Chapter 861 The Subprime Mortgage Crisis Breaks Out
Xiao Qi's choice to set off on the night of April 2 has a deep meaning.
In the previous life, April 2, Eastern Time, was when the subprime mortgage crisis broke out.
Due to the time difference, when Xiao Qi arrived in the United States, it was already late at night on April 2, Eastern Time.
When Xiao Qi left China, the subprime mortgage crisis had not yet broken out. By the time he set foot in the United States, the subprime mortgage crisis had already erupted for the first time with astonishing destructive power. It could even be said that the spring of subprime mortgages was over!
There is no difference from the previous life. The "profit warning" issued by New Century Financial Company in February did not attract too many people's attention.
But on April 2, faced with $17.4 billion in debt pressure from five Wall Street trust funds, New Century Financial Corporation, which was unable to repay and was rejected for an extension, announced that it was filing for bankruptcy protection and would significantly lay off its employees.
As soon as this news came out at 8:00 in the morning, the Nasdaq index immediately fell by 3%, and caused a chain fall in subprime mortgage companies. The overall decline exceeded 8%, and the highest even fell by 18%.
The three major U.S. stock indexes lost more than $160 billion in market value after trading that day.
This is just the storm of subprime mortgage finance companies. The investment funds most closely related to them have been unable to sit still since the morning.
The large number of subprime debt financial products they hold in their hands are extremely dangerous. They can boast of "dancing on the edge of a knife" on weekdays, but once the subprime mortgage loan company collapses, the subprime debt they hold will be
The financial products will be worthless, and a large amount of liquidated damages will be paid, which is absolutely fatal for investment funds.
More than half of investment funds are listed institutions, and even they are subsidiaries of investment banking giants such as Morgan Stanley, Merrill Lynch, and Goldman Sachs. The business of these investment funds is subject to stock market supervision.
Although they used various means to delay reporting losses on the subordinated bonds they held, as the market closed in the afternoon, huge loss scandals still broke out in some small and medium-sized investment funds, resulting in a final loss of US$160 billion in market value. At least
One-third comes from small and medium-sized investors’ panic predictions about investment funds.
Fortunately, it is only the small and medium-sized investors who are panicking. If the big guys can't stand it, the panic shouldn't be so small.
The subprime debt market in the United States is a very huge market, about 1.3 trillion U.S. dollars. However, it is not only the subprime debt that will be affected, but also the 1.5 trillion subprime debt market. Because the disaster is coming.
It's all panic. Investors and the stock market don't care about the risk difference between subprime debt and subprime debt. They will only become more panicked because of the huge scale.
All right.
The subprime debt market is big enough, right?
But do you know how huge the U.S. investment fund market is?
At least more than 5 trillion US dollars!!
It is only officially included in the regulation of the stock market. Private equity funds, etc., can only be more than that, but not less!
You must know that it does not mean that if you hold a US dollar of subprime financial products, you will lose only US$1 in the end.
If it were really that simple, Deutsche Bank, Royal Bank of the Netherlands, Japan's Mizuho Bank, etc., who had only bought hundreds of millions of dollars in subprime debt products in their previous lives, would have lost money so much that they couldn't even keep their pants, and a group of senior executives almost staged a trapeze.
repertoire!
So, if even the collapse of the US$1.3 trillion subprime mortgage market would trigger a violent tsunami, then what kind of shocking storm would result if investment funds of US$5 trillion or more suffered huge losses?
It is conceivable that due to the globalization of financial products, even Chinese tycoons have bought a lot, so this financial crisis will not only affect the United States, but will soon spread to Europe and Asia...
...Across the world, countless investors will cry, and thousands of people will have nothing from now on.
However, the financial world is so cruel.
If you come in and participate, you have to bear risks and responsibilities.
Well, conversely, everything has two sides, there are those who lose money and those who make money.
It is the practice of many fund managers to bet on the collapse of subprime debt in advance. Of course, there are also many people who bet that subprime debt will not collapse. Whoever loses will be eaten by the other party.
Xiao Qi was naturally one of them who made a lot of money!
Tong Wencong has been in New York and Wall Street during this period. Today, all his hard work has received the greatest reward.
Although many people are speculating that the U.S. government will definitely rescue subprime debt, investment funds, and the stock market.
But the power of capital cannot be controlled by the government at all. This time, the three chain brothers and sisters above will definitely not escape the end of being tortured to the point of death!
Xiao Qi looked at the time and saw that it was already one o'clock in the morning. "Ask Tong Wencong to come with us. Let's find a place to have something to eat."
"good!"
Anthony smiled and dialed the phone.
When he put down the phone, he found that Xiao Qi was not excited at all. Instead, he picked up the recent information of Mario Law Firm that he had compiled and looked at it very carefully. It seemed that he had not recorded at least 500 million US dollars in super super funds at all.
Average profit!
$500 million in profits just today!
When all the profits are harvested, Anthony is sure that Xiao Qi will earn at least 15 billion US dollars from the subordinated debt operation!!
In other words, Xiao Qi made a profit of 60 Mario Law Firm through an investment activity in an understatement, but even so, he still read the business report of the law firm seriously, without any pride or impatience.
No.
He is truly a genius!
Anthony thought with admiration.
The legal profession in the United States has developed to this day and has become an extremely mature profession. It can be said that there is no other country in the world where the legal profession is as mature and standardized as the United States.
To put it bluntly, even if he commits a crime, the criminal can lie to his parents, but he will never hide anything from the lawyer, because only the lawyer will help him find loopholes in the law and escape from legal sanctions.
What lawyers care about is not the law at all, but the people who entrust them.
In a sense, lawyers specialize in confronting the law.
In all the business Xiao Qi did in the United States, he did not hide the fact that Mario Law Firm had drafted the previous contract with Tong Wencong with the help of Mario and Anthony.
It is also because of this that Anthony understands the entire investment process.
I deeply know what a great vision the little boss has in this understatement.
Decision makers with outstanding vision are the core figures of a group. Anthony has long believed that Xiao Qi is the soul of the Fairy Faction, and now he is more determined to follow his philosophy. (To be continued, please search Piaotian Literature for better updates of the novel.