Mark had been prepared for their arrival, and he had prepared a lot of information to convince them.

Sophia said: "Mark, you are crazy! You actually took three billion yuan to do the short subprime mortgage business, which is equivalent to throwing money into the water." ”

The subprime mortgage business has created an unprecedented boom in the banking sector, and any banker thinks the outlook is good, and there is no bubble in it.

Mark's actions are tantamount to suicide in their eyes.

Loans are a very common phenomenon in the United States, from houses to cars, from credit cards to phone bills. Locals rarely buy a house in full, often with long-term loans. However, it is also known that unemployment and re-employment are common here. How do these people who have an unstable or no income at all buy a house? Because their credit rating is not up to standard, they are defined as subprime borrowers.

About a decade ago, when mortgage companies were flooded with advertisements on TV, in newspapers, on the streets, or in your mailbox filled with enticing flyers:

"Do you want to live a middle-class life?

"Don't you have enough savings?

"Don't you have any income? find a cowboy loan company!"

"Can't afford a down payment? We offer zero down payment!"

"Worried about the interest rate being too high? We offer a preferential interest rate of 3% for the first two years!"

"You still can't pay it every month, it doesn't matter, you only need to pay interest for the first 24 months, and the principal of the loan can be paid after two years! Think about it, after two years, you must have found a job or been promoted to manager, and then you are afraid that you will not be able to pay!"

"I'm worried that I won't be able to pay it back in two years? Oh, you're really too careful, look at how much the house has risen now compared to two years ago, and then you can sell it to someone else, not only will you live for two years for nothing, but you may also make a profit! Besides, I don't need you to pay, I believe you will be able to do it, do I dare to borrow, you still dare to borrow?"

Under such temptation, countless citizens of the United States did not hesitate to choose to take out loans to buy houses, and you are worried about the debts of the United States in two years?

The chairman of the company, Mr. Cowboy, who is also familiar with the economic history of the United States, cannot not know that the real estate market is also risky, so it seems that this income cannot be swallowed alone, and it is necessary to find a partner to share the risk, so Mr. Cowboy found the leading brother in the economic circles of the United States - the investment bank.

These guys are all well-known masters (Merrill Lynch, Goldman Sachs, Morgan), what do they do every day? Even when they are full and idle, they are idle, so they find Nobel economists, Harvard professors, use the latest economic data models, and after some tinkering, come up with several analysis reports, so as to evaluate whether so-and-so stock is worth buying, and there is already a bubble in the stock market of such and such a country.

They are all a group of people who cheat and cheat in the risk assessment market, do you say they see that there is a risk in this? Of course they can see it with their feet! But there is a profit, so what are you hesitating about, take it over! So economists and university professors use data models and old three kinds of evaluation, repackage it, and come up with a new product - CDO (Collateralized Debt Collateral Bond), to put it bluntly, it is a bond, through the issuance and sale of this CDO bond, so that the bondholders can share the risk of the housing loan.

Assuming that the original bond risk level is 6, it is medium to high, so the investment bank divides it into two parts: senior and ordinary CDO, in the event of a debt crisis, the senior CDO enjoys the right of priority to pay, so that the risk level of the two parts becomes 4 and 8 respectively, and the total risk remains the same, but the former belongs to the low-risk bonds.

So the investment bank found a hedge fund, and who is the hedge fund, that is, a ruthless character in the world's financial circles who buys short and sells short, calling for wind and rain, and living a life of licking blood from the knife and snatching food from the tiger's mouth, and this little bit of risk is meaningless! So, relying on the old relationship, they borrowed money from the bank with the lowest interest rate in the world, and then bought these ordinary CDO bonds on a large scale.

Prior to 2006, the Bank of Japan's lending rate was only 1.5 percent, and the average CDO rate could reach 12 percent, so hedge funds could make a lot of money on interest rate differentials alone.

In this way, a wonderful thing happened, at the end of 2001, the real estate of the United States soared, more than doubled in just a few years, so that just like the cowboy loan company at the beginning of the advertisement, there will be no money to pay back the house at all, even if there is no money to repay, the house can also make a lot of money, the result is from the loan to buy a house, to the cowboy loan company, to the major investment banks, to the banks, to the hedge fund everyone makes money, but the investment bank is not very happy! At the beginning, I thought that the risk of ordinary CDO was too high, so I threw it to the hedge fund, but I didn't expect these guys to earn more than themselves, and their net worth rose vigorously, and they knew that they would keep it for fun, so the investment bank also began to buy hedge funds, intending to get a piece of the pie.

