Stearns, but whether to save Bear Stearns?

After all, the former governor of Arkansas who used taxpayers' money to save the Wall Street hungry wolf that everyone despises has been scolded bloody.

Is it really worth it for all of you here to risk the world's disgrace and carry your black hat to save Bear Stearns?
"If Bear Stearns collapses, once the subprime mortgage assets held are sold at a low price in the bankruptcy process, it will cause a chain reaction that is difficult to estimate in the market. Such assets held by major institutions and funds will also be worthless. , the whole financial system is over."

Henry Paulson said in a serious tone: "Bear Stearns' P2P thunderstorm has already caused huge losses, and Bear Stearns' bankruptcy must not lead to the collapse of the mortgage bond market."

"The truth is this truth."

The Fed official shook his head and laughed, "Although we assume the role of lender of last resort, Bear Stearns is not a bank, but an investment bank. In principle, it should not be under the supervision of the Fed."

"This is indeed a problem." Henry Paulson touched his chin. "No matter how we do this, we must have a basis."

"As for the evidence, we're here to find out. If we want to save Bear Stearns, we have a way to save Bear Stearns. We have the right to explain." Bernanke narrowed his eyes into a line.

"Beyond that, we have to find some foreign aid."

"Who? Buffett?"

"Besides him, there is Lu!"

Henry Paulson glanced out the window, the sun was shining brightly.

(End of this chapter)