The 196th bet is not the end if it wins

In the face of the balloons that are constantly inflating, everyone is in ecstasy.

Wei Dongsheng is an exception.

Wei Dongsheng stared at those details with hindsight, and heard the footsteps of the global economic crisis getting closer and closer in advance.

Following the collapse of New Century Finance, the mortgage crisis crept in, and Bear Stearns' two hedge funds that invested in subprime mortgages suffered heavy losses. At this point, Bear Stearns, one of the five largest investment banks in the United States, was officially involved in the whirlpool of the subprime mortgage crisis. Faced with the huge losses from investing in subprime mortgages, Bear Stearns issued only a tepid statement declaring that it had no problems with capital or liquidity. Perhaps, Bear Stearns took this setback as a common crisis that it has survived many times in its nearly 100-year history, with very limited attention.

In July 2007, the crisis spread further and the American Household Mortgage Investment Corporation (American_Home_Mortgage_Investment) declared bankruptcy. Seeing that the crisis could no longer be hidden, Standard & Poor's and Moody's belatedly issued crisis warnings about mortgage-backed bonds, and the subprime mortgage crisis officially entered the public eye.

In August 2007, the central banks of Europe and the United States began to bail out the market, and the Federal Reserve continued to inject capital into the financial system, each time with billions of dollars. Countries around the world also attach equal importance to it, and from August 11 to 13, in just 48 hours, central banks of various countries invested $326.2 billion to rescue the market. Central banks around the world have bailed out hundreds of billions of dollars and hundreds of billions of euros at every turn, effectively soothing the impact of the subprime mortgage crisis. On October 5, 2007, both the Dow Jones and the S&P hit record highs, as if they had crossed the quagmire of the subprime mortgage crisis.

However, these bailout policies have not addressed the symptoms.

The paper paste windows of the Federal Reserve and the rooster crow in the middle of the night in Huaguo are actually similar. The latter sits on an administrative monopoly, treats shareholders as mentally handicapped fools, and is unreasonable and arbitrary in changing rules; The former is sitting on a capital monopoly, relying on its large size and abundant funds, and is quite unreasonable and collides with the market. So, the end result of both is equally bad. The China Securities Regulatory Commission seems to have alleviated the "5.30" crash, but in fact, it is conniving at the floating capital to blow up a bigger balloon and gather new crash potential energy; The Fed seems to have alleviated the subprime mortgage crisis, but in fact, it is indirectly inducing a global economic crisis by allowing a group of investment banks, hedge funds, financial insurance, etc. to transfer their losses to more customers.

At this moment, they all think that they are right, and they all think that everything is under control.

Since they think they're right, let's keep betting!

Compared to the global economic crisis of 2008, the turmoil of 2007 was just an appetizer.

China's political ecology has changed a little in five years and a big change in ten years. 2007 was a new five-year juncture, and the Workers' Party held its 17th Congress from October 15 to October 21 to elect a new cabinet elders. There are a total of 25 faces in this year's top political club in China, some of them remained, four generations remained in the cabinet, and Gong Qixing also remained in the cabinet, but Gong Qixing was still an ordinary elder; Some people entered, and the future five generations of princes and future cabinet chiefs were also added to the cabinet.

Behind the personnel changes are the changes in power, and the changes in power will inevitably form a new political map. For example, Bu Hou, who was kicked to the Ministry of Commerce by a certain faction in the past, was now selected into the cabinet by luck and immediately reborn. As long as there are no major changes, Bu Hou will definitely leave the place as he did in his previous life, and continue to bet on major changes in the next ten years after five years.

In China's system, political power comes first, and many people are waiting for the end of the new cabinet election.

Wei Dongsheng is no exception.

Five years ago, in 2002, Wei Dongsheng waited for the 16th Congress of the Workers' Party to come to an end, and then rushed to Yanjing with the gray money earned from plug-ins and private clothes; Five years later, in 2007, it was the same, and when the final results came out, Wei Dongsheng could arrange and adjust his plans for the next five years cheaply. The butterfly effect brought by Wei Dongsheng has not yet affected the top clubs in China, and all the more familiar faces in the previous life appeared in the cabinet on time, and the political climate change in the next three or four years may be the same as in the previous life.

