Chapter 1047 The Eve of the Great War (1)

Many people are aware of the subprime mortgage crisis, but their impression of it only rests on the simple concept that the financial tsunami led to the decline of the U.S. economy, and the most famous event it caused was that of Lei Man, one of the world's four major investment banks. Investment banks went bankrupt.

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 dominance in global finance, military and politics 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 U.S. dollars lies 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 playing this way for decades without any major problems, because people all over the world have paid for it.

But it's not foolproof.

The long-term domestic monetary easing policy has left the market and banks with a lot of money on hand.

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 give 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$100 million, the bank has to wait 10 years, and the loan will be US$150 million with interest, and it will earn US$10 in 50 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$130 million. After the credit companies purchased the loans, they packaged them and put them on the market for sale.

The cost price is US$130 million, and each US$10 is divided into 15 shares. After the credit company earns US$20, the loan is dispersed to the market.

This group of capitalists turned the liability into a subscribeable asset like a genius. This 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 happen 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 explode until seven years later, in 2008.

But now, Li Jin is going to be the one to tear apart this mask of hypocrisy and glitz and break the backbone of the United States in advance.

Mr. Huo was shocked by Li Jin's words.

Not just anyone has the courage to say this.

Of course it's okay for an ordinary citizen to say something nice, but when their status and strength reach Li Jin's level, every word they say is well-founded, so no matter how arrogant they are, they would not dare to say something that would break the backbone of American finance.

But Mr. Huo didn't ask anything, but asked a very simple question, "What do you need me to do?"

A simple question, seven words, but it contained Mr. Huo's unreserved trust and support for Li Jin.

Li Jin, who felt the deep love and righteousness, took a deep breath and said, "Old man, what the Huo family has to do is to do their best to short-sell the subprime credit market in the United States, that's all."

Mr. Huo was silent for a moment and said, "Okay, I will let Zhenzhou contact you."

It was just such a sentence, without even asking why or how confident it was.

Li Jin clenched his fists. With Mr. Huo's unreserved support and trust, he would do his best to create a future.

After putting down the phone call with Mr. Huo, Li Jin thought for a while and made a second call.

This call was made to Hu Taidou.

The call was answered by Hu Taidou's housekeeper. After waiting for a while, Li Jin waited for Hu Taidou himself.

"Little fox, I really don't want to answer the call when I know it's you."

Hearing Hu Taidou's voice on the other end of the phone, Li Jin laughed and said, "Is this a compliment from Mr. Hu to a junior like me?"

"Hmph, just tell me if you have anything to say." Hu Taidou snorted coldly.

"Borrow some money to spend." Li Jin's answer was simple and rude, and he laughed twice.

Li Jin couldn't see Hu Taidou's expression on the other end of the phone, but it must not be good.

Seeing that Hu Taidou didn't say anything for a long time, Li Jin had no choice but to continue: "Mr. Hu, don't be so upset. The money is really not much, just 800 billion."

There was a refreshing sound of slamming a cup on the other end of the phone.

Then came Hu Taidou's almost roaring voice, "Li Jin, what do you think I am!? Here to rob me!? Even if you rob me, you should get a more reliable number. At my age, I can't even count the coffin." If you don’t have that much money, why don’t you ask for 800 billion, Suncoins?”

Li Jin had the foresight to hold the phone further away from his ears. After Hu Taidou finished yelling, he continued: "Look, you can get angry easily. It's better not to be so excited when you're older."

"Mr. Hu, to be honest, you may not have that much money, but the entire Huizhou Merchants Chamber of Commerce does. As soon as you open your mouth, everyone will come together, come on, come on, come on, come on, you can still get it together."

"If you don't want money, get out!" Hu Taidou scolded.

Li Jin shrugged and said, "Okay, it's fine if you don't give me money. Then I'll kill every Huizhou merchant I see. With Jin Qing's current size, not only will I wipe out the Huizhou merchants, I'll at least knock them out of the country." Outside of the four major chambers of commerce, there’s nothing wrong with it, right?”