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"Then comes the second crisis. Pen | fun | pavilion www. ｂｉｑｕｇｅ。 infoAs soon as these d's got hot, hedge funds shook up. What is a hedge fund? If you have a dollar in your hand, you dare to borrow a hundred dollars to play. How can it be wasted with such a hot asset in hand, of course, it is to take out the mortgage for cash, so as to continue speculation. And the collateral they used as collateral was the D that the investment bank sold to them at the beginning, and then exchanged for a loan of five to fifteen times. ”

"Driven by this, investment banks are becoming more and more enthusiastic about doing D, and hedge funds are becoming more and more enthusiastic about buying these Ds. After buying it, the enthusiasm to take out the mortgage for the loan is also getting higher and higher. So, unconsciously, ten trillion dollars were constantly rolled out of the bank through the D leverage. When interest rates in the U.S. remain low, when U.S. real estate is booming, everything is fine, but when the authorities turn bad, the situation becomes out of control. Investment banks are aware of this, but the profits in front of them have made them not even want to think about tomorrow, so they still plunge into it. ”

Hearing this, Duan Tianwolf finally let out a long breath, "I understand, it turns out that this is the case, so as long as the subprime debt crisis is detonated, then these investment banks will suffer huge losses." ”

Hearing Duan Tianwolf say this, Long Guohai smiled and said, "Do you think the story of the financiers is over here?" Ha, then you're underestimating them. ”

"Huh? And also? "This time, Duan Tianwolf was really completely shocked.

"Of course." Long Guohai said with an exaggerated expression, "Otherwise, how do you think the financiers make huge profits?" ”

Duan Tianwolf opened his eyes and thought for a while, "I really can't think of how else to make money." ”

"The great Wall Street financiers always think beyond your imagination." When Long Guohai said this, he smiled, "In American finance, words must be called hedging. Didn't we say that d is risky? Well, the bigwigs of the US investment banks have made an invention again, and they have come up with something called credit default swaps, or DS for short. For investors, in this process, the risk-bearing investor does not need to contribute any funds, nor does he need to have any relationship with the insured assets, he only needs to bear the potential default risk of D, and he can get an insurance payment in installments. “”

"First of all, you buy D, and then you make a lot of money every year, but you are worried that in the future, the real estate turmoil, the non-performing loan rate will increase, and the D in your hand will become worthless. And those who buy DS don't have to pay a dime, and they can share the profit every year, isn't it also cool? Again everyone was happy, and then the investment bank made another big profit in the process, genius, right? ”

Duan Tian Wolf simply didn't have the strength to be shocked, he couldn't say anything other than gently swaying his already somewhat blank mind.

"If you think that the imagination of the big guys in investment banks ends there, then you are very wrong. Next, investment banks will launch their killer app, Synth D. Do you know what Synth D is? ”

"I don't know." Duan Tianluo shook his head and said.

"Synthetic D is a new product based on DS. We just said that DS means that the buyer bears the default risk of D, and then without paying a penny, you can get the insurance money every once in a while, right? Long Guohai asked.

"yes." Duan Tianluo nodded.

Long Guohai asked again: "As long as there is no problem with real estate in the United States, then D will not have problems, as long as D does not have problems, then people who buy DS can always get insurance money, right?" ”

"That's right." Duan Tianluo nodded again.

"What did I just say? What are Wall Street investment bankers most proud of? Financial innovation? What is financial innovation? Financial innovation is all about realizing all the predictable benefits immediately. ”

Hearing this, Duan Tianwolf understood a little, and he scratched his head with his hand in disbelief, "Isn't it?" Do investment bankers want to securitize DS as an asset? ”

"It's a genius, and it's completely correct." Long Guohai snapped his fingers, "Since DS has fixed income, why can't it also be packaged and securitized again and sent to the market to sell?" ”

"How does this work?" Duan Tianluo asked.

"Why not?" Long Guohai asked rhetorically.

"Although DS has a fixed income, the premise is that the buyer bears huge risks, how can it be used to make securities?" Duan Tianluo asked.

