In early February, American colleges and universities begin their semester.
The whole family went out to accompany Zeng Yu to register at New York University.
Endorsed by the tenth richest man in the world, Zeng Yu’s master’s tutor at New York University is the dean of the Department of Computer Science, the head of the Center for Data Science and Artificial Intelligence, and a Turing Award winner.
It is the Nobel Prize in computing.
After arranging everything, Zeng Li specially took her great-mother, Lu Xia, and three generations of grandparents to Florida for a trip to relax.
Lu Fei stayed in New York and stayed at the Millennium Broadway Times Square Hotel. The next day, the New York Times Group held a book launch for Lewis in the conference hall as scheduled.
"The Big Short" was published on New Year's Eve. On the day it was released, the New York Times spared no effort to promote it, but it was not as good as John Paulson and Bill Gates who shouted on Twitter and Facebook to tout the book's effectiveness.
Understand the full picture of American subprime mortgages.
Coupled with Mr. Lu's celebrity effect, within three days it was on the bestseller lists of Amazon, The New York Times and other publications.
Lewis, who was slightly famous, was suddenly taken over by Mr. Lu and became a new best-selling author in the financial circle.
Naturally, willingly being Mr. Lu's mouthpiece is equivalent to being a "public intellectual" in the United States.
Facing the lens of the long shot, facing the readers here, especially the senior executives and elites of Wall Street investment banks, as well as funds and institutional investors, they described subprime mortgages endlessly:
"This year, the statement from the G7 finance ministers and central bank governors meeting pointed out that the impact of the subprime mortgage crisis is gradually increasing.
"Whether we can't see it or pretend not to see it, one fact is before us, that is, the cutoff of P2P and subprime mortgage customers has caused the capital pools of MBS, CDO, and P2P to lose their source of cash, just like the faucet has lost its
Water supply…”
"Mortgage default rates continue to soar, the number of unemployed people across the country continues to increase, and I think the abnormal prosperity of the U.S. stock market is coming to an end. According to my prediction, it will be as early as 2008."
"That is to say, there will be an economic crisis this year!"
"The power is far greater than that of the 1997 Southeast Asian economic crisis, because this time it will be a global crisis. It originated from the United States and will affect the entire world economy..."
World economic crisis?!
Many people here couldn't help but exclaim, you know, today's media still praises subprime mortgages and doesn't sing bad news. It's all good news, but according to the analysis in the book, it seems to be very reasonable.
Is the U.S. stock market really going to collapse this year?
"Haha, nonsense!"
In the midst of the whispering crowd, a voice suddenly broke out. Lu Fei turned around and saw a tall, thin man with a hooked nose stood up. John Paulson came over and introduced:
"Alan Schwartz, the CEO of Bear Stearns and my former boss, now has the final say at Bear Stearns. Kane has been dismissed by the shareholders' meeting because he is addicted to bridge and does not care about the company's management."
"Kane had a good plan and jumped out of the fire pit himself."
Lu Fei smiled coldly, "Let him be a firefighter."
"Subprime mortgages are the cornerstone of American finance. The United States will never sit back and watch the collapse of subprime mortgages. You are completely alarmist!"
Schwartz stretched out his finger, "Not long ago, the six major banks on Wall Street launched the 'Lifeline' plan. As long as homeowners who are more than 90 days overdue in repayment apply, they can get a 30-day buffer period, and the Federal Reserve has also cut interest rates.
50 basis points..."
"But what?"
Lewis got the hint from Lu Fei's eyes and said with a smile: "Recently, there have been more and more rumors about Bear Stearns on Wall Street. I heard that some fixed income and stock traders have begun to withdraw funds?"
"The Securities and Futures Commission has clarified this for Bear Stearns."
Schwartz said in a serious tone: "Our capital ratio remains above 10% and we have sufficient buffer capital. Listen carefully. This is personally certified by the China Securities Regulatory Commission!"
Believe the Securities and Exchange Commission? Why not believe that I am Qin Shihuang?
A contemptuous smile appeared at the corner of Lu Fei's mouth.
"Lu! It has dropped below 70 US dollars."
John Paulson nudged him with his elbow and handed over the phone.
The text message shows the current stock price of Bear Stearns, and the staff of the Three Body Fund will send real-time information about the rise and fall of the stock prices of Wall Street giants such as Lehman, Merrill Lynch, and Goldman Sachs.
There is almost no suspense, all stocks fell at the opening today.
"John, you must be trustworthy when working on Wall Street. If you say you want Bear Stearns to die violently, you must die violently."
Lu Fei glanced at the sophistry Schwartz, put his hand on his neck, and made a gesture of wiping his neck towards Lewis.
