They’re all reborn, what’s wrong with being a little more almighty?

Chapter 242 These Days, God Also Writes Books

When the working day came, White returned to his office and the first thing he did was to look up various mortgage-related collateralized debt obligations.

Just like what was written in “The Big Short”, the ratings are quite high, and many are rated A or above.

White randomly picked an AA-rated product and clicked on it. There were dozens of mortgage-backed bonds and another dozen types of collateralized debt obligations in the product. Not to mention an outsider, even White, a professional fund manager, was confused.

White took out a pen, randomly wrote down a few mortgage-backed bonds, and then began to look up the bonds.

After a moment, White's brows furrowed.

"The yield of this mortgage-backed bond was so high last year? This is unscientific. It's just a bond. How can a bond have such a high yield? What was the bank's loan interest rate during the same period last year? How can a mortgage-backed bond have such a high yield!"

After a little thought, White realized that the reason why the yield of this mortgage-backed bond was high was because it contained a large number of subprime loans.

The interest rates on subprime loans are inherently higher than normal mortgage loans, so the returns generated are of course also higher.

In order to stimulate ordinary people to take out loans to buy houses, there are also subprime loans in the US market that deliberately give you preferential interest rates in the first few installments, but then have very high interest rates in the later stages, deceiving ordinary people into taking out loans to buy houses.

As long as housing prices keep rising, ordinary people will not want to get off the pirate ship once they get on it, and may even want to get on more pirate ships. After all, that high interest rate is nothing compared to the rising housing prices.

Paying a few hundred dollars more in interest a month is only a few thousand dollars a year, while a house can increase by tens of thousands of dollars a year, and the input-output ratio is more than ten times or even dozens of times! Apart from what is written in the criminal law, where can you find such a profitable business?

"This mortgage-backed bond should contain a large amount of subprime loans, so it can have such a high return. However, if the proportion of subprime loans is large, it means that the risk is also high. How can it have such a high rating? This rating is unreasonable!"

White continued to check other mortgage-backed bonds, and the situation was the same as before. The yields were higher than normal, which meant that they contained a large number of risky subprime loans, but the credit ratings were still abnormally high.

Finally, White found a problematic mortgage bond that had produced good returns in the first two years, but its returns plummeted this year.

"This is a mortgage-backed bond for home loans. If the yield plummets, it means that many people will not be able to repay their mortgages. The yield plummeted this year, which means that the situation of not being able to repay mortgages started this year."

A bad idea popped up in White's mind, and he immediately picked up his mobile phone and dialed a number.

The other party was his friend who worked in a bank and specialized in the assessment of collateral.

"Hey, White, how do you have time to call me? Nasdaq has already opened, and you should be keeping an eye on the stock market now!" said the bank friend.

"Is it convenient for me to talk to you? I need your help with some personal matters." White whispered.

"Wait a minute." The sound of a friend walking around came from the receiver. After a moment, the friend said, "Okay, there's no one around me, go ahead!"

"I'm planning to buy another house recently. Your bank must have some houses that have been taken away by you because people can't pay back the mortgage. Are there any cheap ones? Please introduce them to me!" White said.

"We have recently acquired quite a few mortgaged houses that cannot be repaid, but none of them are suitable for you. The houses we have recently acquired are either small apartments or in relatively ordinary communities.

As for luxury homes, there really aren't any! You are a fund manager, and you must have many wealthy clients. You must know that it is impossible for the owner of a luxury home to fail to repay the loan. "The friend explained.

"Small apartment? How's the location?" White asked quickly.

"Of course it can't be in Manhattan! There are places in Queens, Brooklyn, and the Bronx. Although some are newly built, places outside of Manhattan are definitely not suitable for you!"

"Since it's a new apartment and it's in New York, it should have great potential for appreciation. Why did the mortgage default?" White asked again.

"They are all young people who are buying a house for the first time. They come to New York with dreams in their hearts and want to settle down there. So they buy a house on impulse! In any case, the threshold for loans has been relatively low in recent years."

"What about those more ordinary communities you mentioned?" White asked.

“The situation in the community is different. House prices have been rising in recent years, so many people have bought houses for investment. They will rent out the houses and use the rent to pay off the mortgage.

