An hour later, in a manor on Long Island, the silver-haired Schiff sat on a soft chair, looked at the three people in front of him, and asked: "So, which genius discovered and made the proposal?"
Damons quickly pointed at Rice, who looked restrained, and said, "It's Rice. After he told me, I rushed to the company overnight to verify it, and then immediately informed Mr. Schiff..."
Before Damons could finish speaking, Schiff looked directly at Rice, "Is this Rice?"
In fact, he had received the information of the three people before they arrived. He didn't pay much attention to Damons and Harley. One was a low-level employee, and the other was a middle-level backbone. Every year, the company didn't know that they were about to leave. There were fewer people like this. , only Rice aroused his interest, especially that proposal.
Les seemed even more nervous. The person in front of him was a billionaire!
He also received a scholarship named after the other party, "I'm Les, hello, Mr. Schiff."
"Yeah, very nice young man."
Schiff was thinking about subprime mortgages even as he praised Rice.
He is not worried at all about the so-called crisis. He doesn't know how many crises he has seen. Just because his family controls a bank that holds Federal Reserve stock, his status will always be as stable as Mount Tai, and it will not affect his life at all. All have no effect.
What he is thinking about now is how to get more benefits. He doesn't have much time left for subprime mortgages. Even a nerd like Les who has just worked for two years can find the clues. How many smart people are there in the entire Blue Star? Did you also find the problem?
Rice chose to report his findings, but many smart people would not be like Rice. Maybe someone has already begun to plan how to short U.S. real estate.
Schiff's heart suddenly tightened. He found that people like him were a little optimistic. The time for the subprime mortgage explosion might be brought forward.
It was the set of plans that Rice gave from his own perspective that inspired him.
Quite simply, Rice believed that since they discovered the mine first, they could start preparing to lay traps for other Wall Street players, especially some of Kuhn Lebo's opponents, and then wait for the subprime mortgages to explode before hunting and devouring them.
This is also the decision that most of Wall Street will make after learning the news.
And Schiff must have known about the subprime mortgage for a long time, but now Rice's idea has opened the door to a new world for him.
Why should he abide by the tacit understanding that no one has ever stated?
Isn't it just sneaking away? What's the big deal?
Thinking of this, he looked at Les again.
"Les, I have read your proposal, but I want you to explain it to me personally."
Les' heart was pounding.
Mr. Schiff is actually interested in my proposal?
This made him feel very strange. Shouldn't we focus on the subprime mortgage issue?
Harley and Damons had the same idea. Why did they feel that Mr. Schiff was not concerned about the subprime mortgage problem at all, as if he had known about it for a long time.
Thinking of this, he said cautiously: "Mr. Schiff, about the subprime loan bubble..."
Shiv waved his hand impatiently, "I don't care about this, just tell me what you think!"
The three of them were startled, and Les suddenly realized that no wonder the other party was so interested in his proposal. It turned out that he had known about it for a long time.
He immediately adjusted his mood and said with a serious face: "Mr. Schiff, I want to confirm two things with you first.
Can you determine when the bubble bursts?
How many others are in the know like you? "
Schiff looked at Les and nodded appreciatively. The kid directly grasped the essence of the problem, and he stopped writing.
“I’m not sure about the time. If we do nothing, we can sustain it for at least three months. In three months, housing prices will reach their peak.
If we try our best to cover up all bad news in the real estate market, this time can be extended by at least one year or even two years.
As for you asking me how many people know about it. . . "
Schiff pondered for a moment, as if thinking about whether he should answer, but then glanced at Harley and Damons, who immediately understood and said: "Mr. Schiff, let's wait outside for Les to come out."
Seeing the two of them getting along like this, Shiv nodded, and after the two of them went out, he spoke to Les.
Subprime loans, in simple terms, are the IOUs left by American banks to lend money to poor people in the United States to buy houses.
And the bank sees its capital flow decreasing day by day due to lending. It just holds a bunch of IOUs from poor people who don't know how to repay them, and they feel uneasy in their hearts.
So I packaged the IOU and turned it into a financial product—collateralized debt obligations (CDOs), and then started promoting CDOs.
After investors buy a CDO, they can regularly receive a certain amount of interest on the IOU, and they don’t have to worry about not making any money any day. If they really don’t make money, either the poor guy who bought the house will sell the house to pay back the money, or the bank will take the house. If you sell it as a mortgage and make money, you don't have to worry about losing money at all.
So a large number of investors rushed to buy CDOs, and the banks had money again, and then they lent more IOUs and then sold them to more investors.
Theoretically, as long as housing prices only rise but not fall, everyone will always make money. Although no one thinks that housing prices in the United States, the beacon of mankind, will fall, but if the consortium wants to cut leeks, they will definitely not believe such nonsense. , so they guided these geniuses on Wall Street to join forces with insurance companies to design a new financial product—credit default swap (CDS).
Banks and investors purchase CDS and pay premiums regularly, but if the CDO explodes, the seller will pay all losses for the defaulting party, which is equivalent to leaving the pot to the third party who guaranteed it.
With the triple-A rating of CDS, a group of geniuses on Wall Street conjured up high-quality securities contracts one after another like magic, which was equivalent to insuring insurance and selling them directly to those who had funds but could not find good investments. By.
Throughout the chain, banks made a profit by selling financial products and issued large loans, insurance companies received large sums of premiums, Wall Street made huge profits through leverage, and investors bought high-yield and low-risk products. Financial products, everyone seems to be happy.
A group of people on Wall Street believe that as long as housing prices in the United States continue to rise, even if these poor people have low credit and often default, they will not suffer any loss if they take back the poor people's high-priced houses and sell them again. Therefore, major financial institutions are happy to sell contracts.
But a group of people on Wall Street have overlooked a blind spot. If more and more people mortgage their houses without repaying the loan, there will be a large number of unsold houses in the market. At this time, housing prices should fall. When housing prices fall, At that time, everything was GAME OVER.
Don't look at the subprime loan scandal that everyone seems to know about in Chen Yi. This is because he doesn't cover it up at all and just talks about it when there is nothing wrong. However, this is only limited to some groups. The total number of people who knew the relevant information did not exceed 2,000.
Although everyone in the United States knows everything they should know, they only know that there is a thunderstorm. All parties have tacitly cooperated to promote real estate, but no one can accurately predict when it will collapse, otherwise the subprime mortgage market will collapse early. There was a stampede.
Now everyone is just starting to make some preparations, after all, housing prices are still rising.
However, a group of people in the Black Palace know that this is for sure, because this requires Fannie Mae and Freddie Mac, the official subprime mortgage guarantee agencies of the United States, to collect IOUs from banks as guarantees in order to continue playing, and in the end they have to let them go, so the Black Palace The palace must know.
Some large insurance companies and investment banks are now making a lot of money by earning premiums, collecting interest, and selling contracts. In their view, subprime mortgages can allow them to make money for a long time.
Les also roughly understood it, and said directly to Shiv: "We can start looking for prey now!
If necessary, you have to pretend to suffer a huge loss! "
Shiv's face also became serious: "Do you want to retreat early?"
