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Chapter 562: Wall Street's Grievances

Although he didn't know why James called him at this time, Li Zhiyang still knew that James, an old boy, must be a guy who can't afford to be early.

As soon as Li Zhiyang asked, James was on the phone and explained to Li Zhiyang one way or another.

A few hours later, Li Zhiyang had already appeared at the airport in Chunyang, and his Gulfstream private business jet was waiting for him on the tarmac at this time

In a dozen hours, he will appear at the JFK airport in New York, and this time James invited him over for another feast in the United States

It turned out that after the time entered 2008, the US economy could no longer bear the catastrophic consequences, and from the second half of the year, the US economy was full of alarms.

But the news media, dominated by Wall Street, of course, turned a blind eye to such warning signs, and everyone continued to sing night after night, and at the end of 2007, several large investment banks and large investment institutions on Wall Street held a final meeting to share the spoils.

In fact, many company executives already know that this opportunity may only be the last time, and it may not be long before next year, everyone will have to put on their luggage rolls and get out of here.

Therefore, at the end of 07, those big investment banks and big investment institutions, in the year-end dividends, but they were not relentless in distributing a total of 38 billion US dollars in red envelopes to the following employees, which was 2 billion US dollars more than in 06, and the average was about the same as everyone's head, which can reach the level of 200,000 US dollars per person.

Among them, Goldman Sachs, which has the deepest pockets, alone accounts for $18 billion

In fact, many senior executives of these companies know that such an opportunity may only be available once, and after this financial crisis, if they want to spend the company's money so lavishly in the future, they don't know when they will have to wait.

So they gave red envelopes to the employees, which was also very refreshing

As soon as the New Year's Day of 07 passed, just entered 08, the situation on Wall Street was getting worse, many investment banks operating subordinated debt products, as well as financial institutions that bought these financial products, are now mourning, everyone knows that there are only a few days before they finish playing.

At the beginning of '08, there was no good news for the economy around the world, and in Newcastle, England, local residents went to North Rock Bank to run and withdraw money, while shouting to support local banks.

And the Americans here are not relenting, shouting to save the American economy, and at the same time withdrawing $17 billion in cash from Bear Stearns' comptoir within two days

This can be said to be a blow to Bear Stearns, which has been battling bankruptcy news since July 07 last year, when two hedge funds under Bear Stearns lost all their customers' money.

When Bear Stearns was withdrawn from the last $17 billion, his confidence in the minds of the people was as equal to zero as his surplus value.

Therefore, the smallest of the five major investment banks on Wall Street, one of the five major investment banks on Wall Street with a history of 85 years, could only declare bankruptcy in the end.

Before July '07, it was still worth more than $20 billion on the stock market, and by the time it opened last week, it had fallen to more than $80 billion, and by the close of trading on Friday, Bear Stearns was still worth $3.4 billion.

But just one Wednesday and Thursday, after a frantic run, Bear Stearns' market capitalization was only a pitiful $240 million.

This is still the price quoted by JPMorgan Chase, and other banks do not dare to touch this plague god at this time

It is said that although Bear Stearns is among the five major investment banks on Wall Street, it ranks behind Goldman Sachs, Morgan Stanley, Merrill Lynch, and Lehman, and is one of the smallest ones.

But as a detonator to detonate explosives, it doesn't necessarily need a strong explosive force, and as long as Bear Stearns makes the first of that domino, then the sensation he causes is absolutely limitless

So the other Wall Street predators, of course, won't allow this to happen, so now everyone is discussing ways to solve this mess left by Bear Stearns

And this is also the meaning of Li Zhiyang being urgently summoned to the United States by James this time, according to James's idea, that is, they will take over this Bear Stearns, of course, only to take over the part of Bear Stearns' trading house, as for the rest of the garbage, leave it to others to clean up the mess

In his previous life, Li Zhiyang also had a general understanding of the fluctuations in the financial market in the United States during this time, but he did not have deep memories of those.

After all, at that time, he was still running for his job, but there were still a few things that he remembered very deeply, that is, in the end, the five major investment banks on Wall Street, except for Goldman Sachs, which has a particularly close relationship with the US government, and the deep-rooted Da Mo, the others all ended up in bankruptcy and reorganization, Merrill Lynch, Lehman, Bear Stearns, none of these three could escape.