It's like "Lao Hei" has a rancid meal at home, and I happened to see the nasty little flower dog of the neighbor next door, and I was going to poison it, but I didn't expect the little flower dog to eat not only fine, but also grow stronger and stronger.

Now the hedge fund is happy again, who are they, bandits who can find a way to borrow ten dollars to play with a dollar in their hands, and now they can be honest with the sought-after CDO? So they pledged the CDO bonds in their hands to the bank in exchange for ten times the loan, and then continued to chase the investment bank to buy an ordinary CDO.

In addition to continuing to buy hedge funds, they came up with a new product, which is called CDS (Credit Default Exchange), Wall Street is the hotbed of these genius products: don't they all think that the original CDO is risky, then I will take out insurance, and take out a part of the money from the CDO every year as a guarantee and give it to the insurance company in vain, but in the future, if there is a risk, everyone will bear it together.

The insurance company thought, yes, the CDO is so profitable right now, and the profits are shared without a penny, isn't this giving us money for nothing every year?

The hedge fund thought, yes, it has been making money for a few years, and the risk is getting bigger and bigger in the future, just a part of the profits will be out, and the insurance company will take half of the risk, and it's done!

So everyone was happy again, and CDS was also a hit!

And Wall Street's greed is never-ending, and they issued a large number of bonds on the basis of CDS, as a result, this "bond" can be sold like crazy, all kinds of pension funds, education funds, wealth management products, and even banks in other countries have also bought, although the initial offering size is the original 50 billion yuan, but how many billions of follow-up issuances are simply impossible to estimate, but the margin is the predictable income of CDS has not changed.

Now the entire capital market, the most beautiful is CDO, CDS and related business, can be described as making money every day, sitting and making money, by the beginning of this year, the market has fallen, but industry insiders are still optimistic that this is just a strategic adjustment, will rise back, Sophia also told Mark, let him not listen to the wind is rain, there is no bubble in the subprime mortgage market.

Mark showed Sophia a set of data models inside the Davis Fund, through which it was calculated that there was a huge bubble in the subprime mortgage market and that a new economic crisis was imminent.

Mark said: "It's true that everyone will pay back the mortgage, and people can do anything to protect their homes, but what about the mortgage that has changed? Banks do not have any supervision and requirements for housing loans, an ordinary family can provide four to five mortgages, which is not their survival home, but a business, which has no CDO that must be repaid basis, once the economy is in a situation, because housing prices have fallen, after the time limit for preferential loan interest rates has arrived, first ordinary people can not repay the loans, and then the cowboy loan company collapses, hedge funds lose a lot of money, and then the insurance company and the bank that lends money, Citigroup, Morgan successively released huge loss reports, and at the same time, the major investment banks that invested in hedge funds also lost money, and then the stock market plummeted, and the people generally lost money, and the number of people who could not repay ......their mortgages continued to increase. ”

Sophia's face changed and changed, and finally said, "What about the authority of your set of models?"

Mark said: "Martin commissioned three research agencies to conduct investigations, and all the analysis data was supported by raw data, so the Davis Fund determined that there was a bubble in the subprime mortgage market, and their treasure was bet on it." ”

Mark didn't show this data and model to Megan, because they were against it from the beginning, which made Mark angry, Lao Tzu is not Lao Tzu but grandson, please get rich?

There is another reason, in fact, the other three are restricting Mark's power, if it weren't for last year's super sale, there would be more contradictions between them, but it is undeniable that the huge profits overwhelm all the shields and crises, but the other three are aware that the MM Group cannot revolve around Mark.

Mark also understands this, so he will not bring them rich.

Sophia said: "Assuming it is true, the risk you are taking is still too great, if it is a billion, it will be a reasonable number, have you considered that if the investment bank, hedge fund, and insurance company all fail, who will pay for the hedging agreement in your hand?"

"In the first 20 years of the world, the best opportunity to make money is here, and I will never miss it, which can clear our debts and buy after the crisis," Mark said. ”

David said unhappily: "We are also facing huge risks, have you ever thought about the consequences of the agreement expiring and the crisis not happening?"