However, Li Jin knew that the real core of the subprime mortgage crisis was the subprime credit crisis.
In order to stimulate national consumption and maintain its strength as the world's largest power, the United States has long implemented a quantitative easing policy throughout the country.
And this monetary quantitative easing policy is not the same as that of Neon.
Its essence is that the United States prints more money to use for domestic welfare and relieve the U.S. government's own debt, and this process lasts for decades.
If any other country had done this, they would have been doomed long ago.
But the United States is different. Its global financial, military and political dominance has allowed the United States to build the core and most important system, which is the U.S. dollar settlement system.
Its full academic name is the Bretton Woods system, which is the core global dollar system.
It would take tens of thousands of words to describe it in detail, but there is only one core to it, and that is that the world uses the U.S. dollar as the core settlement currency, but the power to print money in the U.S. dollar is in the hands of the Federal Reserve and the Central Bank.
In other words, the United States' monetary easing policy has caused all countries in the world that support dollar settlement to pay for the United States' high consumption, high debt, and high welfare.
Therefore, the United States has been doing this for decades without any big problems, because people all over the world have paid for it.
But this is not foolproof.
The long-term domestic monetary easing policy has resulted in a lot of money on hand in the market and banks.
The profit-seeking nature of capital and currency means that money must find an industry to generate profits.
When all countries in the world face this kind of problem, the hot money goes to two places invariably, the stock market and real estate, and the United States is no exception.
In the craziest time, which is now, as long as you are an American, you don't need to do any asset and credit investigation to buy a house loan. If you dare to lend, the bank will dare to grant it.
For the sake of their own performance, salesmen frantically promote bank loan products to everyone, while banks, in order to give investors a decent report, accept applications from these people without rejecting them.
As a result, the real estate industry is completely booming, resulting in a surge in the national debt ratio.
But the loan has a time limit. For example, for a loan of US$1 million, the bank has to wait 10 years, and the loan will be US$1.5 million with interest, and it will earn US$500,000 in 10 years.
But the bank's investors were unwilling to wait so long, so the bank packaged the loans and sold them to credit companies for US$1.3 million. After the credit companies purchased the loans, they packaged them and put them on the market for sale.
The cost price is US$1.3 million, and each US$100,000 is divided into 15 shares. After the credit company earns US$200,000, the loan is dispersed to the market.
This group of capitalists turned the liability into a subscribeable asset like a genius, which is a subprime credit loan.
The loans are resold layer by layer, and all banks and credit companies make a lot of money, but this is a game of drumming and passing flowers. In the end, someone has to pay for these profits.
When the U.S. economic growth slows down and national income falls, real estate prices begin to inevitably decline. When the amount of the loan you have to repay exceeds the value of the house itself, a large number of overdue loans occur.
These subprime credit loans instantly became garbage.
Institutions that had purchased large amounts of subprime credit loan products began to liquidate their positions, investors lost all their money, and the entire market was filled with disasters.
This is the fundamental core of the entire subprime mortgage crisis.
Looking at the entire subprime mortgage crisis, this financial crisis that knocked the world's largest financial power, the United States, from its knees for 20 years, definitely did not form overnight. In fact, it is now at its craziest time.
Someone must have noticed it, but who cares, as long as he is not the last one to take over.
The carnival is still going on, and if it develops according to the normal timeline, it will not break out until seven years later, in 2008.