Vol 6 Chapter 530: good idea

Facing his subordinates looking into his own eyes, Feng Yiping thought about it for a while and said, "The analysis made by you just now is in place and right, but I have to say that until now, everyone hasn't realized what's next. How bad will it be,"

Several major commercial banks are now facing huge risks, and at least one or two of the remaining four major investment banks are also facing huge risks. The life of private equity will become more and more difficult... Isn't that bad enough?

"We all know that this subprime mortgage crisis originated from Wall Street, so everyone focused their attention on Wall Street."

"Because, for example, the most recent crisis that everyone has experienced, the Internet bubble that began in 2000, so many high-tech companies went bankrupt, but the most affected was mainly Silicon Valley."

"That actually only had an indirect impact on the banking industry and the real economy. If the company went bankrupt, the shareholders would lose money. Companies in other industries were still thriving."

"We all know that real estate in Silicon Valley was still appreciating at that time,"

"But guys, this crisis is not the same thing as the Internet bubble,"

"The essence of this crisis is the result of Wall Street's ignorance of risk control. It is that they are full of false confidence in the real estate market, or that they have no judgment at all, but people think that housing prices will continue to rise as a fact."

"And based on this wrong fact, in the actual business process, blindly use high leverage to carry out hedging operations..."

"But is it only Wall Street that does this?" Feng Yiping asked, "No, in fact, the entire U.S. financial market has a tendency to hedge funds."

"Think about it. It's not just banks and investment banks, but also private equity. From people who borrow subprime loans to buy houses, to government agencies that rely on related derivatives to reduce interest and relatively increase income... More and more market participants , Are playing a game of leveraged trading in some form,"

"From the perspective of the national economy, we can even say that the United States is a huge hedge fund."

This is the first time everyone has heard of this view, and because this view is quite bold, it caused a burst of whispers.

"As we all know, overseas investors have a lot of American assets, and the United States also has a lot of investment overseas,"

"The difference is that about two-thirds of foreign investment in the United States is in debt, such as U.S. Treasury bonds held by China; while two-thirds of U.S. investment overseas is in equity. For example, whether it is General Motors, Ford, or Microsoft Google...Most American companies invest in China in equity."

"That is, the United States has been using the low-interest capital of other countries to develop its own enterprises. Isn't this a hedge fund model?"

This is what Feng Yiping admires the United States most.

Think about us. In the previous decades, how difficult was it to make use of foreign capital?

That is to say, the situation has improved slightly in recent years, so the country has loosened foreign exchange control, but for the United States, as long as he prints some treasury bonds, he will immediately have a large amount of funds sent to them.

It seems that there are still a few points of return, but just as we have kept our money in the bank over the years, interest has always been unable to keep up with inflation. How can the few points of return on U.S. Treasury bonds withstand the Fed’s frequent waves of quantitative easing? , There is a wave of quantitative easing at every turn?

Of course, good things can’t be taken over by the United States, just like more traditional banks are more stable when facing subprime mortgages, and more diversified banks are the most panicked when facing subprime mortgages. The United States will also panic.

"And we know that the common weakness of all leveraged investments is that when liquidity ebbs, their capital chain will be affected at the same time, that is, the United States is now very short of money,"

"The essence of the subprime mortgage crisis is the debt crisis. It is the repayment of those subprime loans that has a problem. How big is the problem?"

No one can answer this question, probably because they all feel that the relevant data should exceed their imagination.

"In the entire United States, the total amount of residential mortgages for residents is about 10 trillion U.S. dollars, and the value of real estate used as collateral, at the previous peak, generally does not exceed 130% of the loan amount, and now housing prices have fallen sharply, and the repayment default rate has soared. , The potential credit loss of problematic mortgages,"

Feng Yiping paused, "It should have exceeded 1 trillion US dollars,"

He said lightly. Many of the people present got sweaty all at once, $1 trillion?

