"What a ruthless!"

In the office, Chen Guo said with a sad face.

Just two days ago, he was still discussing with Chen Nian that the biggest difficulty of the construction machinery project is not technology, not capital and resources, but the market.

As a result, now, the opponent has dealt a heavy blow to his side!

20% off directly!

What is this concept?

For many projects that require the use of large machinery, if you can save 20% of the cost, the profitability of the whole project may turn from negative to positive.

And, again, it's a desktop impact.

Under the table, the person in charge of the project is likely to reap millions, if not tens of millions, of personal benefits because of such a large price reduction.

Under this huge temptation, the wind direction of the entire market will irreversibly change.

How easy is it to fight against it?

Even if the plan Chen Nian said can really be realized, and the technology of the product is 10 years ahead of the same level of products, I am afraid that such a disadvantage will not be recovered.

Unless, 10 years ahead of technology, the price will be lower than theirs

This is pure foolish dreaming

Looking at Chen Guo with a bitter face, Chen Nian, who was sitting opposite, couldn't help but feel a little anxious.

A long time ago, he had thought about the "butterfly effect".

He knew that with his arrival, the situation in this world would definitely change, and the balance between various forces would be broken, but he didn't expect that the impact would be so great.

The economic suppression was actually more than 10 years ahead of schedule.

Of course, the other side is not using extreme means, and the so-called price reduction and dumping are more dependent on the inherent attributes of the market rather than relying on administrative power.

However, it can be seen that the other side's assessment of its own threat is actually developing by leaps and bounds.

Most likely, in the short future, their means will be further escalated and quickly reach their peak.

And is it really capable of responding to them equally?

No way.

Even in 10 years' time, our equivalent means are extremely limited, let alone now.

At present, the US economy has not yet completely entered the stage of hollowing out, the first financial crisis after the 21st century has not yet arrived, and the mud of the Middle East quagmire has only barely reached their feet.

It can be said that the United States is now the strongest form since the beginning of the 21st century.

How easy is it to use the strength that you have not yet developed to collide with their strongest form?

This time the crisis is really beyond the scope of my ability to solve

After thinking for a moment, Chen Nian spoke:

"If you really can't do it, we will raise the tariffs equally and limit the import price of the other party?"

"No, this is contrary to our commitment to join the WTO."

"Of course, in fact, they were the first to break their promises, but the problem is that other Western countries, other partners, don't care about that."

"What they can see is that we practice trade protectionism and arbitrarily raise tariffs."

"Once this impression is solidified, it will hit us even harder."

After a pause of a few seconds, Chen Guo continued:

"What's more, it's almost 2006, 2008, the Olympics."

"This is a critical window period, and we cannot make any major diplomatic moves at this juncture."

"I think you know what I mean, too."

"In many cases, it's a last resort."

Chen Nian nodded helplessly, he had nothing to say about this matter.

However, 2008 was mentioned

Chen Nian's heart suddenly moved.

The butterfly effect may occur, but it is unlikely that a storm will actually sweep all corners of the world.

At the very least, the cause of the 2008 financial turmoil should have not been affected.

No, it's even possible, it's going to get stronger.

The reason is very simple, in a series of confrontations in the early stage, the United States lost a large amount of money and foreign exchange, and only in the original soybean battle, the positions lost by major investment institutions reached the level of 100 billion.

Not to mention the follow-up impact on several airlines due to the birth of J-22 and J-20B, as well as the subsequent chain effects.

In a word, they are very short of money in the current US capital market.

So since there is a shortage of money, where is the fastest money?

Real estate.

CDS。

The so-called CDS, officially known as a credit default swap, is essentially a financial instrument for leveraged investments.

A very simple example, if a residential home is sold for $100,000, but the client only has $5,000 on hand, but the real estate company decides to sell the home to the client in order to recoup the funds quickly, what should it do?

It's very simple, guide residents to take out loans, and borrow enough $100,000.

But the problem is that with a "down payment" of $5,000, the leverage of this loan is as high as 20 times, and no bank dares to do such a high-risk business, and the plan cannot be implemented at all.

That's when things come into circles.

The customer wants to buy a house, the real estate company wants to sell the house, and the bank wants to earn interest, but because of the element of "risk", this seemingly "three-party mutually beneficial" transaction cannot be reached.

It has to be said that this is definitely a significant loss.

So, how do you make up for this loss?

At this time, there was a genius in the banking system who stepped up.

He suggested that a third-party agency could be found as security for the transaction.

The bank pays the institution an annual insurance premium of $500, and the institution pays the full amount of money to the bank in the event of default.

And if there is no default, the money goes to the institution.

In this way, the bank's risk is passed on, and the real estate company can continue to buy and sell with customers.

Hearing this proposal, the insurance company immediately made an actuarial calculation.

Subsequently, they found that the default rate of the entire real estate market is extremely low, not even 1%.

In other words, there is only a 1% chance that the insurance premiums they receive will be subject to default payments.

As long as their comprehensive insurance rate is greater than 1%, the business will be done.

So, naturally, the business was done.

Everybody was happy, everybody got what they wanted.

If this is the end of the matter, then the positive effects of CDS will undoubtedly far outweigh the negative effects.

However, capital is greedy, and it will never stop there.

After seeing that the insurance company made huge profits effortlessly, the third-party investment company was intrigued.

They have to get a piece of the pie.

So, they approached the insurance company and got the ownership of the CDS by paying the full amount in a lump sum.

This precedent was set, and investment banks, including JPMorgan Chase and Lehman Brothers, suddenly came to their senses.

Isn't this a debt transaction?

