In early February, American colleges and universities started their semester.
The whole family went out to accompany Zeng Yu to report to New York University.
Endorsed by the tenth richest person in the world, Zeng Yu’s master’s tutor at New York University is the dean of the Department of Computer Science, the head of the Center for Data Science and Artificial Intelligence, and a Turing Award winner.
It is the Nobel Prize in computing.
After arranging everything, Zeng Li specially took her great-mother and Lu Xia to travel to Florida to relax.
Lu Fei stayed in New York and stayed at the Millennium Broadway Times Square Hotel. The next day, the New York Times Group held a book launch for Lewis in the conference hall as scheduled.
"The Big Short" was published on New Year's Eve. On the day it was released, the New York Times spared no effort to promote it, but it was no match for John Paulson and Bill Gates who touted the book's effectiveness on Twitter and Facebook. Understand the full picture of American subprime mortgages.
Coupled with Mr. Lu's celebrity effect, within three days it was on the bestseller lists of Amazon, The New York Times and other publications.
Lewis, who was slightly famous, was suddenly taken over by Mr. Lu and became a new best-selling author in the financial circle.
Naturally, willingly being Mr. Lu's mouthpiece is equivalent to being a "public intellectual" in the United States.
Facing the lens of the long shot, facing the readers here, especially the senior executives and elites of Wall Street investment banks, as well as funds and institutional investors, he described subprime mortgages endlessly:
“This year, the statement from the G7 finance ministers and central bank governors meeting pointed out that the impact of the subprime mortgage crisis is gradually increasing.
"Whether we can't see it or pretend not to see it, one fact is before us, that is, the cutoff of P2P and subprime mortgage customers has caused the capital pools of MBS, CDO, and P2P to lose their source of cash, just like the faucet has lost its source of cash. Water supply…”
"Mortgage default rates continue to soar, the number of unemployed people across the country continues to increase, and I think the abnormal prosperity of the U.S. stock market is coming to an end. According to my prediction, it will be as early as 2008."
"That means there will be an economic crisis this year!"
"The power is far greater than the 1997 Southeast Asian economic crisis, because this time it will be a global crisis. It originated from the United States and will affect the entire world economy..."
World economic crisis? !
Many people here couldn't help but exclaimed. You must know that today's media still praises subprime mortgages rather than badmouthing them. It is all good news, but according to the analysis in the book, it seems to be very reasonable.
Is the U.S. stock market really going to collapse this year?
"Haha, nonsense!"
In the midst of the whispering crowd, a voice suddenly broke out. Lu Fei turned around and saw a tall, thin man with a hooked nose stood up. John Paulson came over and introduced:
"Alan Schwartz, the CEO of Bear Stearns, my former boss, now has the final say at Bear Stearns. Kane has been dismissed by the shareholders' meeting because he is addicted to bridge and does not care about the company's operations."
"Kane had a good plan and jumped out of the fire pit himself."
Lu Fei smiled coldly, "Let him be a firefighter."
"Subprime mortgages are the cornerstone of American finance. The United States will never sit back and watch the collapse of subprime mortgages. You are completely alarmist!"
Schwartz stretched out his finger, "Not long ago, the six major banks on Wall Street launched the 'Lifeline' plan. As long as homeowners who are more than 90 days overdue in repayment apply, they can get a 30-day buffer period, and the Federal Reserve has also cut interest rates. 50 basis points..."
"But what?"
Lewis got the hint from Lu Fei's eyes and smiled: "Recently, there are more and more rumors about Bear Stearns on Wall Street. I heard that some fixed income and stock traders have begun to withdraw funds?"
"The Securities and Futures Commission has clarified for Bear Stearns."
Schwartz said in a serious tone: "Our capital ratio remains above 10% and we have sufficient buffer capital. Listen carefully. This is personally certified by the China Securities Regulatory Commission!"
Trust the SEC? It is better to believe that I am Qin Shihuang.
A contemptuous smile appeared on Lu Fei's lips.
"Lu! It has dropped below 70 US dollars."
John Paulson nudged his elbow and handed over the phone.
The text message shows the current stock price of Bear Stearns, and the staff of the Three Body Fund will send real-time information about the rise and fall of the stock prices of Wall Street giants such as Lehman, Merrill Lynch, and Goldman Sachs.
There is almost no suspense. All stocks fell at the opening today.
"John, you must be trustworthy when working on Wall Street. If you say you want Bear Stearns to die violently, you must die violently."
Lu Fei glanced at the sophistry Schwartz, put his hand on his neck, and made a neck-wiping gesture towards Lewis.
