God-level Trader of Rebirth

In the early 21st century, the Wall Street Journal first proposed the concept of "Wall Street's five major investment banks" in an analysis article.

Later, the financial circles in Europe and the United States expressed their recognition and cited it.

These five investment banks are: Goldman Sachs Group, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns.

Although these five financial groups have a dominant position in the investment banking industry, since the subprime mortgage crisis broke out in [-], their businesses have been impacted to varying degrees.

The first to be affected was Bear Stearns.

Bear Stearns was founded in 1923 and is headquartered in New York.

Before the subprime mortgage crisis broke out, he was the fifth largest investment bank on Wall Street and a frequent client of Fortune 500 companies.

With more than 1.5 employees, its main business is to provide investment banking services such as stocks, bonds, fixed income, and asset management to global corporate institutions, governments, enterprises, and individuals.

Although its asset size is difficult to match compared to the top four investment banks, in terms of profits alone, this company was the most profitable investment bank in the United States from 2003 to 2007.

In the 90s, Bear Stearns followed Lehman Brothers and began to engage in mortgage-backed securities.

This was the business with the highest interest rate in the securities market at that time.

Time has entered the beginning of the 21st century.

Bear Stearns' business expanded rapidly and soon occupied the main market in the mortgage-backed securities business.

In [-], its sales of mortgage-backed securities exceeded one trillion US dollars, five times the sales in [-]. Its pre-tax profits exceeded those of Goldman Sachs and Morgan Stanley, making it the world's most profitable company. The highest investment bank.

After tasting the sweetness, this business soon became one of the main businesses of Bear Stearns Investment Bank.

This allowed it to rank very high in the industry for five consecutive years before the subprime crisis.

However, no one expected that this "top student" who had always performed well would become the first "king" to fall into the mortal world during the subprime mortgage crisis.

In the first half of [-], the mortgage market began to weaken, and Bear Stearns' performance also began to decline significantly.

Two of its hedge funds collapsed, causing investors to lose more than $15 billion.

Although Bear Stearns was hit hard at this time, it was not enough to collapse a financial group as big as them.

But in financial markets, confidence is more important than gold.

In February 90, Bear Stearns' stock price was over $[-].

Friday, March [-].

After Bear Stearns announced its first quarter results, its stock price plummeted 47%, finally closing at $30 per share.

At this time, their company's market value was only over US$30 billion, but its bond assets on its books exceeded US$3000 billion, and its leverage ratio had soared to more than 100 times!
Faced with a sharp increase in credit risks, news soon spread in the market that Bear Stearns "may" collapse.

A large number of investors and counterparties also had doubts about its ability to fulfill its obligations, and they all redeemed their bonds in advance.

As a result, overnight, the cash available for payment at Bear Stearns plummeted from US$180 billion to less than US$2 million at an astounding speed.

It's clear that it won't be able to open its doors normally next Monday.

If the liquidity crisis is not resolved over the weekend, Bear Stearns will go bankrupt on Monday.

However, at this time, as the chain reaction of the subprime mortgage crisis began to appear, major financial institutions on Wall Street were already overwhelmed, and there were even fewer institutions capable of acquiring Bear Stearns.

In the end, Bear Stearns filed for bankruptcy in federal bankruptcy court.

In order not to cause panic in the market, the Federal Reserve was forced to intervene. After nearly three weeks of mediation, the company was sold to JP Morgan at a very low price of US$2.4 million.Morgan promised to assume all its debts and retain all the company's personnel structure, but only if the U.S. government guaranteed it and the Federal Reserve provided a credit loan of 50% of Bear Stearns' debt to merge and reorganize the company's business.

This move saved Bear Stearns' life and allowed the U.S. banking system to temporarily avoid disaster.

However, after this incident, everyone has fully seen the danger of "subordinated debt".

The so-called subprime debt is, to put it bluntly, junk debt.

At the peak of the real estate bubble, banks were very keen on providing mortgages. As long as you signed your signature, you could get the mortgage without any proof. You just had to make up your salary and no one would investigate.

Then everyone just keeps taking out loans, buying houses, and changing hands, pushing house prices to continue to rise.

Wall Street continues to cut up mortgages, package them into asset securitization tools, and sell them externally.

In other words, they sold these junk bonds to stock market investors.

The reason why investors dare to buy is because they are insured by insurance companies, so everyone is doing it unscrupulously and feels that their risks are very small.

However, in the final analysis, this is a game of passing the flower by beating the drum. If the drum stops, whoever has the flower in his hand will die.

Bear Stearns was the first to fail, then Lehman was the second!

Because the scale of subordinated debt he holds is much larger than Bear Stearns!
Big enough to shake the entire American financial system.

Fuld, the CEO of Lehman Corporation, was still entertaining major clients in India. When he heard the news of Bear Stearns' bankruptcy, he immediately took a flight back home.

By this time, Lehman's stock price had begun to plummet.

Then came the banks, and news of the cessation of trading with Lehman filled the newspapers and media.

All signs are sending a signal to the outside world that it is difficult to sell the "bad assets" in Lehman's hands.

It has to be said that when people are unlucky, bad news always comes one after another.

Fuld hurried back to the company. Before he could take a breath, Paulson, then the federal finance minister and his former nemesis, kept calling to inquire about the situation.

He believes that Lehman's continuous loss of trading partners may mean that disaster is coming.

Facing the gloating tone on the other end of the phone, Fuld could only pretend to be calm, show a confident look, and repeatedly told him, "We'll be fine," before letting him temporarily close the phone. Bad mouth.

But in the subsequent stock market, Lehman fell 35% at the opening.

In desperation, Fuld wanted to announce results in advance to enhance investor confidence, but doing so somewhat sounded like there was no silver here.

So it had no effect, and Lehman's stock price continued to fall, falling by 48%.

As a last resort, he could only hold an emergency company meeting again to try to come up with a perfect solution.

At this time, the market was already flooded with news that Lehman was about to go bankrupt.

Wall Street ushered in a veritable "Black Monday."

U.S. stocks plummeted, global stock markets plummeted, and Asia-Pacific stock markets and Australian stock markets also fell sharply.

at the same time.

Goldman Sachs Group Inc., Asset Management Division, New York.

All the traders in the entire department were sitting in front of their work desks with solemn expressions. With their right ears pressed against the phone, they called the heads of major hedge funds one by one, suggesting that they all short-sell Lehman Brothers.