NS Fund, this is a very ordinary fund on Wall Street, but although the strength of the owner of this fund, Reinhardt, is not worth mentioning compared to those behind the scenes, it is actually pretty good.
Reinhardt himself has a net worth of over 100 million, and his IQ is much higher than the average of Blue Star. The fund has raised about 4 billion U.S. dollars in total, and investors still trust him.
But recently, like Rice of Kuhn Lebo, he also sensed a bubble in the real estate market from a pile of repayment data from mortgage securities companies on the market.
In order to allow them to lend more loans, banks that lend money have developed a floating interest rate system. The interest that borrowers have to repay will gradually increase from low to high. Therefore, in the early stage, the default rate is very low and it is basically difficult. Anomalies have been discovered. Even the current default rate is not very high. This is a bonus period for rent collection.
But Michael discovered that defaults were getting higher and higher over time. After this discovery, he derived a mathematical model and calculated that the interest rates on subprime mortgages may rise significantly after one year.
This can only be due to the fact that more and more poor people have had their houses confiscated after being unable to repay their mortgages. By then, the people on Wall Street will have more and more houses in their hands, and housing prices will definitely plummet.
Therefore, he immediately chose to package one of the CDs in his hand as a bond and sold it to other people on Wall Street, thus withdrawing 300 million U.S. dollars.
Then he started trying to short CDOs and took the initiative to sign a 50 million CDS contract with Goldman Sachs. He was the short side.
In other words, if the CDO anchored by CDS fails, he will be the winner of the bet, and Goldman Sachs will have to pay him three times the price, which is 150 million U.S. dollars.
But before that, he had to pay a monthly premium equivalent to 0.2% of the total contract loan amount to a third-party bank, which is 100,000 dollars per month. Well, the bank was also opened by a certain board member of Goldman Sachs.
Looking at this number, Reinhardt was even more sure that his calculation was correct, because calculated this way, the annual interest rate of CDS is 2.4%, which is nearly five times higher than the initial 0.5%. It seems that Goldman Sachs may also estimate that next year or It will explode in the first half of the next year.
According to the current trend of rising housing prices, subprime mortgage defaults are only a very small possibility. In addition to receiving $50 million in cash, a certain board member of Goldman Sachs can also sit back and do nothing comfortably. First collect the rent, CDO collects the second rent, and CDS collects the rent again, wouldn't it be wonderful?
But now that Reinhardt saw a group of people on Wall Street coming to ship goods, he became more and more convinced that his guess was right, so he directly took one-third of the funds in the fund, almost 1.5 billion U.S. dollars, and continued to gamble with Goldman Sachs. CDO will definitely default.
The salesmen at Goldman Sachs didn't say anything. Of course they would be happy if someone was willing to send money, so they asked the senior management for instructions and signed the CDS contract after receiving an agreeable reply.
Now Reinhardt has to pay $3 million in premiums every month, which is $36 million a year.
Both Goldman Sachs and Reinhardt looked confident. Reinhardt had figured out the truth of the matter from various clues, but Goldman Sachs had never thought about giving money.
In their plan, Reinhardt will automatically give up the right to perform these CDS contracts after one year, because Reinhardt has no money to pay the premium due to various designs. . .
The two made different choices. Reinhardt could only play according to the rules of the game and felt that he had a high probability of winning.
But Goldman Sachs, a player who can set the rules of the game, said that even if he loses, he can instantly become a winner.
. . .
If Reinhardt is a smart man who only discovered something fishy now, then there is a partner at Morgan Stanley, about 500 meters away from NS Fund, who discovered it a year ago. More than 10 million were paid.
Morgan Stanley, as early as the beginning of this century, the Morgan family has dominated Wall Street. Today, after the United States introduced a bill prohibiting financial mixing, Morgan took the initiative to divide into **** (Little Morgan) and Morgan Stanley ( Damo).
With 60,000 employees and hundreds of offices around the world, its energy is many times higher than those of Blue Star's small players.
