Yi. What happened to the big short?
At the 88th Academy Awards, the film "The Big Short" won the Best Adapted Screenplay Award. After reading the original, I really felt that it deserved its name.
The original book is a professional economics book. The data speaks, and the domestic version has no intimate notes. If the reader is familiar with the words "discount" and "interest spread", it is still very stressful to read.
The author of this book, Michael Lewis, is a veteran in the financial industry. He became famous in the first battle with "Liar's Poker". For the first time, he showed the bottoms of Wall Street. So far, this book is a world-class financial must-have. One of the reading lists. Later, he wrote "Moneyball", the story of saving a team with data analysis, which was brought to the screen by Brad Pitt.
"The Big Short" is about the U.S. subprime mortgage crisis. I don't know much about it. Let me briefly describe it:
In order to stimulate the economy, the United States vigorously developed the real estate industry in the first few years of the 21st century. Own a house. They issue loans to a large number of people who do not have regular jobs (no stable repayment ability) (such as a stripper, maybe she is young and beautiful in recent years and has a lot of income and can afford the loan, but how can she rely on her body for food ten years later? At least 20 years.) Because these people have a bad credit rating and are "nearly", these loans are called "subprime loans".
The interest rate is low and the down payment is low. The trend of buying a house without a threshold is blowing, and the house price will naturally rise. If you buy it today, the price of this house will double tomorrow. Who is not happy and who does not buy a house? With a monthly income of 10,000 yuan, the mortgage only needs to be repaid at 2,000 yuan, and at least three or four sets of houses should be purchased to relieve the hatred.
This is the client, let's look at the central office. Bank lending is certainly reserved for good yields, but it doesn't stop at earning interest. It packaged the claims on these millions of mortgages and sold them to the securities market. The market believes that some people will cut off the supply, but the number of people who cut off the supply is divided by the large number of millions, and the probability is close to zero, then the creditor's right can definitely be realized, and the profit can definitely be realized, then this financial product It is a high-quality asset that can make a steady profit without losing money. It can be mortgaged back and forth to borrow more money for ten to make more financial derivatives. These financial products related to subprime loans flow from one brokerage to another, and no one is willing to give up this great opportunity to make money. Even if these mortgages sometimes seem unreliable, financial institutions still have a way. They will buy insurance for these assets. Even if the price falls, the insurance company pays the bill and "hedged" the risk. Does it seem more stable to make money without losing money? And insurance companies are also bullish on real estate, although the insurance rate is extremely low, the base cannot be held large, and they are waiting to collect money.
I especially checked the years before the subprime mortgage crisis in 2008. The GDP of the United States soared from 4:00 to 6:00, and it was like eating Viagra.
The story of "The Big Short" is about several different teams of financial practitioners who, according to their own judgments, discovered problems from different angles under the market frenzy, decided to buy short, and finally made a big profit, which was severely criticized. The profit-seeking nature and decay of Wall Street.
The operation of short-selling is "credit default swap", which is the same as buying insurance for financial assets as mentioned above. If these assets rise, you will continue to pay premiums, and if these assets fall, you will receive compensation. The difference is that the short buyer does not own these assets, which means that I did not take the flight, but I bought aviation accident insurance. When a large number of delinquents appear, housing prices fall, and claims cannot be realized, financial products and derivatives built on them will be in big trouble. Assets originally valued at tens of billions are considered worthless, boom! The subprime mortgage crisis broke out. Brokerages have a shortfall of billions of dollars, stocks plummeted, and one by one went bankrupt. The bears bought aviation accident insurance and can easily make a lot of money? The company that sold them their insurance went bankrupt, and they still got nothing.
At the end of "The Big Short", one of the short-selling protagonists said: In the next few years, hundreds of bank and rating executives went to prison, the Securities and Exchange Commission was thoroughly investigated by the government, and Congress was forced to break up the big short. Banks, further regulate the housing loan and financial derivatives market
Then he said: Just kidding! All of the above is what I mean!
It's the banks that actually take the people's investment money, use it to give themselves huge bonuses, bribe parliaments to dismiss radical reforms, and then put the blame on the immigrants and the poor. (It's all these poor people applying for loans!) After all this was done, only one banker was put in jail. The hapless man cost his owner billions in the subprime deal.
I often hear people complain that they can't afford to buy a house, saying that they want house prices to fall. The truth is that people who can't afford a house when the economy is going up (and house prices are rising) can't afford it even more when house prices are falling.
We'll talk about why tomorrow, and that's the story of Too Big to Fail!
(Maybe you already knew how this all happened, thank you for your patience to read so much.)
Also, in "The Moral Standard of Money" there is too big to fail
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