But the number of people renting houses is obviously not as large as the houses themselves. If the houses cannot be rented out, many people cannot even pay the interest, and have to bear the property tax, so they simply cut off their loans and hand over the houses to our bank.”

"Has this happened a lot? I mean since this year," White asked again.

"It is a lot more than in the past two years, but this is normal. After all, the real estate market has been hot in recent years and a lot of houses have been built. With more houses, more people will buy them, and more people will be unable to repay their loans!"

This friend from the bank is obviously very optimistic about the real estate market.

White did not refute it. If someone said now that the US real estate market would collapse, they would definitely be regarded as crazy.

However, his friend's optimism made White extremely frightened. This friend was a person who specialized in collateral valuation at the bank. He was not only professional, but also a front-line worker in the field of housing loans. Even he did not notice the hidden worries in the real estate market. It seemed that the problem was really big.

After ending the call with his friend, White immediately made a decision.

Sell ​​all your Bear Stearns stock! Sell all your Freddie Mac stock! Sell all your Fannie Mae stock! Sell all your subprime mortgage-related bonds!
Of course, if the only thing he does is to avoid losses, he is not a qualified fund manager. Such a kind person cannot survive on Wall Street.

Those who can survive on Wall Street are all vultures!
So we should not only avoid losses, but also take the opportunity to make a fortune.

White immediately called Morgan Stanley and said, "Hi, this is White. I heard that you recently launched a credit default swap product specifically for real estate loan collateralized debt obligations. I'm very interested! Is the starting price 30 million US dollars? If the price is right, I can buy 100 million!"

……

A few days later, White was called to the office by the company boss.

"White, I heard that you sold the stocks of Bear Stearns and Fannie Mae and Freddie Mac?" the boss asked.

"Yeah, I'm not optimistic about the real estate market," White replied.

"You also went to Morgan Stanley and bought a $100 million credit default swap contract? It was also for mortgage collateralized debt obligations?" The boss paused and continued, "Are you pessimistic about the real estate market? You think the real estate market is going to collapse!"

White nodded. "You figured it out! I do think the real estate market is going to collapse. By then, many people will not be able to pay their mortgages, and there will be a large number of defaults on mortgage-related collateralized debt obligations. That's why I bet against Morgan Stanley and bought a $100 million credit default swap contract."

"Why do you make such a judgment?" The boss frowned and continued, "The current real estate market is still very prosperous. House prices have been rising, and developers have been building new houses. There is no worry about selling them. There is even a feeling that supply is insufficient to meet demand."

"Don't you think this is the last carnival before the disaster?" White asked back.

"What I need is not your subjective judgment, but a substantial analysis. For example, you can give me a piece of data to tell me why the real estate market collapsed!" "Sir, please wait a moment, I'll get it now!" White said, turning and leaving.

Instead, the boss was stunned. He didn't expect White to be able to produce relevant data.

Since there is relevant data, why didn't I see it? This is Wall Street. There are no secrets on Wall Street. All policy information, economic data, and even analysis from various think tanks can be seen.

Just as the boss was puzzled, White had returned with the book "The Big Short" in his hand.

"Boss, this is the book that told me that the real estate market is about to collapse!" White handed the book to the boss.

"The Big Short? Is this the latest book by some economist?" the boss asked subconsciously.

"No, it's actually a fantasy novel."

"Fantasy novel?" The boss looked confused. He obviously didn't understand what fantasy novels were.

White had to explain: "It is a novel created by the author based on his own imagination."

"So what does this novel have to do with your judgment that the real estate market is going to collapse?"

"This novel describes the real estate market crash! I thought it was going to happen, so I bought a credit default swap on the mortgage according to what was written in the novel."

The boss blinked, as if he didn't hear White's words clearly. He hesitated for several seconds, and after confirming that he had heard it correctly, he immediately showed an incredible expression.

"You're telling me that you carried out operations worth hundreds of millions of dollars in the financial market based on the description in a novel? The key is that this is a fantasy novel, and the content in it is completely imagined by the author? Are you crazy?"

"Sir, this novel really makes sense. I believe what is described in it will happen soon!" White explained confidently.