But the embarrassing thing is that Reilly’s li fund and Morgan Stanley are not in the same group.
In the past two years, more and more companies on Wall Street have implemented a partnership system, and these partners are just borrowing shells. There are many such companies in the five major investment banks on Wall Street.
To use an analogy, it's like in a shopping mall, the relationship between shopkeepers and shopping malls is similar.
Li Fund nominally accepts the leadership of Morgan Stanley. The former uses the latter's reputation to raise large amounts of funds, and then distributes certain equity dividends to the latter.
But how to play it is the former's own business. Of course, LI Fund must be responsible for the rate of return. Once there is a major loss, Morgan Stanley may directly kick him out as a partner, otherwise Morgan Stanley's reputation will be ruined. It was ruined by Li.
Therefore, a large part of Raleigh's profits belongs to itself, not to Morgan Stanley.
He bought a $500 million CDS gambling contract almost a year ago. Even when he bought it, he didn't know it was sold by Morgan Stanley. . .
But now I feel refreshed after seeing this situation on Wall Street.
“Is it finally time?
The predators have already started running away! "
However, his and Reinhardt's ideas are slightly different. Reinhardt only estimates that it will explode at the end of next year or the beginning of the next year. The earlier he enters the market now, the greater the odds.
Rayleigh may not be as good at math as Reinhardt, but he has a great gambling habit and courage. After a thorough analysis, this gambling monster determined that it will definitely collapse in November this year.
After calculating the insurance premiums he had to pay, he set aside $10 million for emergencies and a little for living expenses, then spent all the $500 million he had in the fund to sign a CDS gambling contract with Lehman Brothers.
For this reason, investors thought the kid was crazy and began to withdraw their capital, but Reilly didn't care at all. He just wanted to let the real estate collapse.
In this way, the size of Li's fund shrank directly from 3.3 billion U.S. dollars to 500 million U.S. dollars. If it goes as he predicted, Lehman Brothers will eventually lose him 2 billion U.S. dollars.
Seeing that some clues finally appeared, Lei Li felt excited.
However, neither Reinhardt nor Reilly expected that Goldman Sachs, one of the five major investment banks, also keenly sensed something was wrong.
. . .
On October 1, 1999, China was holding its once-in-a-decade mooncake-eating ceremony.
Goldman Sachs is a century-old company since its establishment. At the beginning of the 20th century, when Morgan JP, its counterpart in the century-old company, was leading the way, Goldman Sachs almost lost its underwear during the financial crisis in 1929 due to wrong decisions. He lost money and became the laughing stock of all Wall Street.
It took more than thirty years of recovery before it began to rise again in the 1950s. It has now become one of the top five investment banks on Wall Street.
The total assets of Goldman Sachs have always been a secret. Not only the Qinglong Study Group does not know, but Goldman Sachs President Solomon may not be able to get an accurate number if he does not spend a long time counting it himself.
At the same time, this is also a trouble that every consortium speaker will have. This thing is really not something that one person can figure out.
The Qinglong Study Group can only give a rough estimate based on the data collected. Goldman Sachs' total assets are greater than 1.5 trillion US dollars.
However, Solomon, the truly wealthy CEO of the company, looked livid at this time. He had urgently summoned all the board members.
The conference room was noisy like a vegetable market. Some people were still on vacation in various places in Blue Star. After receiving the notice, they also got on their own private planes and flew back to Wall Street within a day.
There was even a shareholder who might have rushed back from a tropical island, wearing a straw hat and a floral shirt, and some other people were also in strange clothes, but the other people in suits and ties turned a blind eye to what they were discussing.
The entire conference room was in chaos. If someone who didn't know saw this scene, they would never believe that this was the board of directors of Goldman Sachs.
Dong dong dong——
After Solomon knocked on the table, the attention of others was attracted. One of them, who looked to be in his seventies, could still be vaguely seen as an old man with a red neck, shouted directly.
"Little Solomon, what's going on?"
But Solomon looked solemn.
"We are in big trouble, someone wants to detonate the crisis in advance!"
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