Reboot 2003

Chapter 217 Chapter 125: Lessons from the Past (Three in One)

Trouble is coming. Although it is a bit of a joke, Chen Aotian has indeed not been active elsewhere. Just because others came to Weibo specifically to find him does not mean that this matter is not important.

The person who came was Meili Jian's current finance minister... assistant.

Her name is Jane Kashkari, a professional lady who looks calm and dignified.

Although he is not a minister, he is still a person sitting in the front six rows in China. He condescended to come to Weibo, registered an account, and got a certification.

The reply was a Weibo post by Chen Qin two days ago——

In recent days, Weibo's trend has completely reversed along with Goldman Sachs' stock trend.

What Chen Qin did before was very simple, he just issued a short selling report.

Issuing a short-selling report is not a bad thing in itself. Investigation reports from third parties can indeed regulate the market in a sense, especially since Goldman Sachs itself writes financial reports. Now that it has added Chinese business, it is reported by Chinese media every few days. He poked his spine and scolded him for being a trader, but even that didn't stop him from writing his essay. Being asked to write an investigation report in Meilijian can only be said to be karma, and there should be no problem in itself.

The previous bad wind seemed to be because the report seemed a bit unclear, and the whole thing seemed a bit flimsy. If Chen Aotian hadn't really shorted his own money, others would probably just think that he was doing it. Grandstanding.

But the situation now is different after all.

The short-selling report said that Goldman Sachs operates a large number of subprime mortgage derivatives-related businesses. This part of the business is too risky. This matter is still unclear, but it has exposed the tip of the iceberg. After the thunderstorms in the new century, Goldman Sachs' stock price fell. It has fallen more than 20% from its high.

Of course, those retail investors who were trapped were unhappy, but after all, they came here to squeeze the quilt, and the other party put things on the table in advance. They were still scolding them when it fell last time, but this time they were all convinced. Well, in the past few days, a large group of leeks have been pestering Chen Aotian every day, asking what will happen next?Will it still fall?Your report is too difficult to understand. Can you tell us directly if it will still fall?

Some financial practitioners came to communicate with him. Two days ago, someone argued with him about the impact of rising default rates on some bonds. Chen Aotian responded with some content. Although it was easy to understand, it was not professional enough.

Ms. Jane from the Ministry of Finance said: "Are you sure that what you said will happen?"

Her tone was not very tough, it seemed like she was just asking casually, but her certified identity was very conspicuous. When she clicked on her personal page, she saw that she had registered today, and the first thing she did after registering was to reply to this Weibo post. .

Chen Qin remembered the interview with Sun Xiaomei at that time. Of course, the situation this time was different.

He returned to the home page and replied: "This is just my opinion, of course I am happy to see others recognize my investment strategy."

After replying, he started to look through his other contact letters. The message just now was sent by Gu Wenjie. He also had other messages. For example, the ABX index fell by another 3 points today. For example, a beautiful official from the Ministry of Justice talked about the Internet. The importance of information security, and Bloomberg published an article inviting scholars in the field to write, also disclosed some unfavorable information for Goldman Sachs.

However, in this article, the author gradually talked about the problem of inadequate financial supervision. He talked about the excessive circulation of some derivatives in the market, which has deviated from the original intention of their design.

"Then you should publish it in professional financial publications instead of tempting young people here to buy financial derivatives they don't understand."

Chen Qin immediately replied: "Did Paulson send you to teach me?"

The Assistant Finance Minister seemed to be saying nice things. In contrast, Mr. Chen was a bit too irritable, but of course he knew what she meant - in Meili Jian, persuading others to buy and sell financial products is a very troublesome thing. Although the supervision in the Internet field is not perfect now, as long as information is provided, it will need to be regulated to control insider trading and financial fraud.

Because of this obvious reason, the official from the Ministry of Finance was obviously here to talk.Although Chen Qin had not broken the law, she specifically asked Chen Qin if he was not sure. It was hard to say that she had any good intentions, so Chen Qin naturally had nothing good to say.

Of course, there may be other reasons for Ms. Jian's strange appearance, and Chen Qin doesn't know it either.

But there is no need to understand and just think the worst.

The most recent Secretary of the Treasury, Henry Paulson, was the CEO of Goldman Sachs a year ago.

This Ms. Jane is also a direct confidant of Paulson who came from Goldman Sachs. She followed the chicken and dog to heaven and entered the Ministry of Finance together.

Doesn’t this look like a naked revolving door?Is Melican Treasury the back garden of Goldman Sachs?In fact, everyone is surprised, but he was appointed by Bush, and others can't say anything.