After the cabinet election ended, Wei Dongsheng immediately dialed Gong Qiuqiu's phone: "Are you okay over there?" ”

Gong Qiuqiu's mood was very high: "Very good, the Rose Fund has suddenly become the biggest short on Wall Street. The mortgage crisis is far beyond my imagination, and any hedge fund that shorts the mortgage market is the star of Wall Street at the moment. If you rank the list of the most profitable fund managers in 2007, the Rose Fund ranks first; John Paulson, who is also short in the mortgage market, is in second place, and is more sought after than Soros (George_Soros). Leaving aside the specific returns from our own investments, if I were a fund manager like John Paulson, as a fund manager at the Rose Fund, how much would I earn? ”

Wei Dongsheng cooperated with Gong Qiuqiu's interaction: "$1 billion? ”

Gong Qiuqiu: "You underestimate the percentage of fund managers. ”

Wei Dongsheng overestimated: "$2.5 billion? ”

Gong Qiuqiu: "A little more." ”

Wei Dongsheng continued to raise the data: "$3 billion? ”

Gong Qiuqiu smiled and said, "It's almost." ”

Wei Dongsheng was surprised: "You've made so much money? ”

Gong Qiuqiu said: "Actually, there are not many. Although the performance of the two funds managed by John Paulson is not as good as that of the Rose Fund, with its volume of more than $200 billion, he has made at least $3 billion in money. As a young fund, Rose Fund was neglected by the capital market in the early stage. If not, the fund manager of the Rose Fund will be even more terrifying, after all, our Rose Fund is a ruthless character who dared to spend more than $1 billion in July 2006 to short the U.S. mortgage market. ”

Gong Qiuqiu went on to explain: "Hedge funds are not weaker than war, expensive games, contracts can easily be hundreds of billions of dollars, as long as you bet in the right direction, the money will continue to flow into your pocket. One of Bear Stearns' hedge funds is actually in our hands, and Bear Stearns is still delaying the payment. If Bear Stearns' huge sum of money can actually be received, the Rose Fund will actually earn $1.5 billion more this year. ”

Wei Dongsheng: "Is there any hope for this contract?" ”

Gong Qiuqiu: "Bear Stearns' financial situation is very bad, and last week's contract performance negotiations, do you know how Bear Stearns threatened us?" The head of Bear Stearns even threatened us that if the Rose Fund refused to discount the price, our $1.5 billion contract would be worthless when Bear Stearns went bankrupt. I never imagined that Bear Stearns, which is almost 100 years old, would one day be so desperate as to threaten bankruptcy. Bear Stearns, one of the five largest investment banks in the United States, was so miserable that he threatened me with bankruptcy! Bear Stearns' financial situation is probably worse than I thought. ”

The contract was successfully executed, and the contract was worth $1.5 billion; If the performance fails, the contract is worthless.

In the face of such a threat from Bear Stearns, Gong Qiuqiu calmly lamented Bear Stearns' disgrace, which proved how strong the advantage of the Rose Fund was in this financial war.

Wei Dongsheng patiently listened to Gong Qiuqiu tell her little story: "Is there any hope for Bear Stearns to fulfill the contract?" ”

Gong Qiuqiu: "In last week's negotiations, Bear Stearns made a proposal. Bear Stearns hopes that I will come forward to broker an in-depth cooperation between CITIC Securities and Bear Stearns: CITIC Securities will raise $1.5 billion from Bear Stearns and carry out a $1 billion equity swap. To put it simply, CITIC Securities lends money to Bear Stearns, and Bear Stearns returns the money it borrowed to us. ”

Gong Qiuqiu previously worked in CITIC, and because of the influence of the Gong family, he has strong connections in China's financial system.

In other words, if it weren't for Gong Qiuqiu's timely help in the past, Wei Dongsheng would not have been able to make a third-party payment platform credit treasure before the launch of "Spring and Autumn of the Ten Kingdoms". If the cooperation between Bear Stearns and CITIC Securities is beneficial to each other, Gong Qiuqiu can definitely play a role.

This kind of operation, Wei Dongsheng sounded troublesome.

Shorting the U.S. mortgage market is far more difficult to operate than Wei Dongsheng imagined.

Shorting billions of dollars will never be as simple as buying and selling stocks.

First of all, to go short, you need to find players who are willing to bet against you. If everybody is short, whose money are you going to make? Someone is long, or someone doesn't believe in going low, they are willing to bet with you, and they have enough money to bet with you, so that you can make a profit through betting.

Winning the bet is not the end, you also have to ensure that the losing party obediently fulfills the contract and cedes the real cheap silver to you.

The losing side of the bet generally does not default on the contract with barbaric acts. Hedge funds have a guarantor for every transaction, and the price of a loser's default is not only to offend the Rose Fund, but also to offend the guarantor and the unspoken rules of the market. Therefore, every time the Rose Fund makes a fortune, it will pay various forms of guarantee fees to Wall Street bigwigs. This money is a must, otherwise Bear Stearns said tear it up, what can you do with it? And with multiple guarantees, since Bear Stearns lost the bet, they had to fulfill the contract, otherwise the entire international market where Bear Stearns lost his promise.

Moreover, Gong Qiuqiu is by no means a pawn of ordinary people.

Gong Qiuqiu is not only Gong Qixing's niece, but also has strong connections in China's financial system, and the cost of Bear Stearns' default is extremely high.

However, Bear Stearns was able to legally breach the contract.

For example, bankruptcy.

Once Bear Stearns declared bankruptcy, Bear Stearns' $1.5 billion contract with the Rose Fund became a bad debt, literally a pile of waste paper, as Bear Stearns threatened.