Rebirth of the Financial Crisis Sweeping the World

  Chapter 235 235 is just a small consortium, so-so

  At 10 o'clock in the morning, Wang Guanxi received a call from Feng Shaokun.

  On the phone, Feng Shaokun congratulated him: "Guanxi, this time Lehman Brothers went bankrupt, and you made a lot of money again."

  Before, the Black Shirt Investment Bank asked him to borrow 1.5 billion Hong Kong dollars, and then went to short Lehman Brothers, and then today I saw the news of Lehman Brothers’ bankruptcy.

  This is simply amazing.

  Wang Guanxi boldly gambled that Lehman Brothers would go bankrupt when Lehman Brothers was negotiating with a buyer. He did not expect that Lehman Brothers would really go bankrupt. He admired him greatly.

  Wang Guanxi faintly smiled and said, “It’s so lucky, haha, Brother Feng, are you Yongheng Securities Company okay now?”

  Feng Shaokun said: “It’s okay, I don’t touch American stocks and bonds at all, but the bank at home has lost a lot of money”

  Wang Guanxi said: “This small loss, when it’s not a big deal, quickly tighten the loan. The bankruptcy of Lehman Brothers this time may lead to the outbreak of a financial crisis.”

Feng Shaokun nodded: "The financial crisis broke out? This is terrifying. To be honest, I also think that a financial crisis may break out. Fortunately, our family has a sense of crisis and we have made some preparations. We have tightened our loans long ago to deal with the possible financial crisis "

  "We have dinner together at noon, I want to ask you something"

"it is good"

  So, at noon, the two came to a western restaurant called Gaddis in Mong Kok.

  The main French cuisine here. Over the past few decades, although competition among restaurants has become increasingly fierce, Gaddi is still regarded as a gourmet landmark, and its style remains the same.

  The restaurant is equipped with a resident band to accompany every night. While listening to the old-fashioned music played by the band, you can enjoy authentic French cuisine or dance with light singing. Gaddis is one of the few restaurants that can truly put people in the style of the past.

  Wang Guanxi smiled and said, “This is a romantic place for lunch.”

  Feng Shaokun smiled and said, “I used to be one of the owners of this restaurant”

  Wang Guanxi asked curiously: "Why not now?"

  Feng Shaokun said in remembrance: "I used to date a French girl. This restaurant was bought for her. After she left, I sold the shares in the restaurant."

   "Then you still have a story" Wang Guanxi smiled and said, "Tell me."

   "Don't talk about it, everyone is a mother, why are you talking about it?" Feng Shaokun smiled.

  Then the two ordered pan-fried foie gras with apples, light lobster curry, golden apples, white truffle pasta, beef and oyster tartare.

  Feng Shaokun was eating the white truffle pasta and suddenly stopped, and asked: "Guanxi, do you have a girlfriend now?"

  Wang Guanxi was shocked, and said: "The girlfriend who hasn't officially confirmed yet."

  Feng Shaokun thought for a while and said solemnly: "If you meet someone you like, remember to let her have a baby with you, otherwise she will give birth to someone else."

  Wang Guanxi: "·····"

  Then the two chatted about financial trends.

  Feng Shaokun said: "This time Fannie Mae, Freddie Mac will have 200 billion yuan of debt due at the end of the month. I think the payment problem will stump the US government."

   "Yes, the US$200 billion debt is due, but it must be paid back" Wang Guanxi smiled.

  In September, the drama of the US subprime mortgage crisis has been staged for more than a year.

  On September 7, US Secretary of the Treasury Paulson announced that the government would take over the two largest mortgage lenders in the United States-Fannie Mae and Freddie Mac.

  At this point, the fate of the two heavyweight actors in the subprime mortgage crisis scene seems to be basically clear.

  Common stocks and special stocks of these two major mortgage institutions fell sharply, while bonds saw their biggest one-day gains in history.

  Some investors breathed a sigh of relief, some were dumbfounded with resentment, and others made a lot of money and smiled...