Goldman Sachs doesn't seem to mind publicizing this relationship. Last year, Goldman Sachs' stock price rose by more than one-third, which was obviously influenced by this relationship.

So now Paulson is brought out directly. Ms. Jane responded very quickly just now, but in the blink of an eye she was silent. Only a group of red-necked netizens were left cheering and applauding below. The grievances between Goldman Sachs and that Chinese Internet company have been over. Now that they have a little understanding of it, they are happy to see these senior people in the financial industry suffer.

But after that, Chen Qin sat in front of the computer and waited for a long time, like a cute little poster waiting for a reply from a bar friend.

After waiting for a while, there was no response. Probably Ms. Jane would not reply.

...a little disappointing.

Someone made a special trip to ask him. He had expected this. Just like China Communications used official media to test the galaxy software, the attention of national agencies was not something that seemed mysterious.

But if you want to do business, you can't go against the government. Although Chen Qin's tone is not good, he went out of his way to short Goldman Sachs' stocks and even staged the drama himself on Weibo. The fundamental reason is not just because he wanted to badmouth some important government officials. .

Now that Goldman Sachs' stock has started to fall, the plan has actually come to an end. I originally thought that this important official from the Ministry of Finance could have a good 'talk' with him, but the person who came to talk to me stopped talking after a few words.

Chen Qin felt a little regretful and was about to change the window to read the financial article.

However, when I closed Ms. Jian's silent homepage, I saw another message.

It wasn't a reply to him, but a message from another follower.

It was Bex, the bald manager of Goldman Sachs. A few days ago, he also specially registered a Weibo account like Ms. Jian today. He came to reply to Chen Aotian's Weibo saying that he wanted to short Goldman Sachs and said "Welcome"... …It seemed funny at the time, but now it’s become a laughing stock.

Afterwards, his Weibo was dug out and whipped to death. People who were busy saying that it was his talk that caused Goldman Sachs to suffer heavy losses. Others speculated that he had offended Galaxy Software, which attracted the other company's attack. Now he is taking the blame. It felt a bit pitiful to be laughed at, and he himself did not dare to speak. His Weibo account kept pretending to be dead.

Bakers had been trying to 'solve the problem' with Weibo before, and the carrot and stick strategy was still being used. However, as Goldman Sachs' stock price plummeted and the situation in the subprime mortgage market became more severe, Goldman Sachs' attitude changed. He had to be even more humble, and he couldn't let Chen Qin take back the report that had been sent out.

As for CDS, the price is getting higher and higher, but of course red water funds will not give up their meat to others.

So recently, there has been no dialogue between the two sides.

But just now, when Chen Qin was talking to Ms. Jian, Bex didn't know what signal he received and sent several Weibo messages in succession.

"In any case, there are still major variables in the financial market at this stage, and Goldman Sachs will not change its operating policy in the future..."

"All our operations in China are compliant and legal, and we have a deep cooperative relationship with the local government..."

"We have never illegally traded real estate loan securities derivatives, and our financial experts have submitted a 21-page report to the Federal Reserve explaining the situation..."

Due to the 140-character limit on Weibo, it was very difficult to post Bakers' Weibo post. One post was split into several posts, which was quite laborious to watch.

Just when Chen Qin saw it, someone from the company also sent a message. It turned out that Goldman Sachs had sent an open letter to investors. Bakers specially took a copy and announced it on Weibo. It seemed that it was not specifically for He listened.

It just happened that Chen Qin was waiting to have a good chat with someone, so he immediately responded to Bex: "Why don't you tell me how many CDOs you have lost? I'm really worried about your Goldman Sachs investors."

For businessmen, quarreling in social situations is really an unseemly thing, but Chen Aotian of Galaxy is quite concerned about this kind of thing. Before this time, he had 10,000+ followers, and I can’t say how many of them he had. Fans, in short, basically come here specifically to watch the fun.

So Chen Aotian's Weibo was posted, and the onlookers below immediately forwarded it enthusiastically and started to cheer.

But this time the opponent seems to be a tough one - of course this is not a bad thing for the netizens who are watching the excitement.

They immediately saw that it was as if someone had mentioned it a little bit that day, and Mr. Chen came out with a short-selling report like he was playing tricks.

As soon as Chen Qin finished his reply, Bex from Goldman Sachs responded with a long string of Weibo posts and links to the report.

"Goldman Sachs has submitted a twenty-page report to the Fed and we are working to resolve the issue."

"We welcome investigative agencies from third parties, whether well-intentioned or malicious, but we do not welcome market saboteurs who seek to manipulate people's minds."

"We believe that the discloser of information should disclose all information related to the target in the disclosure process. You yourself also purchased a large amount of subprime mortgage derivatives, which is many times higher than millions of dollars."