"You have a point, officially because of this huge risk, those asset rating companies do not dare to rate this kind of security. The road to DS securitization is about to come to an end. That's when the great Renault company came into the picture, and they made a genius financial innovation. That is to accumulate the cash flow generated by the DS into a spare 'pool', so that in the event of a default, you can lose your share of the money you got first, and not your own money. And when you feel that it is wrong, you can sell it before you lose your own money. ”

"If you think about it, in the past, when you invested in bonds, in order to get cash flow, you had to put real money into it, and you had to take the investment risks that might arise. Now you can keep your money untouched and keep it in the stock market or elsewhere to continue to create wealth for you, and you will get a steady cash flow as long as you take some risks. Oh my God, is there a more shady investment product in the world? For this reason, asset rating companies have almost no hesitation in stamping the big seal. Then this investment product sold like crazy in the United States, and a large number of funds, including pension funds, education funds, and many foreign funds, flocked to buy it. ”

Duan Tianwolf blinked his eyes and said, "Didn't these fund managers think about it, no matter how this thing is packaged, it is actually still a high-risk variety." They don't know that if there is real turmoil in American real estate, they will be in big trouble? ”

Long Guohai spread his hands and smiled: "So what? The high returns have been achieved, and their high bonuses have already been earned. I'll tell you, in addition to this ordinary synthetic D, they also issue a synthetic D product called a zero-coupon bond specifically for hedge funds, which is riskier and more terrifying. And it is through these channels that I have just said that the subordinated debt, which is just over a trillion dollars, has been inflated to tens of trillions of dollars. ”

"The only people who benefit from this game are investment banks, and they have no profit." Duan Tianwolf finally concluded.

Long Guohai smiled faintly and shook his head, "On the surface, it seems to be so, but because of being too greedy, over-lending to hedge funds, and encouraging speculation, even investing in hedge funds, the losses brought to investment banks are also huge." And most importantly, many of the people they have ruined are also part of American society and are their customers. Once the U.S. real estate oscillates and will bring about a large-scale wave of bankruptcies, which will trigger a recession in the U.S. economy, and the U.S. investment banks will also be difficult to escape from this recession. ”

When Long Guohai said this, he paused, and said with emotion: "The entire American society is like a person, and the American investment bank is like its brain. Investment banks live by devouring their own bodies, as long as the speed of their devouring is well controlled, this body can indeed continue to grow new meat for it to devour, but if they are too greedy and bite their bodies in one go, then they will eventually bury themselves. Both the Wall Street elite and the Rothschild family are well aware of these truths, but when the bright red profits appear in front of them, none of them can resist this temptation. The madness of devouring profits, to the point of devouring oneself in the end, is the tragedy of almost all financial oligarchs. ”

"Nope." Duan Tianwolf shook his head, "It should be said that this is a tragedy for all mankind. Isn't it stupid that we all humans are doing something that we know is wrong, but we can't resist the temptation in front of us, and we can't help but do it, and in the end we destroy everything, including ourselves? ”

"Huh." Long Guohai laughed for a while, and then said, "Okay, let's not be so deep anymore, as if we are worried about the country and the people." Let's get back to our own business. ”

"Okay." Duan Tian Wolf retracted his thoughts, nodded, and then said, "I listened to your words, and I fully understood. This can be done exactly the way you do it. ”

"Of course I have no problem doing it, but there must be two prerequisites, first, I must have sufficient funds, and my own must not be enough. Second, I have to keep my life safe, and if the bats kill me, I can't do anything. ”

Duan Tianwolf said: "We will discuss the matter of money, and as for the security issue, it should be no problem, because you only need to teach me how to do this matter." Specifically, it's up to me, no, to be precise, it's up to me to control others to do it. In addition, I think that with Chen Jiansheng's life, it is not a big problem to get the support of China's political axe. When the time comes, I will ask Ling Mengdie to ask her to ask the political axe to send someone to protect your safety. As long as the bats don't go all out against you, the NSA people are enough to protect you. ”

(To be continued)