It was at this time that Lewis took out a research report that he had prepared in front of everyone, exposed Schwartz's lies mercilessly, and stripped Bear Stearns of his pants——
Bear Stearns has a very serious problem, and this problem is probably just a microcosm of the financial market!
The United States must be wary of the immeasurable systemic financial risks caused by subprime debt and P2P!
The entire report is produced by the Wharton School of Business.
The reliability and authority are hard to refute at the moment. The key data listed are clear at a glance. P2P, funds, subprime mortgages, debt, leverage, etc. are all-inclusive. It is like dissecting a sparrow.
See blood.
In particular, it exposed the lies previously released by Bear Stearns——
The cash reserves are not even $18 billion!
Bear Stearns is losing money!
The knock-on effect is that the subprime mortgage bonds held by Bear Stearns and the commercial real estate investments they invest in are in danger.
Once such a large amount of bonds and projects came into its hands, including leveraged notes, bank financing, commercial mortgage debt, and equity bridge loans, Bear Stearns was simply sitting on a barrel of dynamite.
A single flame will blow it to pieces.
From the economic situation, capital data, debt status to project matters, everything is covered, and there are even insider revelations.
"I have a friend from Goldman Sachs, and he said that he just rejected a normal transaction of yours not long ago because it was confirmed that Bear Stearns' credit is not enough to support normal transactions."
As Lu Fei's spokesperson, Lewis frantically outputted: "Is this all fake news?"
"Of course it's fake news!"
Schwartz lacked confidence and insisted: "It's just that Bear Stearns is a major participant in subprime mortgages, so there are rumors like this. In fact, they are all false news. Let me ask you, looking at the financial history of Wall Street, there are
Will an investment bank like Bear Stearns fail? Is it possible? Impossible! Unless they are caught for criminal activities, so I am still optimistic about Bear Stearns."
"But now, Bear Stearns' stock price is about to fall below $60!" The investor sitting in the back row suddenly stood up.
"What!
"
In an instant, the whole hall was in an uproar.
The investors who had nothing to do with Bear Stearns breathed a sigh of relief, and then looked at the people who were related to Bear Stearns with gloating eyes, their expressions were horrified and they were restless.
Only half an hour after the press conference, Bear Stearns' stock price plummeted from $32 to $79.
The decline reached a terrifying 08%!
It was the largest single-day decline in U.S. stocks since the 1987 stock market crash. Even if the Internet bubble burst, it would not be so exaggerated.
The stock price has plummeted from a high, and it is impossible to see the bottom at a glance.
Everything that happened in a short period of time made Schwartz's head buzzing, and he hurriedly left the press conference without caring about his grace.
One, two, three...
More and more investors left the market, and in the blink of an eye, the seats quickly went from packed to empty.
There is only a bunch of media left, staring at each other with big eyes and small eyes.
If you say it falls, it will fall. This is so amazing!
"Lu, Bear Stearns' current CDS contract price for every US$10 million of subprime mortgage bonds has soared from US$60,000 to US$90,000, and is very likely to exceed US$700,000."
John Paulson was grinning from ear to ear.
"Slowly throw out all the CDS in our hands."
Lu Fei applauded and stood up.
At this moment, the media who smelled the smell swarmed forward, not surrounding Lewis, but instead surrounding him and John Paulson.
"Lu, the book "The Big Short" is also signed with your name. Can I understand that this is a sniper against Bear Stearns?"
"This is what you said, not me."
Lu Fei waved his hand, "Actually, I just served as a consultant to Lewis, just like in "The World is Flat", and I served as a consultant to Friedman. I put my and John's opinions on subprime mortgages and the future global economic situation
Provide it to him."
"There are too many books on subprime mortgages. Are the writers and economists who wrote these books also sniping?"
Then he shrugged, "We don't need to be secretive if we want to short Bear Stearns. If I want to snipe, I won't be afraid to admit it. But if it doesn't exist, it doesn't exist. I don't need to deny anything."
Mr. Lu, you are so bad!
John Paulson saw him telling lies with his eyes open, so he suppressed his laughter and tried his best to restrain himself in front of the media.
"What do you think the impact of Bear Stearns's decline will be? Is Bear Stearns finished?"
The reporter cast an eager look.
"I don't know. I only know that this is the beginning of Bear Stearns. Let the bullets fly for a while longer. Maybe when the 'Bear Stearns moment' comes, Bear Stearns will be truly finished."
"Bear Stearns moment?"
"That's when Bear Stearns hit a real crisis."
"What kind of crisis? When?"
The reporter asked eagerly.
However, Lu Fei only left them with a mysterious evil smile, like God mocking mortals.
Just when everyone was puzzled, the "Bear Stearns moment" unexpectedly appeared the next day.