“Shit!” The boss was so angry that he started to curse. He slammed the table and yelled at White: “Your mind is full of shit! Even if it was a misjudgment, can you find a more reasonable reason?
I bought a 100 million credit default swap contract based on a novel. Do you think I'm an idiot? That was all investors' money! You just gave it to Morgan Stanley for nothing!

You have caused such a huge loss, you can pack up and leave! No! You can't just leave like this! You have to bear the loss of 100 million! You have to give an explanation to the investors! You should go to jail!"

Seeing that his boss was really angry, White had no choice but to continue explaining: "Boss, don't be angry first. Please read this novel first. I promise that after you read it, you will even feel that we bought too little of the 100 million credit default swap contract!"

"White, are you possessed? Is your mind controlled by Satan, so you say such outrageous things!" The boss said, and actually took out a cross from the drawer and pointed it at White.

The vultures on Wall Street also have faith. It's mainly because they have done too many immoral things in their daily lives and they need to seek comfort.

White showed a helpless expression: "Sir, I am not possessed by the devil. Everything I said is true. Please take a look at this book "The Big Short". If after reading this book, you still think I am wrong, you can report me to the financial industry regulatory agency, or even call the police to arrest me!"

Seeing White's persistence, the boss calmed down a little and looked at the book "The Big Short" on the table with hesitation.

White then added: "Sir, I have been in this industry for many years. I have never made any major mistakes in these years and have made a lot of money for the company. Do you think I would do something without basis?"

The last sentence finally touched the boss. The boss recalled White's past and knew that he was not a reckless person.

"Okay, let me take a look at the book first. If the content of the book is nonsense, I will not let you go!" said the boss.

……

Next, the boss spent the entire morning immersed in the book "The Big Short".

When he read the last chapter, which was about the beginning of the subprime mortgage crisis, he couldn't help but start shaking.

"Oh my God, was this book written by God?"

The boss looked at the cover of the book and found the author's signature. This God was called Zhang Wei.

"Zhang Wei, this is a Chinese name. Is he the son born by God in China?" the boss thought to himself.

This boss obviously didn't know that God really does have a second son, and he is Chinese.

The content of "The Big Short" was too shocking for the boss. He was a little dazed for a moment and his mind went blank.

As the boss of a fund company, he has been working on Wall Street for so many years and knows more about the inside story of Wall Street. Based on his understanding of Wall Street, what is written in this book is completely in line with the nature of Wall Street.

Just based on the various shameless operations on Wall Street described in the novel, the boss already believed 70% of the content of the novel.

“Is the real estate market really going to collapse?”

For the next two or three minutes, the boss still had to verify it personally. After a long time, he came to his senses and immediately made several phone calls.

The boss's network of contacts is much more extensive than White's. He doesn't need to ask friends indirectly like White did to get a lot of real data.

Soon, the boss was told some figures about the default rate of subprime loans by his connections. Upon learning that the default rate of subprime loans had reached such a terrifying level, the boss immediately felt that a disaster was imminent.

"It's over. The real estate market is really going to collapse! Then the mortgage-backed bonds of the mortgages will become worthless. The collateralized debt obligations that contain the mortgage-backed bonds will also be implicated and their value will shrink significantly!

How many real estate-related CDOs are there in the United States? One hundred billion? Five hundred billion? One trillion? Even trillions? God knows how many layers of traps those investment banks have, and how many times they have split and sold a CDO!
These shameless scammers on Wall Street, they know that what they are selling is garbage, but they deliberately package the garbage and then sell it! I wonder how many ordinary people will be cheated out of their wealth by them!

Oh no, investment banks can’t handle such a large scale. If investment banks can’t handle it, it will be a financial crisis! The entire financial system will collapse!”

After the feeling of impending disaster, the boss’ first reaction was that this was a godsend opportunity to make money!

In just a few seconds, the boss made a judgment. He immediately picked up the phone and called his secretary.

"Sir, what do you want?" the secretary asked.

The boss handed The Big Short to his secretary and said, "Go buy thirty copies of this book right away, and notify all fund managers in the company to have a meeting in the conference room after the market closes today! We are going to do something big!"

(End of this chapter)