The decline of the three major stock indexes does not seem to cause much panic in the market. The downward trend of the subprime loan market began to emerge in January 2007, and until April, after New Century Company filed for bankruptcy protection, it had fallen by 40% in three months.

However, the U.S. stock market reached its critical point of collapse in October, which means that six months after the subprime mortgage market began to collapse, the stock market began its collapse mode in a sharp spiral decline.

The most important thing is that people do not realize the seriousness of the matter. From a regional perspective, the United States' real estate speculation initially focused on small areas, but no one expected that the snowball would grow bigger and bigger, and regional crises would quickly spread throughout the United States.

After the Asian financial crisis, countries have increased international demand for safe or considered safe dollar assets due to the needs of reserves. Whether it is sovereign wealth funds or foreign central banks, there is a huge demand for fixed-income securities.

This further explains why securitized debts built around the United States' real estate prices can be issued to some extent around the world. Correspondingly, the financial crisis triggered by the United States has also spread to major economies around the world.

Securitization has helped the US government achieve policy goals such as releasing liquidity, promoting growth and employment, and enhancing social welfare. It can be described as a successful "financial project"; but on the other hand, the realization of policy goals is that risks are constantly accumulating.

The US government is undoubtedly the biggest beneficiary. This is why when the subprime mortgage crisis broke out, all bankers collectively acted as rogues, fell to the ground, and let the crisis ravage. In the end, the government had to take action to rescue the market, injecting capital into the collapsed Do, and continuously purchasing already garbage mbs bonds.

Andy has a $7.2 billion CDS bond with leverage in his hand. Although he is not as shorted as Michael Bry, a crazily awesome figure, who is a crooked person, but he is also the best among the big shorts this time.

The short-selling god George Soros pulled his old face down and ran to see Michael Bry again and again next time he met him. As soon as he met, he said a lot of words to the rising star, "The old driver took me with me." Michael Bry was entangled and had no choice but to give a general explanation of the trick. He hurried back and did the same thing, and immediately went home to short the CDS for more than one billion.

This loan promotion led by the US government and Wall Street to poor people who cannot afford to buy houses finally triggered a huge risk that has been surging for a long time.

The reason why Andy attaches more importance to DS short is that CDS is mainly issued by insurance companies like AIG, and the bug is that you can buy insurance without owning related assets. It is equivalent to buying a car insurance for Lao Wang's car next door. If he crashes, you will be very happy to get a claim, and Lao Wang is not aware of it.

However, it seems that everything is developing in a favorable direction for Andy, a group of big short sellers. In fact, those small and medium-sized short sellers who short CDS but lack liquidity funds have long been anxious. Well, it is an adjective that adds fuel to the fire, ants running around in hot pans, etc.

Because the original bond price of mbs is still high, the cds that mbs securitized still maintain aaa rating. The cash flow in hand is insufficient and liquidity is insufficient. The short price does not fall but rises. They have to lose money and inject capital into the margin account. If they do not make up for it, they will be forced to close their positions.

Andy played with the marker in his hand, sat on the boss's chair, put his feet on the table, shaking his body gently, and the seat turned back and forth, looking at the various data displayed on the LCD screen in front of the conference room of the strategic command center with a relaxed expression.

Alvetre walked to Andy with an ugly face and sat down, "These damn bastards, full of lies!"

"Haha, don't be angry, Al, isn't this something we thought of long ago? In fact, the first shot we took the lead in lightning has already played the domino effect. The reason why mbs are now high and the cds rating does not drop is just to pretend that nothing is wrong and lure other peers to buy it and rush to sell it, which can make the company bankrupt and thus get out. And the idiots who take over the drum and pass the flower process are not worthy of pity.

Haha, you don’t know how many calls I have received in the past few days. My grandfather has called me to keep silent and not make any comments about the subprime mortgage crisis in public places.”

Andy threw the marker pen in his hand onto the desk, wrapped his hands around his chest, rested his head on the back of the chair, and chuckled with a sarcasm.

"But boss, we will lose a little money in the margin every time..."

"Okay, Al, complaining is useless. You know better than anyone else that their strength is not something we can compete at the moment. They just hold on. What can we do? Our margin is enough for us to hold on until they can't hold on. Use more than 100 million margin for billions of profits. It's not a loss. Moreover, hasn't CDO Insurance started to make money? Although it's pitiful, at this point, you must have enough patience. When the darkest moment before dawn passes, we will usher in the fiery sunrise!"

"As the fog becomes thinner and thinner, the truth will be revealed soon. I really want to know which greedy guys will take over the garbage."

Andy closed his eyes slightly and half opens, glanced at Al, and chuckled, "The greed of Wall Street is flowing in the blood, full of fraud and lies. What they are playing now is just a game called "After the dust settles, who are the idiots?"."

When Alvetre heard his boss' complaints, he couldn't help but shake his head and laugh. He didn't expect that the young boss could be so calm. You should know that shorting is not very risky. If you are not careful, you will die without a place to die.

In fact, how could Andy not know the risks of short selling? He also summarized the three major fears of short selling in this subprime mortgage crisis.

First, I bought a CDS and found that the relevant assets were defaulted. The CDS price remained unchanged, thinking that the entire system colluded to make fakes. Now it is at this stage, which makes the bears miserable and ridiculed by investment banks that have returned to normal.

Second, after finally making money from the CDs in hand, I began to worry that the investment bank of the bet opponents turned their CDs into waste paper.

Third, the warehouse was finally cleared and the money was obtained, but I found that I might be targeted by FBI or occupied by "Occupy Wall Street". The public pressure was too great.

Although it was Andy's three major fears of short sellers, it did not include himself. Some people do not want him to shout "The wolf is coming", so they will naturally give. Through the words of Old Smith, he is not a naughty man, and he knows what compromise is. If you want to make money, you will have to kill you. For example, Kennedy, tsk, your favorite thing is to smash the pot, whether it is an opponent or an ally, so it is like a myth.

"Boss, recently, many calls have been made to the company to find out the news, especially Goldman Sachs Group's financial adviser Ke Sai wants to visit you." Alvetle said without hesitation.

Andy looked at Al with a smile, shook his head and said, "They are the main targets of Michael Bry's bet, and aren't they responsible for research and development? I'm not interested in seeing him, okay, I'm going to pick up my girlfriend from get off work, tsk, look at the changes over the past week, the stock market is regaining vitality, it's time to rise, mbs do not fall and rise, cds are still aaa level. Although some companies went bankrupt, everyone is still the same as nothing. What happened on April 2nd is almost a joke. It seems that my two weekly magazines were slapped in the face..."

Alvetre shrugged and looked helplessly at his young boss patting his butt and leaving. It seemed that he could only say sorry to his old friend. Whether it was due to professional ethics or confidentiality agreements, he could not reveal even a single message to anyone.

Andy didn't even want to meet the other party. He sold these mbs with great fanfare and praised them for how good they were. The other privately invented that CDO, such a hedge insurance, is very immoral to short mbs, and Goldman Sachs is undoubtedly the most awesome to play with this routine...

a
Chapter completed!