February 24, 2008 Chinese youth
complained bluntly
In the United States, loans are a very common phenomenon, from houses to cars, from credit cards to phone bills, loans are everywhere. Locals rarely buy a house in full, usually with long-term loans. But we also know that unemployment and reemployment are very common here. These people whose income is not stable or even have no income at all, how can they buy a house? Because the credit rating does not meet the standard, they are defined as subprime lenders. Starting about 10 years ago, at that time, advertisements from loan companies appeared on TV, newspapers, on the streets, or filled with attractive flyers in your mailbox:
"Do you want to live a middle-class life? Buy a house. "
Isn't your savings enough? Loan!"
"No income? Find an Aniu loan company!"
"Can't afford the down payment? We offer zero down payment!"
"Worry about the high interest rate? We provide 3% for the first two years Preferential interest rate!"
"You still can’t afford to pay every month? It’s okay. You only need to pay interest for the first 24 months.
I’ve been promoted to a manager, and I’m afraid I can’t afford it!" resold to others, ah, not only white live for two years, also earned a lot of it! Besides, it does not pay you, I believe you'll do, do I dare loans, you can not borrow? "
in this Under the temptation of the United States, countless American citizens did not hesitate to choose a loan to buy a house. (Are you worried about their debts in two years? I will tell you from the American citizen who feels good about me that anyone who plays a movie can become governor, and maybe I can run for president in two years.)
The Aniu loan company has achieved amazing results in just a few months, but the money has been loaned out, can it be recovered? The chairman of the company, Mr. Aniu, is also a person who is familiar with American economic history. It is impossible not to know that the real estate market is also risky. Therefore, it seems that this income cannot be monopolized. It is only necessary to find a partner to share the risk. So Aniu found the leading brother in the U.S. economic circle-the investment bank. These guys are all famous names (Merrill Lynch, Goldman Sachs, Morgan), what do they do every day? Even if I was full, I was idle, so I called a Nobel economist, a Harvard professor, used the latest economic data model, and after some tinkering, I came up with several analysis reports to evaluate XX stocks. Is it worth buying? There is already a bubble in the stock market of a certain country. A group of people who cheat and drink in the risk assessment market, do you think they see that there is a risk? You can see it with your feet! But there is a profit, so what are you hesitating about, take over! So economists and university professors used the data model and the old three to evaluate, repackaged, and came up with a new product-CDO (Note: Collateralized Debt Obligation, debt mortgage bond), to put it bluntly, is a bond, through issuance and sales This CDO bond allows bond holders to share the risk of housing loans.
Just selling like this, the risk is too high or no one buys it. Suppose the original bond risk level is 6, which is medium to high. Therefore, the investment bank divides it into two parts: senior CDO and ordinary CDO. In the event of a debt crisis, senior CDO has the right to preferential compensation. In this way, the risk levels of the two parts have become 4 and 8 respectively, and the total risk remains the same, but the former belongs to low- and medium-risk bonds. With the investment bank's three-inch "golden" tongue, of course it sold a lot of money! But what about the remaining high-risk bonds of risk level 8?
So investment banks found hedge funds. Who are hedge funds? That is the role of the world's financial world who has been short-sellers, and they live a life of licking blood. This is a little risky! So relying on the old relationship, borrow money from banks with the lowest interest rates in the world, and then buy these ordinary CDO bonds on a large scale. Before 2006, the Bank of Japan loan interest rate was only 1.5%; the ordinary CDO interest rate may reach 12 %, so just relying on interest differential hedge funds make a lot of money.
In this way, a wonderful thing happened. At the end of 2001, the real estate in the United States has soared, and it has more than doubled in just a few years. This way, just like the advertisement at the beginning of the Aniu loan company, there will be no repayment. Even if you don’t have any money to pay for the house, you can still make a lot of money as soon as you sell the house. The result is that everyone from people who borrow money to buy a house, to Aniu loan company, to major investment banks, to various banks, to hedge funds, is making money, but the investment banks are not too happy! At first, I thought that ordinary CDOs were too risky, so I threw them to hedge funds. I didn’t expect these guys to earn more than themselves, and their net worth rose steadily. Knowing that I had kept them for fun, investment banks also began to buy hedge funds. , I plan to share a piece of the pie. It's like "Lao Hei" has bad food at home. He happened to see the pesky little flower dog next door, and planned to poison it. I didn't expect the little flower dog to eat it, not only would it be fine, but it would grow stronger and stronger." "Lao Hei" is now deceptive. Could it be that the rotten food is more nutritious, so I started to eat it too!
This time, the hedge funds have been happily broken again. Who are they, bandits who can borrow 10 yuan to play with 1 yuan in their hands, can they still be honest with the sought-after CDO? So they mortgaged their CDO bonds to the bank in exchange for 10 times the loan, and then continued to chase investment banks to buy ordinary CDOs. Hey, when the agreement was signed, these CDOs belong to us! ! ! That upset in the heart of investment banks, apart from continuing to buy hedge funds in silence, they came up with a new product called CDS (Note: Credit Default Swap). Well, Wall Street is the hotbed of these genius products: Don’t you all feel that the original CDO is risky? Then I have taken out the insurance. Every year, I use a portion of the money from the CDO as a guarantee and
give it to the insurance company for nothing . However, if there is a risk in the future, everyone will bear it together.
The insurance company thought, yes, right now CDO is making such a profit, and the profit is distributed without paying 1 cent. Isn't this giving us the money every year for nothing? It's done!
Hedge funds thought, yes, they have been earning for a few years, and the risk is getting bigger and bigger in the future. If only a part of the profit is distributed, the insurance company will take half of the risk and do it!
So everyone is happy again, and CDS is selling hot too! But the matter is not over here: because the "smart" Wall Street people came up with innovative products based on CDS! We assume that CDS has already brought us 5 billion yuan in income. Now I am issuing a new "San Mao" fund. This fund is dedicated to buying CDS. Obviously the risk of this fund based on a series of previous products It is very high, but I have invested 5 billion yuan that I have earned before as a margin. If the fund loses, then the 5 billion yuan will be used to advance. Only when the 5 billion yuan is lost, your investment will start. Loss, and before that, you can redeem it in advance, with an initial scale of 50 billion yuan. Oh my God, is there a better fund than this? A fund bought with a face value of 1 yuan will not lose your own money if it loses to 0.90 yuan, but every penny you make is yours! When the rating agency saw this genius idea, it didn't hesitate to give it an AAA rating!
As a result, this "San Mao" can be sold crazy, and various pension funds, education funds, financial products, and even banks in other countries have also bought them. Although the initial scale of the initial issuance was 50 billion yuan, the subsequent issuance is almost impossible to estimate, but the 5 billion yuan deposit has not changed. If the existing scale is 500 billion yuan, the margin can only guarantee that you will not lose money when the fund's net value is not less than 0.99 yuan.
When the time came to the end of 2006, the American real estate that had been glamorous for five years finally fell from its peak, and the food chain finally began to break. Because of the fall in house prices and the time limit for preferential loan interest rates came, first ordinary people were unable to repay their loans, and then the Aniu loan company went bankrupt, and hedge funds suffered substantial losses, which in turn affected insurance companies and lending banks. Citigroup and Morgan Morgan successively issued huge loss reports. The major investment banks that invested in hedge funds also lost money, and then the stock market plummeted, the people generally lost money, and the number of people unable to repay their mortgages continued to increase...Finally, the subprime mortgage crisis broke out in the United States.
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