  So far, people can’t help asking, what role did the two Americans play in the subprime mortgage crisis? Why did the US government rescue two private organizations?

  Who won in this game? Who lost?

  Let’s recap, America’s inverted mortgage!

  It can be said that from the property savior to the time bomb!

  At the beginning of this year, Fannie Mae and Freddie Mac were still the real estate saviors in the eyes of the US government. The government had hoped that these two mortgage market giants would purchase more mortgage loans to withstand the further recession of the housing market.

  So what kind of organization is "Two Beauty"?

  Why does the US government give such high expectations and requirements to the “two Americans”?

  In the 1930s, the United States faced an economic depression that was more severe than it is today, when the unemployment rate was as high as 25%.

  In order to stimulate domestic demand, in 1938 the US government established the Federal National Mortgage Association Fannie Mae (Fannie Mae).

  Out of the US government’s admiration of private enterprises, Fannie Mae became a private joint-stock company in 1968. In order to break the monopoly, the US Congress created FreddieMac (Freddie Mac), a federal mortgage company in 1970.

  The work of "Two Americans" in the US mortgage market is similar to that of "Lord".

  The government requires that for a housing mortgage that meets certain conditions, "Two US" is obliged to buy it from the bank, so as to provide the bank with liquidity to issue more mortgage loans.

  And the "two Americans" will then package the purchased mortgages in batches to generate housing mortgage bonds (MBS) and then sell them at a higher price.

  In the 1980s, "Two Americans" rapidly expanded their share in the mortgage financing market and successfully went public.

  In 2006, any mortgage of less than US$370,000, as long as it met a very low condition, the "two houses" had to buy it.

  The crisis that started in subprime mortgages last year spread rapidly. If Freddie Mac and Fannie Mae did not promise to purchase home mortgage loans, banks would not lend even to high-quality customers.

  As a result, the market position of the two companies has become increasingly important. Under the high hopes of the government, in January this year, the two companies purchased 80% of the housing mortgage loans that month.

  The work of "fallen master" is not done once and for all, any investment always has risks.

  When the borrower corresponding to a certain MBS cannot repay the loan in time, Fannie Mae and Freddie Mac must repurchase these debts. This behavior will directly lead to the deduction of the assets of the two companies.

Since the subprime mortgage crisis unfolded, the default rate of mortgage loans in the United States has risen sharply.

  U.S. Treasury Secretary Paulson reluctantly said at the mortgage forum on July 9: In 2007, there were 1.5 million cases of foreclosure, and some predict that it will increase to 2.5 million this year.

  The Canadian Treasury Secretary also said: The US and US can maintain lower capital reserves than ordinary financial institutions. In today's financial tightening environment, it is difficult to raise capital turnover.

  There is a gap between the huge debt that needs to be paid and the company's own funds, so people are increasingly worried about the safety of the "two US".

  If the two U.S. assets go bankrupt in insolvency, all banks that issue U.S. home mortgage loans will be in jeopardy.

  At that time, the only option for these banks is to raise tens of billions of dollars in financing.

  At the same time, this will stimulate further declines in housing prices and further sales of houses, which will exacerbate the decline in housing sales and the rise in default rates.

  The problem with Fannie Mae and Freddie Mac is about whether thousands of Americans can continue to own their homes.

  It is not only the American people who are concerned about the "two US" crisis, but also foreign investors who purchase the "two US" bonds.

  Worries about the bankruptcy of the “two US” have caused the interest rate spread of “two US” bonds and loan-backed bonds that meet the “two US” standards to rise rapidly.

  As of last Friday, foreign central banks have reduced their holdings of agency bonds managed by the Federal Reserve for seven consecutive weeks.

  The takeover plan announced by US Treasury Secretary Paulson on September 7 includes: The US Treasury Department will purchase preferred stocks with a limit of US$100 billion in the “two US” companies to ensure that the net assets of the two companies are positive.

