In September, Fairy Bank was the subject of most discussion among Chinese people, but around the world, everyone's eyes were still firmly fixed on Wall Street.
Perhaps it is because Xiao Qi disturbed this time and space. In August, after China launched anti-counterfeiting and monopoly investigations against the three major American car companies,
These originally had little to do with Wall Street, but the current economic situation in the United States is very pessimistic, and the economy and finance are closely related, so this turmoil has directly affected Wall Street.
Worried about the job problems of auto workers, several major auto unions in the United States directly demanded the redemption of their bonds in Fannie Mae and Freddie Mac.
This could cost Fannie Mae and Freddie Mac their lives.
They were already on the verge of collapse, and they were exhausted from dealing with various demands for repayment of bonds, etc., delaying as long as they could, cheating as much as they could, and trying desperately to protect themselves.
But this time is different. The major auto unions in the United States cover millions of workers. These people are the backbone of the manufacturing industry and the foundation of American workers.
The funds used by the auto union to purchase bond investments are all the capital of auto workers like them.
Once Fannie Mae and Freddie Mac fail to pay them and agree to redeem them, the auto workers will have no savings left!
But Fannie Mae and Freddie Mac really have no choice. They have a lot of bad debts, but they have absolutely no chance of paying back tens of billions of dollars in bonds from the major auto unions.
However, this dilemma is not without its benefits.
At least the federal government is panicking.
They were still holding on tight before. But now they can’t. Fannie Mae and Freddie Mac can’t pay the bonds of several major auto unions, which will cost lives!
Therefore, the federal government quickly announced that it would take over Fannie Mae and Freddie Mac, and would actively evaluate their bonds and risks to ensure a satisfactory answer to investors.
After hearing this, the stocks of Fannie Mae and Freddie Mac plummeted by more than 10% again, which did not give the federal government any face.
We are not fools. Who doesn’t know that Fannie Mae and Freddie Mac have become a mess? Even all the banks and fund companies on Wall Street combined cannot save it.
In the past, everyone was still looking to see if Fannie Mae and Freddie Mac could hold on, but now that the federal government has stepped in to take over, it's obvious that they just can't.
The federal government is a poor man and often shuts down. Isn’t it an international joke to ask them to spend nearly 10 trillion US dollars to rescue Fannie Mae and Freddie Mac?
Government financial institutions, major banks, investment funds, etc. in various countries are all crying and shouting at the moment, begging the U.S. federal government to not let Fannie Mae and Freddie Mac collapse. Even if they are half dead, they are still alive.
If you have hope, if you go bankrupt and delist, you will really lose all your money!
It's a pity. Anyone with any sense knows that the bankruptcy and delisting of Fannie Mae and Freddie Mac are irreversible.
Immediately afterwards, the U.S. federal government squeezed out more than 20 billion and injected it into Fannie Mae and Freddie Mac. Most of it was used to repay the bonds of several major auto unions, which disappointed investors and left Fannie Mae and Freddie Mac alone.
The stock prices of American and Fannie Mae are so low, this time they plummeted by 13%.
The U.S. bond market and home loan market are completely the most important part of American finance.
Now that Fannie Mae and Freddie Mac, which represent them, are on the verge of bankruptcy, the lives of banks and companies involved in derivative financial products such as subprime debt are naturally becoming more and more difficult.
Xiao Qi has never had a good impression of American investment banks, so he added fuel to their fire.
On Tuesday, September 5, the British Financial Times broke a breaking news.
The investment bank Lehman Brothers, which is in the midst of a deep subprime mortgage crisis, was originally negotiating with Barclays, the third largest bank in the UK.
Lehman Brothers' liabilities exceed US$600 billion, but their various assets are worth more than US$300 billion in total, and their overall negative assets exceed US$300 billion.
But if you investigate more carefully, you will know that many of Lehman Brothers' assets have now fallen below their net worth. Once this financial winter is over, there is no problem that more than 400 billion will become more than 600 billion.
However, such a large sum of money will still need to be used for several years, so a very powerful bank must take over to have this chance to survive. Otherwise, not only will you not be able to save others, but you will also be involved in it.
Barclays can only survive on Lehman Brothers' liabilities and assets for three to five years at most, as long as it can wipe out the debt.
What they value is Lehman Brothers' network of contacts in various countries and the various elite talents it has, which is very beneficial to Barclays Bank's global layout.