Since it is a debt transaction, then go to the exchange!

As a result, CDS products were launched.

Its price is speculated higher and higher, like a stock, squeezing the last vestige of potential from the original contract.

The only pillar that can exist is the rising room.

Because, as house prices rise, so does the value of the original contract.

But can house prices really keep rising?

Apparently not.

Most of these CDS contracts that drive up housing prices come from subprime loans, which are loans for people who are not well educated, financially able, or have a history of default.

There is no doubt that the probability that they will not be able to repay the loan is very large.

So eventually, the housing bubble was punctured, and the world's biggest financial crisis in 21 came to the world

Looking back at the whole process of the financial crisis, one of the most critical points is the CDS hype.

So what if, now the speed of CDS hype, is faster than his previous life?

Chen Nian's spirits perked up, and he said to Chen Guo:

"Help me look up the size and default rate of the current U.S. subprime loans."

"Also, help me see the latest trading size and price of CDS in the U.S. financial market."

Hearing Chen Nian's question, Chen Guo opened his mouth wide in astonishment.

"What do you mean? Why do you suddenly want to check this thing? ”

Chen Nian pondered for a moment and said:

"I have an idea now."

"Obviously, this dumping strategy cannot be made by Caterpillar's own company."

"Behind them, it can be said that there must be official support from the United States."

"If you want to support, you must invest money."

"What if, their official, has no money?"

"You mean, you want to get your hands straight from their money chain?"

"It's unlikely."

Chen Guo's expression was a little puzzled, but he still picked up the phone in his hand and called the economic adviser of the Spark team.

It was Chen Feiyun who answered the phone.

After listening to his request, Chen Feiyun also asked the same question:

"Why do you need this data?"

Chen Nian told all his thoughts and judgments on the subprime loan and CDS markets, and the latter listened to them directly.

"Xiao Nian, where did you know these things?"

"The requirements of CDS for financial and economic knowledge are not something that ordinary people can figure out at a casual glance."

"The library stumbled upon it."

Chen Nian's face replied without changing his face.

"Well, even if it's what the library saw."

"However, while your theory is correct, the trend is not necessarily correct."

"As far as we know, the default rate in the current subprime mortgage market in the United States is still extremely low, at best, between 1% and 2% at most."

"This default rate is not enough to cause the storm you are talking about."

"You know, their financial market is an extremely mature market, and the risk tolerance is quite high"

"There must be a lag in the default rate."

Chen Nian interrupted Chen Feiyun's words and said firmly.

"Hysteresis? This is a problem, but we can't judge it effectively. Quite simply, the unemployment rate remains low, and average wages have even risen. ”

"In this case, there's no reason why their default rate would go up."

"Then check their residential housing transfer rate, and check the number of new purchases of second homes by urban residents, if these two data are up year-on-year, then it proves that my judgment is not wrong!"

"Okay, I'll do it now."

At this moment, Chen Nian's authority played a role, although Chen Feiyun still had doubts about Chen Nian's judgment, but out of trust, he still chose to carry it out to the letter.

After hanging up the phone, Chen Guo looked at Chen Nian and asked:

"So, what's your plan? Even if the CDS you're talking about really goes wrong, what can we do? ”

"You're going to have to solve this problem from the capital chain, but I really don't see much of a connection with the capital chain."

Hearing Chen Guo's words, Chen Nian laughed and replied:

"It's not really something that technicians need to understand. Next, I need you to do something for me. ”

"No matter what the price is, no matter how big the pie is, we must drag our domestic enterprises, and don't let them advance their procurement plans because of Caterpillar's discounts."

"I need time, and it has to be at least six months."

"Understood."

Chen Guo nodded.

Although he does not understand economics, he understands technology and equipment.

He knows that if domestic enterprises really take advantage of this opportunity to procure, the next one or two years, or even two or three years in the demand for construction machinery will be filled by foreign capital, even if domestic equipment is made, there will be no market space.

And this vacuum period is enough to force the units involved in the project, including XCMG and Sany, to death.

The two discussed the specific plan for a while, and Chen Guo felt more and more that Chen Nian was mature in terms of overall strategy, but before he could sigh, the phone on the table rang.

It was Chen Feiyun who called, and as soon as the phone was connected, he couldn't wait to say:

"Xiao Nian, the situation is the same as you expected!"

"It is true that their default rate has not risen significantly, but the second-hand housing market is indeed more active than ever, and even, according to rough statistics, the second-hand housing turnover rate in some large cities has reached more than 5%!"

"In addition, the number of second homes you mentioned is not available for the time being, but I consulted with several colleagues in the United States, and according to their information, at least in his circle, the investment attribute of housing has been deeply rooted in the hearts of the people."

In other words, this number will definitely not be low. All your inferences have been fulfilled! ”

Chen Feiyun's words revealed undisguised surprise, and then, he continued to speak:

"Does that mean that the next step, their default rate will go up? Our chance has come? ”

Chen Nian subconsciously shook his head and replied:

"No, it's not enough."

"As it stands, they will last at least one or two years."

"We've got to add a fire to them, and you're going to have to figure it out."

"My suggestion is that, on the one hand, we should start with CDS, and on the other hand, we should think about how to make their housing prices plummet in a short period of time."

"Understood, I'll arrange it!"

Chen Feiyun hung up the phone excitedly, while Chen Guo in the office was still confused.

He asked:

"So, what exactly are you going to do?"

Chen Nian smiled and replied:

"It's simple."

"I'm going to detonate the financial crisis in the United States."

These two days have been a little less, because I am working on my teeth.

At present, I have to extract two teeth, fill one, and have a root canal tomorrow...