As the Wall Street Journal, the New York Times and other media continue to badmouth subprime mortgages and investment banks such as Bear Stearns, Lehman and Merrill Lynch, investment sentiment is becoming increasingly pessimistic.
Various rumors that were unfavorable to Bear Stearns spread on Wall Street. Even the clarification from the U.S. Securities and Exchange Commission was of no avail. Public opinion was out of control, and panic swept across the country.
Not just across the United States, Bear Stearns' global clients scrambled to remove funds. Within two days, 15 billion US dollars were withdrawn one after another, which directly caused a run on cash reserves.
By Thursday night, Bear Stearns only had a measly $1 billion in hand, but the house leaked and it rained all night——
Also losing funds is its own P2P platform.
The borrower was unable to repay the loan, and the lender would rather pay liquidated damages than withdraw the capital before the expiration of the investment period. Bear Stearns did not have the extra funds to fill the P2P hole, and the capital chain collapsed immediately.
Finally, Bear Stearns’ P2P platform exploded!
Hundreds of funds and hundreds of thousands of middle-class Americans fell into the tens-billion-dollar pit on the platform, and it exploded with a bang.
The chain reaction of thunderstorms soon spread to four to five hundred P2P platforms across the United States, large and small. Small and medium-sized platforms were hit by thunderstorms one after another due to lenders' breach of contract. Even P2P platforms of giants such as Lehman, Merrill Lynch, and Citigroup were also affected.
On the edge of a thunderstorm.
The entire P2P market, which is worth hundreds of billions of dollars, is on the verge of collapse because of the Bear Stearns thunderstorm.
But Schwartz could no longer care about all this.
Not even caring about dignity and reserve, he called everyone on Wall Street for help:
For the sake of being the same as Yingjiang, let’s give our brother a hand!
As a result, all that was gained was the immobility of the friendly forces.
Deutsche Bank, Merrill Lynch, Goldman Sachs and other peers all hung up the phone. Not only did they refuse to trade with Bear Stearns, they even added insult to injury——
Backhand short Bear Stearns!
Everyone pushed against the wall. When the repo market was announced to be closed to Bear Stearns, it was equivalent to completely closing the door to hope.
The entire company suddenly fell into despair.
Whether you can live to see the sun tomorrow, all you can count on is the Federal Reserve and the Treasury Department, otherwise you can only file for bankruptcy.
As Treasury Secretary, Henry Paulson received Schwartz's call for help. He was completely dumbfounded and suspected that his ears had heard wrongly.
Bear Stearns, the fifth largest company on Wall Street,
With a total of hundreds of billions of assets, the cash on hand is only 78.11 million U.S. dollars, not even 100 million U.S. dollars. It is so embarrassed that the stock price has plummeted to the ground.
Only $8 per share is left.
The market value has evaporated by 8%!
Henry Paulson put down the phone with mixed emotions.
He has an anonymous share in the Paulson Hedge Fund and the Trisolaris Fund. The more Wall Street giants like Bear Stearns fail, the more subprime mortgages fall, the more they earn.
Glancing at "The Big Short" on the table out of the corner of his eye, he couldn't help but sigh: "Why does God always side with Lu? Is he God's illegitimate son?"
But it couldn't control so much, so it brought the regulatory authorities headed by the Ministry of Finance and held emergency consultations with the Federal Reserve headed by Bernanke.
The first question is not how to save Bear Stearns, but whether to save Bear Stearns?
After all, the former Arkansas governor who used taxpayers' money to save the despised Wall Street wolves was already scolded bloody.
Is it really worth it for all of you here to risk the world's disapproval and carry your own black hat to save Bear Stearns?
"If Bear Stearns collapses, once the subprime mortgage assets it holds are sold off during bankruptcy proceedings, it will cause an unpredictable chain reaction in the market. Such assets held by major institutions and funds will also be worthless.
, the entire financial system is finished.”
Henry Paulson said in a serious tone: "Bear Stearns' P2P thunderstorm has caused huge losses, and we must not let Bear Stearns' bankruptcy lead to the collapse of the mortgage bond market."
"This is the truth."
The Fed official shook his head and laughed: "Although we play the role of lender of last resort, Bear Stearns is not a bank, but an investment bank. In principle, it should not be supervised by the Federal Reserve."
"This is indeed a problem." Henry Paulson touched his chin, "No matter how we do this, we must have a basis."
"Here's the evidence. Let's look for it. If we want to save Bear Stearns, we have a way to save Bear Stearns. We have the right to explain." Bernanke narrowed his eyes into a thin line.
"In addition, we must also find some foreign aid."
"Who? Buffett?"
"Besides him, there is Lu!"
Henry Paulson glanced out the window and saw the red sun in the sky.