Faced with Barclays Bank's entire plan to "save Lehman Brothers", which was to acquire Lehman Brothers, whose market value had dropped by 94%, for US$1.7 billion, Lehman Brothers' executives had no objections, but the key was that they
Eight senior executives actually demanded a "golden parachute" severance package of US$2.5 billion before agreeing to the acquisition.
Upon hearing such unreasonable and absurd conditions, Barclays backed down, and the negotiations between the two banks were about to break down.
All right.
The financial industry in the United States was already in a state of uncertainty, but upon hearing such a shocking news, a strong earthquake immediately occurred.
Originally, this news was only supposed to be disclosed a few months later. As a result, the executives of Lehman Brothers were despised by the people across the United States and became synonymous with shameless greed for money.
This was the reaction just months after the collapse of Lehman Brothers.
Now that it is revealed at this critical juncture of negotiations, the reaction from top to bottom in the United States will be even more intense.
"I can't believe it, do these people have shit in their heads? It's definitely a good thing for someone to take over the mess of Lehman Brothers and prevent this century-old company from perishing! These stupid executives, aren't they?
Do you wish Lehman Brothers collapsed?”
"It was this group of incompetent guys who brought Lehman Brothers to the brink of bankruptcy. And now this group of guys, facing the company they work for, not only do not seek to save it, but they ignore the company for their own interests.
Profit is really shameful and hateful!"
"Oh my god, am I reading that right? They only invested US$1.7 billion to buy Lehman Brothers, and these senior executives actually asked for a 'golden parachute' of US$2.5 billion in severance pay. Is it even more expensive to fire them than Lehman Brothers?"
"Bah! Look, Wall Street is run by people like this. These bastards are really desperate for money!!"
"They are a disgrace to the United States. People who live like them are the best scum! Be careful of being struck by lightning when you go out!"
"..."
Countless people have expressed their anger on various occasions, including ordinary people, government officials, senators, movie stars...etc.
Even the elites on Wall Street did not dare to express sympathy for them when they were interviewed. Many people hurried by with their faces covered.
The most angry people are actually the middle and low-level employees of Lehman Brothers.
The treatment of Lehman Brothers is actually very good. They are all afraid that after the collapse of Lehman Brothers, they will be left without rice, so they most hope to be acquired by Barclays Bank.
Now that such a big scandal has been revealed, Lehman Brothers employees are angry and ran to the offices of the eight board executives to yell and curse, which reportedly almost led to physical conflicts.
Under such circumstances, the British bank Barclays immediately held a press conference and announced that it would abandon its acquisition plan to "rescue Lehman Brothers" due to "certain unattainable conditions."
The top management of Lehman Brothers also announced the next morning that it would submit an application for bankruptcy protection today. The 158-year-old Lehman Brothers has finally come to an end.
As soon as this news came out, the U.S. dollar and the three major U.S. stock indexes all fell, and the market entered panic again.
Lehman Brothers is the second investment bank among the five largest investment banks on Wall Street to collapse.
But in the eyes of investors, this is not the end.
Because there is another one of the five major investment banks, Merrill Lynch, which is also deeply involved in the subprime mortgage crisis. The severity of its losses is no less than that of Lehman Brothers.
Now that Lehman Brothers cannot hold on and collapses, will Merrill Lynch be next?
If Merrill Lynch collapses, will Washington Mutual, American International Group, Citibank and other giants also declare bankruptcy?
The collapse of so many giants will have serious consequences for the dominoes triggered. Will the U.S. financial economy never recover?
Etc., etc.
Huge pressure and melancholy are like huge mountains, weighing on the hearts of almost every American.
No!
The current financial crisis in the United States is caused by the subprime loans they created themselves.
But the problem is that the subprime debt crisis is not just popular in the United States. American financial giants have sold subprime debt bonds all over the world. If all the subprime debts amounting to hundreds of billions of dollars explode, what will happen?
The leverage of trillions of dollars is a huge trauma to financial institutions around the world.
If the United States collapses, everyone will be hit hard.
Such a severe situation is undoubtedly the biggest global crisis since the Great Depression of the 1930s.
And the scary thing is that it seems that this global financial crisis is simply unavoidable.
The violent financial tsunami is coming!! (To be continued, please search Piaotian Literature, the novel will be better and updated faster!