  In addition, the Ministry of Finance will also provide short-term financing for these two mortgage institutions and 12 other banks. At the same time, the Federal Housing Finance Agency (FHFA), the regulatory agency of the "two US", will take over the management of the two companies.

  After the government takes over, the shares of "Two Americans" will continue to be traded, but dividends to shareholders will be suspended.

  As soon as the news came out, the market value of the “two US” companies almost completely evaporated on Monday, among which Fannie Mae’s share price plunged 90% to close at 73 cents, the lowest since 1982. Freddie Mac also fell 83% to 88 cents.

  The spread between the "two US" bonds and US Treasury bonds has experienced the largest decrease in history. The wins and losses of the relevant stakeholders are obvious.

  The boss of Pacific Investment Management Company, Gross, once urged the Ministry of Finance to take action as soon as possible on TV.

  He bet that the federal government will rescue the two US bonds, and his investment once accounted for 61% of the fund’s total investment. After the news was announced, Gross's single-day income reached US$1.7 billion.

  At the same time, there are also central banks and institutional investors who are under pressure from domestic public opinion.

  According to publicly available market information, the total amount of US mortgage loans held and guaranteed by Fannie Mae and Freddie Mac is around US$5.2 trillion, accounting for more than half of the total US home mortgage loans.

  Of the various types of mortgage bonds issued by the two companies, about 3 trillion yuan is in the hands of US financial institutions, and the rest are scattered in overseas investment institutions.

  According to data released by the US Treasury Department on June 30 this year, the top 5 foreign creditors of the two US bonds are China, Japan, the Cayman Islands, Luxembourg and Belgium in order.

  The share price of "Two US" plummeted, and many hedge funds that have been shorting their stocks are enjoying the profits.

  The biggest loss is undoubtedly the shareholders of "Two Americans". Not only did they suspend dividends, but also after the Ministry of Finance purchased preferred shares, the previous shareholders' equity in "Two Americans" was diluted.

  The stock price was still more than 70 yuan last year, and now it is 1 yuan.

  For example, Morgan Bank Group bought 30 billion U.S. dollars of preferred stock and basically lost money!

  30 billion U.S. dollars, no more!

  Speaking of this, Wang Guanxi couldn’t help but sigh: “The 30 billion US dollars of the Morgan Bank Group has been directly squandered. Before Lehman Brothers had acquired Morgan Bank, it was simply impossible.”

  Feng Shaokun also said: "This time I thought that Bank of America, or Bareck Bank of the United Kingdom acquired Lehman Brothers, but I didn’t expect that the talks would collapse, hehe"

  Wang Guanxi smiled and said, “Now the crisis is still to end. Lehman Brothers is bankrupt, and Fannie and Freddie’s future is still uncertain!”

  The U.S. Treasury Department chose to go with the two U.S. times, but the rescue operation is still far away.

   Then Wang Guanxi said: “According to the rent-to-sale ratio, the US housing prices have to fall by about 15% to fall to a reasonable price. After the rescue, it can help the housing prices not to over-fall.”

  "Although the'two Americans' have been taken over and have temporarily injected some confidence into the market, I think the financial risks are far from eliminated.

  The reset of subprime interest rates will reach a peak in the first quarter of next year. Mortgage defaults are still going on. Whether it will affect credit card borrowing defaults will remain to be seen. "

"Moreover, as of August this year, the two U.S. debts can be repaid normally, but what is more concerned is whether the U.S. government will pay interest for the repayment of the "two U.S." bonds on the bonds that are about to mature this quarter, and this determines. The future destiny of the two US bond holders." Feng Shaokun sighed: "Yes, by the end of September, Fannie Mae’s upcoming bond quota is about 120 billion U.S. dollars, and the amount of Freddie’s upcoming bond maturity is about US$120 billion. 103 billion dollars!"

  Wang Guanxi smiled and said: "This debt of more than 200 billion US dollars is due, and it will be another bomb!"

