Chapter 2018: A Bankruptcy in the Eyes of an Ordinary Person (Part I)

Against this backdrop, speculation on Wall Street in the United States is growing. Especially since the end of the 90s, with the continuous decline of interest rates, the continuous acceleration of asset securitization and financial derivatives innovation, coupled with the luxury consumption culture that pervades the whole society and the blind optimism about future prosperity, it has provided the possibility for ordinary people to borrow ahead of consumption, but it has also bought the root cause and bane of today's situation.

The Bush administration naturally understands these things, and we must not forget that these members of the Bush administration are in fact big capitalists, and although Bush Jr. was born into a political family, he is also a big farmer, and the profit-seeking nature of capital naturally allows them to do their best to extract profits.

But now, as president of the United States, George W. Bush has to think about the problem at the level of the whole country: if this situation is allowed to continue, ordinary people will go bankrupt and run out of money, and in the end, it will be the rich people in the United States who will be unlucky.

Everyone is actually very clear in their hearts that for capitalists and businessmen, the market and purchasing power are the most important, and even the importance of the latter is far greater than the former.

In the past, when George W. Bush was not the president of the United States, he could just worry about this and just try to figure out the wallet that filled the money, but now, when he became the president of the United States, he could not do that.

"President, I think we need to try to reassure our creditors at this point so that they don't sell off their U.S. Treasury bonds at this time, or we're going to go bankrupt." Although Card was only the White House chief of staff and was not in charge of the government's finances, he still suggested it to George W. Bush with anxiety.

Purely from a theoretical and technical point of view, the current US government and social discrimination are maintained by borrowing foreign debts, and even the kind of foreign debts that have been demolished to make up for the west wall, and new debts have been added to the old debts; theoretically speaking, the current financial situation of the US government is very dangerous, and once those creditors in the United States decide to sell the US Treasury bonds in their hands, the US government will immediately fall into a state of bankruptcy.

The U.S. subprime mortgage market turmoil, which has begun to emerge, is ostensibly directly due to rising interest rates in the U.S. and the continued cooling of the housing market. The rise in interest rates has led to an increase in repayment pressure, and many users with poor credit feel that there is a high pressure to repay and the possibility of default, which will affect the recovery of bank loans, and also have a serious impact on many countries around the world, including China. When the time comes, if China and Japan, the two largest creditors of the United States, are included...... Japan is okay to say that if the United States puts pressure on them, they will not dare to do so, but China is not so easy to say, especially after the aggressiveness they have shown in the recent period...... Sell off the US Treasury bonds they hold at this critical juncture, and the US government will immediately go bankrupt

So in Card's view, at this time, stabilizing the Chinese has become a top priority for the US government.

"Card, I think you're wrong," said Secretary of State Condoleezza. Rice seemed to digest the bad news brought in by Card, and said confidently, "Contrary to your opinion, I think that at this time, it is absolutely impossible for the Chinese to sell their national bonds."

Well? Everyone looked at Condoleezza in amazement. Rice. There were no experts in finance and finance other than Rice who participated in this meeting. Rice's words were a little incomprehensible to everyone, and they didn't understand why she said that, after realizing that the US bonds in their hands would depreciate sharply, they should not sell their Treasury bonds as soon as possible to reduce their losses.

"For us, it is sometimes a good thing to owe too much debt," at this time, the strong Rice appeared in front of everyone again, "This is actually very easy to explain, if it is purely from a technical level, because of the excessive debt owed to the rest of the world, the United States seems to have gone bankrupt a long time ago, but the problem is that those creditor countries in the United States will not want to see the United States go bankrupt, because for them, The bankruptcy of the United States means that the US Treasury bonds in their hands will immediately become a pile of worthless waste paper"...,

"So for our creditor countries, not only can they not abandon U.S. Treasury bonds and so on, but they must even continue to subscribe to more U.S. debt to ensure that the United States does not go bankrupt, because for them, ensuring that the United States does not go bankrupt and ensuring the stability of the American economy is actually safeguarding their interests."

"Of course, if we see that the situation in the United States is not very good, even if they only pay lip service to sell their US Treasury bonds, it will have a great impact on our next actions, so it is necessary to make the necessary gestures and actions to stabilize our creditors...... Maybe we can borrow more money from them to save the American economy. ”

Accompanied by Rice's words, everyone chuckled, no, spending other people's money to do things, and even making others pay for the benefits, the United States has always done this.

Card pondered for a moment, and finally nodded, he was successfully persuaded by Rice, but after thinking for a while, Card still had some concerns, "Okay, Rice, we can put the American creditors aside for the time being, so what do you think we should do to solve the current situation of the mortgage investment company suddenly declaring bankruptcy?" ”

At this point, Card's tone was a little dissatisfied.

Of course, everyone, the dissatisfaction in Card's words is not aimed at everyone here, but at the damned, ignorant American mortgage investment company...... This girl, without humming or haha, suddenly declared bankruptcy? Let us be too passive

When Cade talked about this, everyone thought the same thing in their hearts: this home mortgage investment company is really ignorant

Yes, in the United States, loans are a very common phenomenon, and locals rarely buy houses in full, usually for long periods of time, but the problem is that unemployment and re-employment are very common in the fierce competition in the United States. These people who have an unstable or even no income at all, and buy a house because their credit rating does not meet the standard, they are defined as subprime credit lenders, referred to as subprime lenders.

According to the figures released by the U.S. Department of Housing last year, less than 60 people and families in the United States own a house that is fully owned, which means that the remaining part of the population and more than 40 families need to rent a house or obtain a house in the form of a subprime loan.