Goldman Sachs and Morgan Stanley, in the end, were forced to announce that they would change from investment banks to commercial banks, and since then, the five major investment banks on Wall Street, from 02 to 07, have had a five-year history of windfall profits, which can be regarded as an abrupt end

Since then, Wall Street will enter an ice age of small profits, and no one knows when such days will end

It is said that this Bear Stearns, although the size of Wall Street is relatively small compared to several other giants, but the bad guy is also a famous investment bank with a history of nearly 100 years, and there have been countless glorious moments, how can no one be willing to help at this time?

But when it comes to this point, several other investment banks or investment institutions are okay, and everyone can still help each other, but for Bear Stearns, everyone is really more willing to stare at him and see him go out of business.

Of course, there is a reason for it, and the words have to be taken from Bear Stearns' boss James. Kane, speaking of this guy's reputation on Wall Street, is quite poor, and he has always been known for being mean and stingy in the circle of predators.

Therefore, his relationship with the bosses behind several other major investment banks on Wall Street, or some other investment institutions, is not harmonious

The grievances between them mainly began with the Asian financial crisis in 1998.

It is said that before the Asian financial crisis, John, the head of the arbitrage trading department of Salomon Brothers, a big company on Wall Street. McCurry got out of Salomon Brothers and set up an LT fund

This McCurry brought a group of younger brothers out of Salomon Brothers, and used their experience with Salomon Brothers to create a precedent for hedge funds

The arbitrage trading they engage in, strictly speaking, should actually be a risk-free trading profit principle

In fact, it is to buy a financial derivative and sell another financial derivative short, as long as the two financial derivatives, within the time specified in the contract, the stock and their prediction, then there will be a price difference, and they can use the price difference to make money

But such spreads are often relatively small, so how to maximize this spread and win huge profits

At this time, the routine of familiar securities trading comes in, that is, the use of leverage

McCurry used this trick to great success on Wall Street, and he also invited many star employees in his LT, such as Schultz, who won the Nobel Prize in economics and once studied Black-Schultz's law, and Morton, as well as a professor at Harvard University, and Mullins, who served as vice chairman of the Federal Reserve

And this star-studded LT did not disappoint the majority of investors, and in the first three years, it achieved a cumulative profit rate of two hundred percent with little fluctuation and stable profitability

Now Wall Street is crazy about it, so countless copycat versions of LT have appeared, everyone is selling dog meat on the head of a sheep, and they are doing similar transactions to LT.

As a result, the concept of hedging began to run rampant in the financial street, and suddenly sprung up like mushrooms after a rain, and all kinds of large and small hedge funds began to occupy people's attention at once

And Wall Street is also bullish at this time, everyone is making money, and the money is red-eyed

At this time, because of the emergence of these large and small copycat hedge funds, the profitability has also begun to become thinner, but the geniuses are not worried, it doesn't matter if there are competitors, then let's increase financial leverage

By the beginning of '98, there were less than $5 billion in fixed assets, but in the financial market, they had more than $120 billion in assets, and their leverage ratio was more than 25 times

But in 98, Soros, who was so good at dying, finally punctured the balloon, and this old boy is also smart, and he attacked some small Asian countries and weak countries.

He didn't dare to attack these people on Wall Street, otherwise these people would have to kill him, but even he himself probably didn't expect that things would be too big.

The Asian financial crisis, which started with a few small Asian countries, has spread to the whole world

Japan, South Korea have been affected, and even the United States has not escaped this

And the most seriously affected by this incident is the LT fund, which is already a behemoth at this time, because the Asian financial crisis has affected Russia, and Russia has a consistent polar bear-like unreasonable style.

At that time, because the president of Russia was Yeltsin, and at this time, Yeltsin completely lost the sharpness he had when he first came to power, and even looked a little mediocre and weak

At this time, Pu Ting was riding a big victory on the issue of driving, returned to the State Duma, and became the prime minister of Russia.

In the Yeltsin era, because he believed in that Jeffrey, he used shock therapy in Russia, and Russia at that time was made a miasma by Jeffrey, and it simply became an investment paradise for Western European capitalists and American speculators.

These guys gulp and suck the blood and sweat of the Russian people, and the Russian people have long been dissatisfied with such a situation.

At this time, the careerist Pu Ting appeared, he wanted to revive Russia's majesty, he wanted the people of the country to see that there were still people in Russia who spoke for them, and he dared to argue with those speculators in Western Europe and the United States, and he just dared to give them a look

You must know that at that time, many Western European capitalists, as well as American speculators, held a lot of Russian government bonds.

At that time, the financial crisis in Asia was very serious, but everyone still had considerable confidence in Russia, after all, these national bonds were related to a country's national credibility.

Moreover, Russia is a nuclear state, once the second largest power in the world, how can such a country declare bankruptcy, how can it be possible to let the bonds issued in its own national currency go wrong?

