Wind Rises 2005

Chapter 623 Under the Avalanche

"That guy Paulson took action..."

A phone call spanned both sides of the ocean. On one end was Sister Jiang who was in New York, and on the other was Ma Liang who was still in Shanghai.

The time has come to September, and the economic collapse caused by the subprime mortgage crisis lasted only a moment.

Ma Liang had already told Sister Jiang to keep a close eye on the movements of several super short sellers. After all, this was the only way he could remind them.

You can't say that you are foresight and can predict the precise time.

He has been shorting U.S. stocks for the past year. Not only has he made huge profits, Jiang Yinqiu has also benefited a lot.

This is already very miraculous, but you can't do anything to show yourself to others.

Hearing the news from Senior Sister Jiang, Ma Liang immediately warned: "Sister, you can take action at any time!

If you have enough authority, go all in and short U.S. stocks. "

"All in?" Jiang Yinqiu said in surprise. She was still a little hesitant. After all, things like big short mistakes often happened.

Ma Liang replied without hesitation: "Yes, just do it.

Starting from today, I will also mobilize all funds to short U.S. stocks. Judging from the available information, the U.S. economy is on the eve of a complete collapse. "

"Is it that exaggerated?" Jiang Yinqiu still couldn't believe it.

Now the Internet industry is booming, and the mobile Internet is also at the beginning of its rise. There are obviously many positive signs, and it doesn't feel like a complete economic collapse is going to happen.

If that were to happen, wouldn't it be scarier than the bursting of the Internet bubble in 2000?

Ma Liang paused for a moment, then responded firmly: "Sister, it's only the first week of September, and oil prices have dropped sharply. This is both good news and bad news.

Moreover, the financial industry is even more miserable, especially bank stocks, which have fallen sharply.

In the past six months, you have also seen that I have been shorting the financial sector and have never made a mistake. This is enough to show that there will definitely be a wave of super big market in the future.

Especially the share price of Lehman Brothers, which used to be as high as over 50 US dollars, is now almost gone.

Next, I will focus on shorting these bank investment banking stocks. I guess those big short sellers must have similar plans. Sister, you can follow them all in. "

"Okay, I'll study it some more and report it to my boss before I talk to you." Jiang Yinqiu finally agreed.

After hanging up the phone, Ma Liang fell into deep thought again.

The funds he can allocate are limited, and he cannot compare with those big short sellers. After all, they have been doing hedge funds for many years.

However, this opportunity was rare. Even if it meant temporarily borrowing working capital from other companies, finding a bank loan, or even increasing leverage, he would take action and make a big profit.

There is also good news from Jennifer's side, the private equity fund raising is going very smoothly.

Although it is still far short of the first-phase goal of US$10 billion, it has also raised several hundred million US dollars.

Although these funds are used for venture capital, they can also be borrowed temporarily through certain operating techniques.

In this way, Ma Liang will eventually have a lot more funds to use for short selling.

He immediately called Jennifer to make her fully prepared, especially since the loan had to be executed as soon as possible.

With the shares of startup companies that [Dafeng Capital] has invested in before, it is possible to turn over a lot of funds through banks.

In particular, Twitter shares are as easy to use as hard currency when mortgaged.

Short-term dismantling is normal in the United States. Just through loan operations, another billion dollars can be made in a short period of time.

With everything ready, the drama finally kicked off.

On September 9, the share price of Lehman Brothers, which has a history of 9 years, continued to fall, causing market volatility again.

On September 9, negotiations between Lehman and China Development Bank broke down, and the stock fell 10% that day, completely triggering a downward frenzy in the U.S. stock market. On September 45, Lehman announced that its losses in the third quarter of that year would reach US$9 billion, and announced its restructuring plan and further measures to reduce its holdings of residential mortgage loans and commercial real estate, and cooperated with Blackrock to reduce residential mortgage risk exposure. .

On the same day, Lehman's stock fell sharply again by 42%.

On September 9, Lehman announced that the company was in serious financial crisis and was seeking to sell the entire company.

This move completely triggered panic in the market. Business partners stopped trading and doing business with Lehman, and customers transferred their business with Lehman to other banks and securities firms.

The share price of Lehman Brothers suddenly fell to $3.65 per share.

In other words, after entering September, Lehman's stock price fell by 9%, but it is not over yet.

At eight o'clock in the evening, Friday, September 2008, 9, an important meeting related to the national destiny of the United States was being held nervously in the conference room of the Federal Reserve Bank of New York.

Attendees include: Goldman Sachs’ Blankfein, Merrill Lynch’s Thain, Morgan Stanley’s Mack, JPMorgan’s Dimon, Citibank’s Pandit, BNY Mellon’s Kelly, and Credit Suisse Duggan of BNP Paribas, Schenck of BNP Paribas, Alemany of Royal Bank of Scotland and Wolff of UBS.

Of course, there are also US Treasury Secretary Paulson and Securities and Exchange Commission Chairman Cox.

New York Fed Chairman Geithner is the main convener of this meeting. He has only one goal, and that is to reach an agreement to rescue Lehman Brothers.

However, Lehman Brothers and its potential acquirer Bank of America did not receive the invitation.

Because the previous government participation in the Bear Stearns bailout plan had caused public dissatisfaction, the government chose not to provide funds this time.

Immediately afterwards, Bank of America and Barclays also announced that they had abandoned their plans to acquire Lehman Brothers.

This time, Treasury Secretary Paulson wants to force Wall Street financial tycoons to spend money to rescue Lehman. After all, it was you who caused the disaster.

But the big guys here hope that the Treasury Department or the Federal Reserve will take action. Some of them regard Paulson's threat as a power game strategy and simply ignore it.

In the end, this game of power and interests failed to reach a consensus at the meeting.

Paulson only hopes to form a consortium of financial institutions to acquire Lehman's non-performing loans; but these financiers are also afraid of getting burned, and they do not believe that the Federal Reserve cannot endorse Lehman Brothers, which is already a bottomless pit.

After all, as of the weekend, Lehman Brothers only had US$10 billion in cash in its account, which meant no acquisition at all.

A meeting broke up on bad terms, and Lehman seemed to be doomed.

On September 9, Merrill Lynch agreed to sell its shares to Bank of America for a total stock price of $14 billion due to losses of more than $450 billion in mortgage investments.

The fall of the Main Street brokerage shocked the world.

On September 9, Lehman announced that its efforts to sell itself had failed and formally filed for bankruptcy protection.

Early that morning, Lehman's headquarters building was already crowded with reporters.

Employees enter the office individually and pack their personal belongings into suitcases. When they left with their suitcases, some had solemn faces, some held their heads and cried, and some lost control of their emotions and angrily yelled at the journalists who came up.

In the end, Lehman Brothers failed. It is said that the credit default swap exposure it held was as high as $4-6 trillion.

This super giant company with debts of up to 6130 billion US dollars collapsed. In addition to more than 2 employees losing their jobs, it also triggered a chain reaction in the financial market.

As soon as the market opened in the morning, the U.S. stock market encountered "Black Monday". The Dow Jones Index hit its largest single-day drop in points and losses since the "9.11" incident, and global stock markets also plummeted.

The next day, Asia-Pacific stock markets, Japan, Hong Kong, Taiwan, and South Korea all fell by more than 5%.

At this point, the global economy encountered the Lehman moment, and the subprime mortgage crisis eventually turned into a world-class financial tsunami.

Of course, there are always lucky ones under an avalanche, and those who are prepared have the last laugh.

In addition to those super short sellers, Ma Liang and Sister Jiang University are naturally among them.

(End of this chapter)