A market that can make money from more than 40 percent of the population of the United States, that is, a huge market with a population base of more than 100 million, has emerged to serve this particular market, or to make money out of the pockets of consumers in this market.

Due to the high price of the previous home, the bank believed that although the loan was given to the subprime credit borrower, if the borrower was unable to repay the loan, the mortgaged home could be used to repay it, auction it or sell it to recover the bank loan. However, due to the sudden decline in housing prices, when the borrower is unable to repay, the bank sells the house, but the funds obtained cannot make up for the loan + interest at that time, or even the loan amount itself, so the bank will lose money on this loan.

It's fine for one or two borrowers to have such problems, but due to the rising interest on installments and the fact that these borrowers are subprime lenders themselves, this has led to a large number of borrowers who are unable to repay their loans. As mentioned above, the bank repossessed the house, but could not sell it at a high price, and lost a large area, triggering the subprime mortgage crisis.

The U.S. subprime mortgage market typically uses a combination of fixed and variable rate repayments, where homebuyers repay their loan at a fixed rate for the first few years after home purchase, and then repay the loan at a variable rate.

In the five years leading up to 2006, the U.S. subprime mortgage market grew rapidly due to the continued boom in the U.S. housing market and the low level of U.S. interest rates in previous years.

As the U.S. housing market cools, especially short-term interest rates rise, subprime mortgage repayment rates have also risen sharply, and homebuyers' repayment burdens have increased significantly. At the same time, the continued cooling of the housing market has made it difficult for homebuyers to sell their homes or refinance them through mortgages.

This situation directly led to the failure of borrowers to repay the loans on time, which in turn led to the subprime mortgage crisis...... The clue is the bankruptcy of the 10th largest mortgage investment institution in the United States: the American Home Mortgage Investment Corporation.

Ordinary people may not be able to understand what the declaration of bankruptcy of the US Housing Mortgage Investment Corporation means, but in the hearts of everyone here, it is extremely clear: This means that since the Clinton administration ends in power and the new Bush administration takes office, the United States will face the test of the biggest economic crisis in the new century. …,

"We've got to do something," Bush Jr. stood up and slammed the table hard.

………………………………………………………………

With the bankruptcy of the 10th largest mortgage lender in the United States, the American Home Mortgage Investment Corporation, the people have not yet felt it, but the sensitive stock market has reacted in a timely manner

On the second day, when the three major U.S. stock markets opened, along with the news of the 10th largest mortgage lender in the United States: the U.S. Home Mortgage Investment Corporation, the U.S. stock market fell in response. The three major stock indexes of the U.S. stock market, including Jones and Nasdaq, fell by more than 2, which made people can't help but be shocked

When the stock market closed that day, more than $20 billion of wealth evaporated from the U.S. stock market in just one day, and the entire U.S. stock market was in mourning...... Of course, the evaporation of $20 billion in wealth is not counted, and the key is that until the day was closed, everyone did not see any signs of market recovery.

Ordinary people may not understand the inevitable connection between the bankruptcy of the 10th largest mortgage lender in the United States: the bankruptcy of the U.S. Home Mortgage Investment Corporation and the sharp decline of the U.S. stock market, but those who manipulate the U.S. stock market are people? They are all the elite of the American financial industry, and the bankruptcy of the 10th largest mortgage lender in the United States: the American Home Mortgage Investment Corporation, immediately made them smell of a financial storm that is about to sweep the United States

This is the case with Tom Brown, a black American citizen. Claire felt it deeply.

Although people of color are discriminated against in the United States, Tom . Claire is very happy with what she has at the moment.

Tom. Claire is an ordinary truck driver in the United States, with a Kenworth truck, a house that she owns and bought with a subprime mortgage, and a gentle and lovely daughter who talks a lot on weekdays, in addition to a four-and-a-half-year-old gentle and lovely daughter.

For all this, in addition to thanking God for your favor and support, Tom Brown. Claire can no longer imagine that there can be dissatisfaction, yes, even now, black people are very discriminated against in the United States, but the house, career and children that can be owned in the United States, can there be dissatisfaction? Look at those who were like the same companions when they were children, which of them is like this, they have a house, a career and a family that they belong to? They are all bored wandering around the streets.

No matter how tiring the work is every day...... In fact, driving a truck is not tiring...... But Tom. Claire only thinks of those inferior companions when she was a child, Tom. Claire immediately felt empowered, like Popeye eating spinach.

Today it's Tom. Claire's rest, so Tom. Claire slept for the first time of the week, and didn't get up from bed until almost 10 o'clock, and slowly went to the bathroom to wash up. Claire listened nonchalantly to the news on the TV.

“…… The 10th largest mortgage lender in the United States: The news that the U.S. Home Mortgage Investment Corporation announced bankruptcy and collapse the day before yesterday caused violent shocks in the three major U.S. stock markets. The prices of several stocks represented by the Jones Index and the Nasdaq Industrial Index fell by more than 2, and some financial experts commented......"

Tom. Claire was shocked to forget the toothbrush with toothpaste in her mouth: the subprime mortgage was borrowed from the American Home Mortgage Investment Corporation, and now the tenth largest mortgage lender in the United States: the American Home Mortgage Investment Corporation has collapsed, the impact of this incident ...... Is it big?

Chapter 2018: A Bankruptcy in the Eyes of an Ordinary Person (Part I)

Chapter 2018: A Bankruptcy in the Eyes of an Ordinary Person (Part I)