"We have complained to the Federal Reserve about this at the same time, and I hope you can give your investors an explanation before then."

……

Bex said a lot of gobbledygook, but the content was quite interesting.

Although the audience didn't fully understand it, they roughly understood the meaning. "Chen, you also bought a CDO?"

"No, I didn't buy it."

"He seems to mean that you concealed some of the facts. Were you deceived by them into buying a CDO? Is that why you shorted it?"

"No, none of the institutions I am related to have ever bought a dime of CDO."

"Then what does he mean?"

It has to be said that Bex’s counterattack seemed to have some effect, and the curiosity of the audience was aroused. Of course, ordinary people could not access this information, but soon, it seemed that professional financial people discovered the problem.

"Red water funds seem to be the key to the conflict between Goldman Sachs and Galaxy Software's Chen in China."

"We investigated the fund and found that it appeared to hold another hedge fund registered with Merigan."

"This fund is called Edward Fund. It holds a large number of financial products that compete with CDOs in the trading market, and its scale can reach more than 100 billion."

“So Chen, you’re shorting subprime mortgages?”

It is difficult to have secrets in a mature trading market, and it seems that this matter was directly exposed.

Netizens on Weibo felt that they had discovered an astonishing fact. Before, shorting Goldman Sachs for 200 million was already a big deal. Now it is already a big deal, but if the investment figure is to be increased to [-] billion, Order of magnitude, they just feel a little unreal.

Of course, if this is just exposed, there doesn't seem to be much of a problem.

Hedge funds are part of the exempt market. In the exempt market, you can't complain if you lose a lot of money, but you don't have to tell others about your investment projects. They are relatively free and naturally don't have to abide by too many regulatory and legal constraints.

Now that I know this, the image of this tech executive who started out as a bit of a clown and later made millions by shorting stocks is starting to look mysterious, but there doesn’t seem to be anything wrong with it.

Chen Qin was thinking about how to reply. Just at this moment, Gu Wenjie saw the news on Weibo and asked him: "Old Chen, please be polite, those are people from the Ministry of Finance, and they are already observing our news. . Although it didn’t say there was a problem with our previous transactions, did you see that Bloomberg article?”

Chen Qin finally had time to open the article, and when he entered, he saw a shocking line of large characters:

"There are various signs that the subprime mortgage market is affecting and shaking the economic foundation of our country. Today, the industry is in chaos. We believe that the uncontrolled spillover of such financial products is the fundamental cause of the spread of the crisis..."

Chen Qin replied: "I saw it, what do you think?"

Gu Wenjie said: "They probably won't do anything to us, but Teacher Ji seems to be very concerned about this recently."

Chen Qin was curious: "What did he say?"

"He said it was okay, but he asked me to pay attention to the direction of the Meijian government. If there is any movement..."

Chen Qin continued to ask: "What should I do?"

"He wants you not to talk nonsense, and to discuss everything with him first. Speaking of which, all our previous operations were legal and compliant, but it's not good to offend people now. I think it's okay for you to short Goldman Sachs, but for Beauty Jian Guanfu, it would be better for us to cooperate more."

Chen Qin told him: "This is not considered hasty. First of all, I have a question, Wenjie, do you think it is really legal for us to buy and sell subprime-related CDS?"

Gu Wenjie actually didn't understand it at all: "Why is it illegal? Didn't you and Teacher Ji analyze the relevant laws before?"

"It's legal, but there are actually no regulatory laws related to subprime mortgages at all. Although we have no illegal operations, do you think we can really get the money when the industry is completely disrupted in the future?"

Gu Wenjie has actually never thought about this problem. In fact, most people who are doing related business have not thought about this problem at all. But at this moment, Goldman Sachs manager Bex, who had just revealed a huge truth, was facing inquiries from netizens. The information he had just disclosed raised a lot of eyebrows and seemed like a violation of their confidentiality agreement with the Edwards Foundation.

"Yes, his fund company did purchase related products, but CDS itself should not be freely bought and sold by people outside the system. I think they are doing unethical transactions. In any case, the government should step in to supervise..."

Bex struggled to explain these things, and Goldman Sachs was a little anxious. Bex was the one who took the blame for the storm, and now he seems determined to violate the confidentiality agreement and die together with Chen Qin.

Although they were buying and selling CDOs for foreign banks outside the system not long ago, now they just want to ask outside forces to intervene and help them legally solve the bad debts in their hands, but they use the same method as Chen Aotian before. In name It is said that Chen Aotian has other related investments behind the scenes, which are actually aimed at the entire industry.