It was at this time that Lewis took out a prepared research report in front of everyone, exposed Schwartz's lies mercilessly, and stripped Bear Stearns of his pants——
Bear Stearns has a very serious problem, and this problem is probably just a microcosm of the financial market!
The United States must be wary of the immeasurable systemic financial risks caused by subprime debt and P2P!
The entire report comes from the Wharton School of Business.
The reliability and authority are difficult to refute at the moment. The key data listed are clear at a glance. P2P, funds, subprime mortgages, debt, leverage, etc. are all-inclusive. It is like dissecting a sparrow. See blood.
In particular, it exposed the lies previously released by Bear Stearns——
There is no cash reserve of US$18 billion!
Bear Stearns is losing money!
The chain reaction was that the subprime mortgage bonds held by Bear Stearns and the commercial real estate investments they invested in were in danger.
Once such a large amount of bonds and projects came into its hands, including leveraged notes, bank financing, commercial mortgages, and equity bridge loans, Bear Stearns was simply sitting on a barrel of dynamite.
One flame and it exploded to pieces.
From the economic situation, capital data, debt status to project matters, everything is covered, and there are even insider revelations.
"I have a friend from Goldman Sachs. He said that he just rejected a normal transaction of yours not long ago because it was confirmed that Bear Stearns' credit is not enough to support normal transactions."
As Lu Fei's spokesperson, Lewis frantically outputted: "Is this all fake news?"
"Of course it's fake news!"
Schwartz lacked confidence and insisted: "It's just that Bear Stearns is a major participant in subprime mortgages, so there are rumors like this. In fact, they are all false news. Let me ask you, looking at the financial history of Wall Street, there are Will an investment bank like Bear Stearns fail? Is it possible? No way! Unless they are caught for criminal activities, so I am still optimistic about Bear Stearns."
"But now, Bear Stearns' stock price is about to fall below $60!" The investor sitting in the back row suddenly stood up.
"What!!"
In an instant, the whole hall was in an uproar.
The investors who had nothing to do with Bear Stearns breathed a sigh of relief, and then looked at the people who were related to Bear Stearns with gloating eyes, their faces frightened and restless.
Only half an hour after the press conference, Bear Stearns' stock price plummeted from $77.32 to $61.79.
The drop reached a terrifying 20.08%!
It was the largest one-day decline in U.S. stocks since the 1987 stock market crash. Even if the Internet bubble burst, it would not be so exaggerated.
The stock price plummeted from its high level, and it was impossible to see the bottom at a glance.
Everything that happened in a short period of time made Schwartz's head buzzing, and he hurriedly left the press conference without caring about his grace.
One, two, three...
More and more investors left the venue, and in a blink of an eye, the seats went from packed to empty.
There is only a bunch of media left, staring at each other with big eyes and small eyes.
If you say it falls, it will fall. This is so amazing!
"Lu, Bear Stearns' current CDS contract price for every US$10 million of subprime mortgage bonds has soared from US$316,000 to US$619,000, and is likely to exceed US$700,000."
John Paulson was grinning from ear to ear.
"Slowly throw out all the CDS in our hands."
Lu Fei stood up while applauding.
At this moment, the media who smelled the smell swarmed forward, not surrounding Lewis, but instead surrounding him and John Paulson.
"Lu, the book "The Big Short" is also signed with your name. Can I understand that this is a sniper against Bear Stearns?"
"That's what you said, not me."
Lu Fei waved his hand, "Actually, I just served as a consultant to Lewis, just like in "The World is Flat", and I served as a consultant to Friedman. I put my own and John's opinions on subprime mortgages and the future global economic situation Provide it to him.”
"There are so many books on subprime mortgages. Are the writers and economists who wrote these books also sniping?"
Then he shrugged, "We don't need to be secretive if we want to short Bear Stearns. If I want to snipe, I won't be afraid to admit it. But if it doesn't happen, it doesn't exist. I don't need to deny anything."
Mr. Lu, you are so bad!
Seeing him telling lies with his eyes open, John Paulson suppressed his laughter and tried his best to restrain himself in front of the media.
"What do you think the impact of Bear Stearns's decline will be? Is Bear Stearns finished?"
The reporter cast an eager look.
"I don't know, I just know that this is the beginning of Bear Stearns. Let the bullets fly for a while, and maybe wait until the 'Bear Stearns moment', Bear Stearns will be truly finished."
"Bear Stearns moment?"
"That's when Bear Stearns hit a real crisis."
"What kind of crisis? When?"
The reporter asked eagerly.
However, Lu Fei only left them with a mysterious evil smile, like God mocking mortals.
Just when everyone was puzzled, the "Bear Stearns moment" unexpectedly appeared the next day.