Is it to put pressure on Yeltsin if he can't print more rubles to pay off his debts, as for the Russian, take care of the?

So at that time, the capitalists of Western Europe and the speculators of the United States were very confident in Russia's national credibility, and at that time they all believed that the polar bear was now a well-behaved teddy bear that had been shackled by a double-headed eagle and did not dare to move

But they all forgot that Russia was a country that had always been a surprising country, and they defeated Napoleon, defeated Hitler, and founded the world's first socialist state.

What else did they dare not do? So a group of Russian careerists, led by the general audience, sang the Internationale and shouted that the Intéchon Nar must be realized, it must be realized

In August '98 it was announced that the Russian ruble was depreciated, and the country's bonds were to be restructured

At the beginning, the reaction of the international financial market was that the polar bear was a rogue again, but fortunately, Russia's economy is small and not closely connected with the international market, so it will not be a big deal.

But it didn't take long for many investors to realize that if Russia, once the world's second largest power, and now one of the nuclear powers, were able to declare bankruptcy, what could be impossible in the world?

As a result, under the sound of Russia's 'August **', all kinds of international travel funds fled with donations

The panic soon spread from Russia's national bond market to the stock market, the foreign exchange market, the bond market, etc., and the frenzied investors wanted nothing but the safest US Treasuries and cash, and they sold everything they had even more frantically

Hedged leveraged investors have also reduced their leverage to reduce their risk.

But in the midst of the trampling of each other, there is only one giant who stands still, and that giant is

But don't think that this is a bright festival and you have to sacrifice yourself, in fact, the reason is that the scale of this fund is too large at this time, and it is really difficult to turn around.

At the beginning of 08, the scale of hundreds of millions, hundreds of billions of assets, and 25 times the leverage. At this time, he was already a trillion-dollar financial derivative and a 125 times leverage.

At this time, there is no way to turn around, his scale is too large, how do you tell him to close the position, and who else can pick up his plate at this time?

This lt disappeared in an instant, but the impression he brought was immeasurable, if according to the previous laws, other investment banks and institutions, at this time they would definitely close their positions and run away, but in this way, no one can afford the consequences.

Because in this way, the most direct consequence will definitely be that the United States will completely finish playing, and the entire financial system will crash and collapse, which will bring at least more than $6 trillion in direct economic losses to the United States, and the subsequent losses will be enough for Americans' children and grandchildren to eat pickles for a lifetime and pay off their debts.

Greenspan, the financial boss of the United States at that time, immediately became angry, and convened a meeting of all investment banks on Wall Street and large investment institutions overnight, asking everyone not to close their positions and run away, in short, to slowly try to save the American financial system by exchanging space for time and sacrificing some interests, so as to avoid the final collapse of the entire financial system.

At that time, several other giants of Wall Street also accepted this result, because Greenspan made it clear that everyone had to do this, because if the casino was smashed, everyone would not have to play in the future.

So at that time, although everyone was losing money, they were accompanied by white faces and soft hands, and their faces were like earth, but they all gritted their teeth and survived.

But there was only one exception at the time, and that person was James, who is now the chairman of Bear Stearns. Mr. Kane.

It is said that when the financial crisis was at its worst, Kane, the chairman of Bear Stearns, was in the mecca of American country music, in Nashville, Tennessee, leisurely participating in golf or playing bridge.

When Greenspan called him to go to a meeting, the old guy simply said 'n', then hung up and turned off his phone.

Go back and continue to smoke his ** cigarette, and continue to fight with his good brothers on the bridge or golf course.

Kane's failure to show up at that time hurt the hearts of many other bosses of big investment banks

Your fucking grandson, when it's cheap, you charge ahead, and when it comes to the top tank, you kid won't show up, you're really not ordinary ruthless

But at that time, everyone didn't have the heart to talk to this James. Kane was more calculating, after all, it was important to save the market, at that time, under Greenspan's nomination, fifteen large investment banks and financial institutions led by Morgan and Merrill Lynch ate almost 90% of LT's assets, while Bear Stearns was not a big son.

So from that time on, the grudge between Bear Stearns and fifteen other big investment banks, or investment institutions, was settled.

Okay, let's meet in the mountains and rivers, let's see

So at this time, Bear Stearns encountered such a big trouble, and no one had the intention of coming to the rescue, but wanted to come up and step on two feet.

Among them, Morgan and Merrill Lynch, who hate this Bear Stearns and gritted their teeth, are even more eager to step on this Bear Stearns a few more times

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