The maturity of a huge amount of bonds will be a problem for the US government. If the debts are repaid on time, all the debts of the US and the US will undoubtedly be put under one shoulder. The credit of the US government is guaranteed, but the credit of the US dollar under unlimited capital injection will be unresolved. Has been tested.

In addition, although the US government has adopted an attitude of injecting capital and providing unlimited liquidity, it does not rule out the possibility of public auctions of the "two US" bonds-and the auction will completely expose the crisis of the two US, including the US financial industry. The investment of itself and all institutional investors will be greatly reduced, and the most tragic outcome is that it will not even be able to collect the principal.

Feng Shaokun said: "Guanxi, I think that the core of the US government's rescue of the US and the United States is to rescue the domestic real estate market and protect the rights and interests of taxpayers. As long as the domestic panic is stable, will it continue to input funds and guarantee all the interests of the chain of investors? Conclusive"

   "Now that Lehman Brothers is bankrupt, who is next?"

   "It will definitely cause a huge panic, and the global stock market will plummet!"

   "Guanxi, you shorted the Hang Seng Index early, and this time you are going to make a lot of money"

  Wang Guanxi’s trading account at Wing Hang Securities Company currently holds 20,000 short positions in the Hang Seng Index. Now the Hang Seng Index has fallen to 19,300, with a floating profit of 3,100 points in the account and a floating profit of 3.1 billion Hong Kong dollars.

  If the Hang Seng Index continues to plummet by then, you will make even more!

  The stock price plummeted in the global stock market this time. It may fall by 2,000 points. By then, Wang Guanxi’s account will have a floating profit of more than 5 billion Hong Kong dollars!

  Oh my God, 5 billion Hong Kong dollars, I am envious when I think about it.

  Wang Guanxi smiled and said: “The Hang Seng Index will fall a lot in the future, and I will lie down and make money.”

  Feng Shaokun said again: "It's not just the Hang Seng Index, but also a large number of Hong Kong stocks."

   "This time your Black Shirt Group is fighting against the Hong Alliance, the Huang's Consortium, and the Zheng's Consortium. The financial war of more than 26 billion Hong Kong dollars will definitely be won by your Black Shirt Group!"

  “The Black Shirt Group may become a consortium in Hong Kong”

  Now the Heishan Group owns Heishan Insurance Company, Heishan Investment Bank, and Heishan Hedge Fund. These three financial companies have all made big money recently.

  For example, the black shirt insurance company, short American International Group.

  Black shirt hedge funds shorted the listed companies under the Huang Family Consortium, Hong Family Alliance, and Zheng Family Consortium, with nearly 11.8 billion Hong Kong used to short!

  The Black Shirt Investment Bank shorted Lehman Brothers, and Lehman Brothers went bankrupt. It made a lot of money safely, with a profit of more than 1.4 billion Hong Kong dollars.

  At this time, Wang Guanxi smiled and said: "It's okay, it's just a small consortium, it's so-so"

  Feng Shaokun immediately knelt to Wang Guanxi in his heart!

  Is this still so-so?

  The black shirt insurance company, the black shirt hedge fund, and the black shirt investment bank under the black shirt group have a lot of cash flow. After the liquidation is completed, all the cash flow of the black shirt group is estimated to be nearly 40 billion Hong Kong dollars.

  The 40 billion Hong Kong dollars, looking at the top ten consortiums in Hong Kong, none of these ten consortiums estimate that they can mobilize so much cash flow and can buy any assets.

  "Haha, Guanxi, the assets of your consortium are estimated to be more than 18 in the Hong Kong consortium. The cash flow and the stock price of the top ten consortiums in Hong Kong are far inferior to your black shirt group."

  "Moreover, in this financial war, the Zheng consortium and the Huang consortium of the top ten consortia in Hong Kong will lose to you."

  Wang Guanxi smiled and said: "Luck is with me"

  "Haha"

  (End of this chapter)