As the Wall Street Journal, the New York Times and other media continue to badmouth subprime mortgages and investment banks such as Bear Stearns, Lehman and Merrill Lynch, investment sentiment is becoming increasingly pessimistic.
Various rumors that were unfavorable to Bear Stearns spread on Wall Street. Even the clarification from the U.S. Securities and Exchange Commission was of no avail. Public opinion had reached an out-of-control situation, and panic swept the country.
Not just across the United States, Bear Stearns' global customers rushed to remove funds. Within two days, 15 billion US dollars were withdrawn one after another, directly running on the bottom of cash reserves.
By Thursday night, Bear Stearns only had a measly $1 billion in hand, but the house leaked and it rained all night——
Also losing funds is its own P2P platform.
The borrower was unable to repay the loan, and the lender would rather pay liquidated damages than withdraw the capital before the expiration of the investment period. Bear Stearns did not have the extra funds to fill the P2P hole, and the capital chain collapsed immediately.
Finally, Bear Stearns’ P2P platform exploded!
The tens-billion-dollar pit on the platform, filled with hundreds of funds and hundreds of thousands of middle-class Americans, exploded with a bang.
The chain reaction of thunderstorms quickly spread to four to five hundred P2P platforms across the United States, large and small. Small and medium-sized platforms were hit by thunderstorms one after another due to lenders' breach of contract. Even the P2P platforms of giants such as Lehman, Merrill Lynch, and Citigroup also On the edge of a thunderstorm.
The entire P2P market, worth hundreds of billions of dollars, is on the verge of collapse because of the Bear Stearns thunderstorm.
But Schwartz could no longer care about all this.
Not even caring about dignity and reserve, he called everyone he could find on Wall Street for help:
For the sake of being the same as Yingjiang, let's help our brother!
As a result, all that was gained was the immobility of the friendly forces.
Deutsche Bank, Merrill Lynch, Goldman Sachs and other peers all hung up the phone. Not only did they refuse to trade with Bear Stearns, they even added insult to injury——
Backhand short Bear Stearns!
Everyone pushed against the wall. When the repo market was announced to be closed to Bear Stearns, it was equivalent to completely closing the door to hope.
The entire company suddenly fell into despair.
Whether we can live to see the sun tomorrow, all we can count on is the Federal Reserve and the Treasury Department, otherwise we can only file for bankruptcy.
As Treasury Secretary, Henry Paulson received Schwartz's distress call. He was completely dumbfounded and suspected that his ears were wrong.
Bear Stearns, the fifth largest company on Wall Street,
With assets worth hundreds of billions, the cash on hand is only 78.11 million U.S. dollars, not even 100 million U.S. dollars. It is so embarrassed that the stock price has plummeted to the ground.
There is only $21.80 left per share.
The market value has evaporated by 71.8%!
Henry Paulson put down the phone with mixed emotions.
He has an anonymous share in the Paulson Hedge Fund and the Trisolaris Fund. The more Wall Street giants like Bear Stearns fail, the more subprime mortgages fall, and the more they earn.
Glancing at "The Big Short" on the table out of the corner of his eye, he couldn't help but sigh: "Why does God always side with Lu? Is he God's illegitimate son?"
But it couldn't control so much, so it brought the regulatory authorities headed by the Ministry of Finance and held emergency consultations with the Federal Reserve headed by Bernanke.
The first question is not how to save Bear Stearns, but whether to save Bear Stearns?
After all, the former governor of Arkansas used taxpayers' money to rescue the despised Wall Street wolves. The last time he did this was the former governor of Arkansas, who was already scolded bloody.
Is it really worth it for all of you here to risk the world's disapproval and carry your own black hat to save Bear Stearns?
"If Bear Stearns collapses, once the subprime mortgage assets it holds are sold off during bankruptcy proceedings, it will cause an unpredictable chain reaction in the market. Such assets held by major institutions and funds will also be worthless. , the entire financial system is finished.”
Henry Paulson said in a serious tone: "Bear Stearns' P2P thunderstorm has caused huge losses, and we must not let Bear Stearns' bankruptcy lead to the collapse of the mortgage bond market."
"This is the truth."
The Fed official shook his head and laughed: "Although we assume the role of lender of last resort, Bear Stearns is not a bank, but an investment bank. In principle, it should not be supervised by the Federal Reserve."
"This is indeed a problem." Henry Paulson touched his chin, "No matter how we do this, we must have a basis."
"Let's find the basis. If we want to save Bear Stearns, we have a way to save Bear Stearns. We have the right to explain." Bernanke narrowed his eyes into a thin line.
"Beyond that, we have to find some foreign aid."
"Who? Buffett?"
"Besides him, there is Lu!"
Henry Paulson glanced out the window and saw the red sun in the sky.
(End of chapter)
