"Hey, Xiao Yu, I'll be in New York at 4 p.m. the day after tomorrow."
"Don't forget to pick up the plane."
"Oh, yes, I said it based on your time, don't try to convert it."
"I'm going to expedite the situation in China. I have to go to Henan province tomorrow morning to see the new factory, and then fly to New York."
"Okay, okay, my mission will be very difficult this time."
Fang Zhuo stood on his balcony making an international phone call and communicating with global marketing director Yu Hong.
After a while, the call ended. He yawned, took out a cigarette and walked to the sofa.
After taking just two steps, Fang Zhuo put away his cigarette and smiled at his sister Zhao Suqi, who was sitting upright.
"Brother, have you been a bit aggressive in smoking recently? I saw that the ashtray in your study is full of ash." Zhao Suqi said seriously.
"When I think about things at night, I always feel that my thinking is not smooth unless I take something." Fang Zhuo shook his head.
Zhao Suqi said seriously: "Smoking is harmful to health."
"Well, that's why I bought a cigar." Fang Zhuo stood up and pulled the whiteboard in the living room to the middle.
Zhao Suqi was limited by her knowledge, and her judgment about cigars was temporarily confused. She didn't know what the structure of cigars was.
"Today I will teach you some interesting knowledge, which can be regarded as professional science popularization for you in advance."
Fang Zhuo took a pen and wrote the word "subprime" on the whiteboard and introduced: "The U.S. bank mortgage loan market divides the borrower's income and credit status into grades. For example, good ones are preferential grades, and bad ones are
Secondary.”
"Loans granted by lending institutions to borrowers with poor credit and low income are called subprime loans."
"Easy, right?"
Zhao Suqi nodded attentively and suddenly asked: "Brother, do you have to charge money for a CEO like you to give lectures outside?"
"This class is probably worth half an Yike." Fang Zhuo said with a smile, and wrote another word "finance" on the whiteboard, and then pointed the arrow of "subprime mortgage" to this word.
Zhao Suqi gathered his energy and listened to the CEO's lecture, which was worth half an Yike.
"Subprime loans are obviously not good enough and face default risks. Is this easy to understand? So what should we do? In order to reduce this default risk, lending institutions such as banks package and sell a large number of subprime loans to another institution."
Fang Zhuo saw that his sister clearly didn't understand, so he gave an example: "For example, Bank A has a subprime loan of 1 million yuan, with a ten-year interest rate of 300,000 yuan, and a default probability of 0.1%. It now pays 1.1 million yuan for the subprime loan."
This loan is sold to another institution B, so A immediately gets 1.1 million in cash, and B gets a long-term asset income that looks pretty good."
Zhao Suqi nodded to express understanding.
Fang Zhuo first marked on the whiteboard and continued: "As for B, it is not waiting for the loan to mature in 10 years, which is too slow. It is innovating financial tools and securitizing the loan, that is, dividing it into
1,000 shares are sold on the exchange market so that ordinary people can buy it."
"B got the cash of 1,000 ordinary people, and these 1,000 people without sufficient financial resources got a subprime mortgage security that looked good and waited for the profits. It was a win-win situation."
Zhao Suqi felt as if she often heard the word "win-win" from her brother. She asked: "Yes, it sounds good, and the 0.1% default probability is also very low. Isn't it a win-win?"
"Well, it would be fine if it was just like this, but Institution B was not satisfied with this. It bought another subprime mortgage with a default probability of 0.5%. This time it increased five times from the previous one." Fang Zhuo smiled.
, "Tell me, how should we sell it to others reasonably and smoothly?"
Zhao Suqi fell into thinking, staring at the words and symbols on the whiteboard.
After a while, she asked uncertainly: "Bundle these two transactions together for securitization?"
"Qiqi is still a bit talented." Fang Zhuo nodded, "As long as two loans with default probabilities of 0.1% and 0.5% are put together, the probability of them defaulting at the same time will immediately become smaller, which will reduce the risk of the second securitization.
After the risk is eliminated, the person or institution that takes over the order can buy with confidence."
Zhao Suqi thought: "It seems not bad."
"Well, the problem is that it doesn't stop there. Institution B or the next C will package subprime mortgages from different regions with different default probabilities and put them into the capital market to reduce the risk as much as possible."
"Then, this kind of subprime securities will be packaged into asset-backed securities with a series of loans such as credit cards, student loans, and commercial mortgage-backed securities, and the scale will increase several times."
"It's more than that. The risks of asset-backed securities have become higher. Banks or financial institutions are not stupid. They think this is not possible, so they seek insurance to cover the risk of default on the securities."
"This risk has flowed into the insurance industry. This operation is called credit default swap, or CDS for short. It is the most common credit derivative product in the foreign bond market."
"Moreover, these operations are not one-way, and leverage is added in the middle. You sell to me, I sell to him, and he sells to her. The gradually amplified risks permeate the entire financial capital market with the combination of financial products."
"This is called systemic financial risk."
"Once there is a problem with the key parts at the bottom and the subprime loan market fluctuates, risks will be passed quickly and the entire system will explode."
Fang Zhuo said the last sentence calmly and asked: "Do you understand?"
"I seem to understand, but why is this risk slowly expanding like this?" Zhao Suqi was puzzled.
"The liquidity of the bubble is too strong. As for the bubble, the United States has cut interest rates many times in a row to encourage people to buy houses. The United States has now introduced a package of economic stimulus plans, including an important policy called 'home ownership'.
'." Fang Zhuo muttered.
He thought for a while and said: "The above are all my judgments, but there should be no problem with this judgment. It's just that the final explosion will not happen in a while. There are many links that can be involved in it, but some links must be able to ensure that it is
Let your own people take the lead to avoid being reckoned with in the end."
Fang Zhuo glanced at his sister who was thinking.
Zhao Suqi was awakened by this sight and hesitantly said: "So... regarding the judgment of these subprime mortgages, their formation, development, and outbreak, brother, do you need someone who can carry out your will and be trustworthy?"
Fang Zhuo said nothing.
Zhao Suqi thought of the "financial devil" whom his brother joked about a long time ago, and then said: "There are some operations that cannot be known to each other in the company?"
Fang Zhuo smiled: "It's all just judgment. Listen and see how professional courses are taught when you go back to college."
"So, who is more trustworthy than your sister and who can better implement your will to operate the subprime mortgage market?" Zhao Suqi stared at his brother's expression.
Fang Zhuo smiled and said: "Do you think your brother is a god? If there is a systemic financial risk, there is a systemic financial risk? This is just a lesson, a deduction lesson."
Zhao Suqi blinked: "But you are very confident in this deduction, right?"
"I think it still needs to be observed." Fang Zhuo said seriously, "otherwise, what do you think I would do in the United States? Just make players?"
Zhao Suqi nodded understandingly: "I thought I was going to have a date with Sister Xiao Yu."
Fang Zhuo's face almost became tense, and he knocked on the whiteboard: "Read well, study hard, and you are the only one who still carries out your will? You have very strong confidence."
"The main reason is that I trust my brother, and my brother trusts me." Zhao Suqi gave a reason.
Fang Zhuo pointed to his head: "Trust alone is not enough, you must also have the knowledge and IQ to make people trust you."
Zhao Suqi nodded: "Study hard and make progress every day."
Well, study hard, make progress every day, implement your will, and strive to become a female devil.
