13 February 2007.

New Century Financial Corporation, the second-largest subprime mortgage company in North America, issued a profit warning for the fourth quarter of 2006, followed by the announcement that Huifeng Bank had suffered huge losses in its North American home loan mortgage business, writing down $10.8 billion in related assets.

At the same time, the major investment banks in North America, including Bear Stearns, Citigroup, Merrill Lynch, Morgan Chase, Regan, etc., have incurred huge losses that have not yet been disclosed.

As the second-largest subprime mortgage company in North America, New Century Financial is about to face a whopping $17.4 billion in forced debt from Wall Street.

The revelation immediately cast a shadow over the company, such a high debt was simply unable to be repaid, and the countdown to bankruptcy had even begun, and the panic of investors began to spread, the fuse of the first detonator had been ignited, and the prelude to the subprime mortgage crisis began.

There is actually an undercurrent behind the tranquility of Wall Street, but Luo Sheng is happy to spend the New Year.

Overseas work as usual.

In March, domestic employees also returned to work one after another.

On the afternoon of Wednesday, March 14, the office of Luo Sheng of Bluestar Technology.

"Don't forget tomorrow's morning meeting."

Erin, who walked to the door of the office, did not forget to turn around and remind Luo Sheng, and when the two sides looked at each other, Erin threw a charming look and left satisfied.

The first shot fired this week has just ended, Ming Jing withdraws his troops, and Luo Sheng has lost several times in the elite battle at home, but as a master of strategy, he never cares about the gains and losses of a soldier, only cares about the final outcome of the victory.

After resting after the war, Luo Sheng poured a cup of tea and returned to his desk to sit for a while, glanced at the computer, and saw a signal request for access popping up on the screen interface.

It was his private anonymous contact account with Paulson's hedge fund and the successor fund, which was separated and Luo Sheng wrote an encrypted security system himself.

It is impossible to make international calls, the lines are not secure at all, and they are eavesdropped by the CIA in minutes.

Luo Sheng quickly operated on the keyboard for a while, then put on a Bluetooth headset and leaned back against the chair.

"Michael."

"Mr. Luo, the number of mortgage defaults has reached a new high, and nearly two million houses have defaulted."

"Two million?"

Luo Sheng suddenly put his hands on the table and folded his fingers, and said, "Has there been a broker jumping off the building with the sharp increase in mortgage defaults?" ”

At the same time, in the office of the Inheritance Fund on Manhattan Island in North America, Michael stayed in his office all night and did not go home, and now it is almost dawn, when he heard Luo Sheng's words, he responded:

"Mr. Luo, the market is derailed, it should have crashed in February, but Standard & Poor's did not lower the value of mortgage bonds, and the mortgage bond market was manipulated by people with intentions, and almost at the same time Goldman Sachs's system went down, our information was gone, Bank of America also had a power outage, and Morgan Stanley's server failed, it's too"

Hearing this, Luo Sheng replied: "What is the current market value of my credit default swap?" ”

Michael: "According to the policy agreement, the monthly premium is more than 30 million yuan paid to the bank, and the current loss has reached about 9. ”

Luo Sheng: "Well, in other words, hundreds of millions of dollars are gone"

After a while, Michael's voice came again: "I know the reason, although I have no evidence, but the big banks are busy passing on the crisis, Goldman Sachs, Citigroup, Morgan Stanley, Morgan Chase, Merrill Lynch is now almost every bank is frantically selling junk bonds to those unsuspecting consumers, and then paying for their greed, and only lowering the value of the bonds after the sell-off is completed, this is an unprecedented scale of crime on Wall Street, and it should be exposed." ”

Hearing this, Luo Sheng couldn't help but remind: "No bank or credit rating agency will confirm this kind of news, Michael, you'd better not do it, otherwise you will be interrogated by the FBI immediately." ”

On the other side, Michael, who was barefoot and crossed his waist with one hand on his waist, walked back and forth in his office, took a deep breath, and said in hindsight: "That's right! ”

He did a lot of calculations, but he didn't count at this level.

Luo Sheng said lightly: "Michael, if this is a protracted battle with a hundred battles, you can lose the first ninety-nine times, but the last time you have to win it back for me, and the real winner is the one who laughs to the end." I don't care about short-term losses, I don't even care about long-term losses, I only care about the end result. ”

Michael: "God! Thank you, thank you, thank you very much! ”

He found that this is the most forgiving investor he has ever met in his career, and other investors are now about to explode on the spot, which shows what kind of dilemma Michael is facing now.