In terms of lethality, it probably does have some.

But Chen Qin had already made plans for this matter.

CDOs and CDS are undoubtedly the main culprits in triggering the subprime mortgage crisis. They triggered a systemic crisis, but they themselves are actually financial products that are beneficial to the market.

The principle is very complicated, but the reason why there is such a big problem, from a future perspective, the problem should be at the implementation and supervision level. One of the problems is that it should not be freely bought and sold by institutions that have nothing to do with the industry.

The indiscriminate issuance of CDOs is of course abominable. It sells junk assets to creditors with extremely high credit ratings.

However, it is also a problem that CDS can be easily sold to outsiders. ISDA certification is originally a reasonable restriction, but this certification can fall into the hands of hedge funds at will, which obviously becomes unreasonable. When the crisis occurs, a large amount of funds have been It flowed out of the system, causing a greater impact on the subprime mortgage market itself. This is also an objective problem.

Therefore, for Chen Qin, who is a CDS investor, this has become a question that he has to consider, that is, can he get the money?
Judging from historical experience, there is no need to worry about this issue. Those short sellers in another dimension have obviously succeeded.

But his own situation is different. After all, he is a foreigner.

It’s not that there is nationality or cultural discrimination, but he wants to make so much money after all, and these CDS alone are worth more than 100 billion.

With such a large sum of money, the government might take some measures.

Historically, of course, the government would not do this. Behind the hedging institutions were a large number of investors, and what emerged after the subprime mortgage crisis was a more deadly liquidity crisis. If random enforcement of laws chilled the hearts of investors, it would be all over.

But to know the risks involved, you can probably look at the previous law enforcement methods of the Meilijian government.

For example, Enron’s financial fraud case.

Mentioning this matter, of course, it is Enron's abomination, disrupting the market order, and the evidence of the crime is conclusive.

Fang Tianchao probably took over the company on the spot, and how could he delay it for a month?

In the free United States, the government investigates the case. I don’t know how many years. In short, the incident occurred in 01, and the sentence has not been completed in 07.

This matter was originally quite simple. After all, Enron is so hateful. The Meilijian government also heard the news and was the first to jump out to eliminate harm for the people.

But this company is a world-class accounting company, and the government clauses are exquisite and clear. After the incident, the government was originally very enthusiastic, but when they saw Enron's financial information, they were dumbfounded.

During this period, the federal government used various methods, including but not limited to torture to extract confessions, parades on the streets, fabrication of evidence, legislation in court and other clown operations, and it took a lot of effort to send Enron's executives to jail.

I didn't get any benefits, and I even made myself embarrassed... This can be regarded as the current situation of the contemporary Meijian financial supervision system.

First of all, it represents the position of the government. In other words, although stuffing money is useful, don't try to ruin the reputation of the government. Enron is one of the largest financial backers of the Bush administration. The Bush administration helped it legislate, but after the incident, it was the first to jump out and draw a line. The boundary turned out to be a hard rock, and although it was a clown, it was quite scary.

Secondly, if the Meili Jian government wants to take control, it will be useless no matter how much they learn about finance. It is the government after all, and even if there are things like separation of powers and procedural justice tied up, it cannot stop what it really wants to do. .

Of course, compared to Enron, Chen Qin did much better things on his own. Everything was in compliance with laws and regulations, and he kept the 'two respects' in mind.

Although buying and selling CDS itself is a gray area, the blame for this matter is also on the banks. And although they are foreigners, Meili Jian’s financial system is different from that of China. It is not that Meili Jian is free and open, but that it is open to the public. As far as international currency is concerned, as long as you are using US dollars, the impact of where the money is is not particularly big. There is no need to dig for foreign exchange as hard as late-developing countries like China.

Now Chen Qin is shorting Goldman Sachs. Although the situation does not seem serious, it seems that Goldman Sachs will lose both sides.

Goldman Sachs was a little bit anxious. Since he couldn't do short selling openly, he at least asked the regulator to intervene and try to see if he could directly and legally withdraw the CDS. Looking back now, maybe today's incident happened because of this.

But... Chen Qin was actually waiting for this moment.

I didn't plan to do anything else.

Still on Weibo, Mr. Bakers righteously criticized the poor situation of market supervision failure. The good guys had no position. In fact, when they saw the previous report provided by Chen Qin, they were all a little worried. Bex also described to them that future - bank collapse, countless people unemployed, economic crisis, how terrible this is.

They were so engrossed in the conversation that they almost forgot what they were discussing, but Chen Aotian suddenly replied: "You now know that there is a problem in the subprime mortgage market, but why did you go there earlier?"

(End of this chapter)