John quickly estimated that the total market value of the five major investment banks on Wall Street, plus the major commercial banks, is only about one trillion dollars.

Gee!

But this is not over yet.

"Don't forget, the declining economy must have caused other credit losses," Feng Yiping added quietly.

"I predict that the accumulation of holes in the entire U.S. financial system is estimated to be as large as trillions of dollars."

"Such a large loss is not enough to fill the entire Wall Street. Therefore, this time is different from the Internet bubble a few years ago. The shareholders of some financial institutions have not lost enough money, and the creditors are also likely to suffer some losses. "

He waved his hand. "In the end like Bear Stearns, stock investors almost lost everything, while debt investors were able to retreat. I think it's hard for such a good thing to happen again."

"The Fed can save one Bear Stearns, but it may not save the second or third, Wall Street," he shook his head. "Next, I guess it will be a **** storm."

"And this crisis will no longer be a subprime mortgage crisis, but will escalate into a financial crisis," Feng Yiping asserted again and again.

"So, what do you need most if you want to survive this crisis safely?" He asked everyone with a smile.

"Money!" more than one person shouted.

"Right," Feng Yiping stretched out his hand and made a gesture of counting money, "that is, money, a lot of dollars,"

"And the good news is, hehe, we happen to be not short of money,"

"Not only are we not short of money, we still have sufficient funds to look for opportunities,"

Many people laughed, some even clapped.

At this moment, this is really good news for everyone to rejoice.

Speaking of it, the situation is the same as in all high-tech parks in Silicon Valley. In the NEXTDOOR park, the employees in these commercial sectors are usually lower than the engineers.

But in the face of such an opportunity, the guys who are casually dressed and relatively bad-spoken, but are actually very proud, are useless, and this is a good opportunity for them to show their ability.

"So, at times like this, we don't have to be anxious and be patient, because the more we get to the end, the better conditions we can get,"

"Make good use of the present opportunity and do more preparations. Believe me, this autumn, we will definitely have a bumper harvest."

"Yeah!" Suddenly the sentiment was enthusiastic.

Feng Yiping felt that if some of them were released at this time, they should all dare to run to any big boss on Wall Street and say, "Hey, your company, do you sell it?"

…………

Feng Yiping left Cummins and John and asked straightforwardly~www.wuxiaspot.com~ After listening to your analysis just now, if the situation worsens in the future, is it possible that our acquisition of Hilton will encounter less resistance? "

Although this acquisition will be initiated by Goldman Sachs in the future, it is only to make things smoother. The main opinions must be taken by themselves.

Feng Yiping believes that Blackstone, who only acquired Hilton in July last year, should not be willing to change hands so quickly.

He originally hoped that Goldman Sachs and the others would cooperate with the persecution, but if not, it would be the best. Goldman Sachs and their favor would not owe the best.

Cummins glanced at John, and John smiled and motioned to him.

"I think that there is such a possibility that Blackstone, which is in desperate need of cash, will be more welcoming to settle such transactions that bring them a heavy burden of assets," Cummins said.

This is the lack of confidence.

It seems that he also knows that Blackstone will not easily change Hilton hands.

Seeing what he didn't add, John said, "Feng, are our funds really sufficient?"

Feng Yiping thought about Li Ruiyuan and nodded, "Enough enough,"

"If this is the case, I wonder if we can do this. While acquiring Hilton, we also express our willingness to acquire some properties of EOP in Blackstone?"

"We know that Blackstone's remaining EOP properties also took up more than tens of billions of dollars in their funds, and now, obviously no one is willing to buy properties."

Feng Yiping's eyes lit up, this is an idea that should make Blackstone tempted, thereby reducing the difficulty of the acquisition.

The question is, if you start with those properties now, will you lose money in the future?

And that's not a problem. After next year, as the economy warms up, the office buildings held by EOP will naturally appreciate.

"Yes," Feng Yiping patted him on the shoulder, "haha, let's do it like this!"