Luo Sheng smiled: "Let's go fight." ”

The call ended, and Michael, who was far away in New York at this moment, also took off his Bluetooth headset after ending the communication, and lay down on the spot for a long time staring at the lights on the ceiling.

It was as if I saw a glimmer of hope.

Heading into February, subprime mortgage bonds did not collapse as he expected, and Michael's mentality was on the verge of exploding, and he was convinced that the derailment of the market was manipulated by well-intentioned people, because the default rate was skyrocketing.

The monthly premium amount of credit default swaps purchased by the Successor Fund is as high as a terrifying $66.8 million, which means that the fund will lose 19 million dollars in just one year, and more than $600 million will be gone, and the one who will collapse may be the Heir Fund.

The 4.2 billion funds under management will only take about six years to be put into flow.

It is conceivable how much pressure Michael has, but after talking to Luo Sheng on the phone, he gave him great confidence, as the largest investor in the heirloom fund, Luo Sheng did not ask for the redemption of the fund, and he did not take the initiative to ask even if such a big thing happened.

And the other investors in the fund are constantly asking how their money is doing.

Michael, who had been lying on the floor for a few minutes, suddenly rolled over and sat back on his computer and began to edit a mass email in an internal email:

[To all investors, our contract allows me to take extraordinary measures against the derailed market, and I currently have reason to believe that the mortgage bond market has been manipulated by interested parties, and in order to protect investors from it, I have decided to prohibit investors from redeeming the fund unless I issue a new notice.] 】

After Michael finished editing the message, he struggled violently before he could hit send, which meant gambling his career and everything, and could face lawsuits or even jail time.

"Win the last time"

Michael muttered to himself, couldn't help but think of Luo Sheng's words before, and finally, his fingers clicked lightly on the mouse.

It was late at night, and within a minute of him sending out, his mailbox exploded.

Almost all the investors were extremely angry, as if they wanted to come and kill him along the network cable and dismantle him.

Michael understands his investors perfectly, and many of them even take care of their families.

Less than three minutes later, his phone rang and Michael answered.

Investor: "Holy**, Michael, what did you do?" What have you done? Yes? ”

Michael: "Eddie, I've already said that in the mail. ”

Investor: "How much money did the heir fund invest in the email of stepping on the horse?" ”

Michael: "Only $4.2 billion. ”

Investor: "What about the premium?" How much do we have per year? ”

Michael: "It's about $700 million a year, which is a lot, but I'm going to get ahead and I'll make money." ”

Investor: "Hahaha will make money?" Dog corpse rice! The fund you manage will go to zero in 6 years, all or nothing, Eumad sends Michael, I want to redeem my funds. ”

Michael: "That's stupid Eddie, if you redeem the fund now, it's going to kill yourself, the fund goes down 17 to if the fund's capital falls too much, according to the agreement, the credit default swap will be invalid, and then those banks will take all the collateral"

Investor: "What? Are you saying that the contract will be invalid? Will it fail? Oh, no, Madefa Michael, pay me back, did you hear me, pay me back, I'm going to sue you! ”

Michael: "If you do this, it's just going to make the fund's capital fall even more crazy and the bank will take all the collateral"

Investor: "Holy **! Michael, if I go up to the rooftop, I'm going to pull you on your back, I swear! I swear to God! ”

Michael: "Thank you Eddie, I'm honored, but I don't think so, I'll probably jump before you, and I swear to God." ”

Investor: "Youmad Law Class Michael!" Honk... Honk... Honk... Toot"

The call was accompanied by a series of yells from investors starting with the letter F, and at this moment, Michael put down the phone in his hand and smirked on the table.

The phone just hung up and rang again, but he didn't connect.

He knew that at this moment, except for Luo Sheng, an investor, all the investors were eager to come over with a big knife and cut him off, absolutely.

Michael put on his headphones, turned the music up to the maximum, and then released the pressure by beating wildly on the drum kit next to his office.

At the same time, the pressure on John Paulson is no different, and he may be even greater, because Paulson's hedge fund is several times more than his successor.

At this moment, it is gradually dawning in North America, and John Paulson is jogging in New York's Zhongyang Park in the morning to release the huge pressure in his heart.

However, at the same time, Luo Sheng, who was far away on the other side of the ocean, had no pressure, and he was even happily playing a game of chicken with Erin now.

For Luo Sheng, the biggest difference between him and other investors is that even if his $6.2 billion is all lost, he will not break his bones, he is still one of the top ten richest people in the world, and he will not have any negative impact on his career.

However, if it is earned, it is not a matter of earning a little.

Then of course the happiness is over.