Chapter 2189 Let the enemy make weapons for me

During periods of economic prosperity, people will feel optimistic about future expectations, banks will be more willing to take risks, and lending will become easier.

In this matter, people always prefer to borrow money to spend money, but they hate saving money and repaying money. Moreover, people are used to judging the future based on past experience. They will be inertial and artificial income will continue to rise and housing prices will continue to skyrocket, so they will borrow a lot of money without hesitation. Invest in real estate.

This often leads to inflation.

Managers will also relax credit because they need more liquidity to maintain economic prosperity. Therefore, during the debt repayment cycle, when spending declines and the economy stalls, policymakers will usually release stimulus measures, causing the debt to break through the critical point of equilibrium, thus Towards the bubble.

The combination of these factors will definitely turn liabilities from benign to bubbles.

This is a rule, an inevitable result, and what Chen Mo calls the "Tao" that cannot be violated.

When a debt bubble reaches its peak, it will turn around and enter a downward self-reinforcing cycle.

In the down cycle, due to reduced consumption, falling income, and increased defaults, banks have doubts about the borrower's ability to repay the loan. Not only will they not continue to borrow money, but they will ask you to repay in advance, corporate cash flow will be in crisis, and defaults will further increase...

When economic growth slows down and people become pessimistic about the future, investments tend to be conservative and assets are sold, housing prices will plummet.

In the capital market, human psychology is dominated by two emotions: greed and fear.

The prosperous first half was controlled by greed;

The second half of the recession was dominated by panic.

When the debt cycle reaches the explosion stage, panic will completely dominate people's psychology, and a debt crisis will occur.

Therefore, the real estate bubble in the dominant country will definitely burst, and the subprime mortgage crisis is inevitable.

Unless it is in a boom cycle, you can control the hand of the person who released the water.

But everyone knows that this is not in line with human nature and the needs of hegemonic politicians.

From 2004 to 2006, during the two years when housing prices in Hegemony skyrocketed, Hegemony's economy was also in a honeymoon period of low inflation and high growth. Under such favorable conditions, Hegemony officials adopted a laissez-faire attitude towards bubbles.

In 2007, the hegemonic economy was experiencing a round of moderate inflation. Monetary policy was torn between controlling inflation and maintaining housing prices, but ultimately policymakers chose to prioritize controlling inflation.

This is because the politicians of the hegemonic country are very selfish. They are essentially the spokespersons of capital. Who is willing to take the responsibility of exacerbating inflation?

However, after experiencing rebirth, Chen Mo knew that in order to maintain the economy, the financial experts and senior officials of Hegemony were drinking poison to quench their thirst, and they were crazy about making up all kinds of lies to trick the people of Hegemony into continuing to buy houses and related bonds, while they themselves were going crazy. Sell, go ashore.

In the real estate industry, once there is no liquidity, life and death are basically instantaneous. A house without liquidity is like a blood-sucking tumor, sucking up cash flow.

Chen Mo himself is engaged in real estate. He knows that the high returns of real estate companies are achieved through high leverage, high liquidity, and high cycle operations. Without liquidity, how can the dominant real estate companies operate in high cycles?

Therefore, Chen Mo is confident that he can amplify the thunder of the subprime mortgage crisis before the elites of the hegemonic country, including the foundation, come ashore, and then detonate it directly, which can directly blow up the entire real estate of the hegemonic country! ! !

Once the industry accounting for 173% of GDP is completely disrupted, the entire industrial chain of Naha country will be involved, and no one will be spared!

Jiang Pengyue was silent for a long time, then spoke again: "It's not that I don't believe you, it's just that the biggest reason why a hegemonic country is strong is not its combat power, but because it controls the international currency!"

"In fact, the international currency status of the hegemonic currency cannot be shaken. It can be said that the hegemonic country has kidnapped the whole world with its hegemonic currency and made the world pay for its economy."

"As long as it suffers any losses, it only needs to print money like crazy and let the hegemonic currency depreciate slightly to make up for the losses, transfer the risk to the whole world, and let the whole world pay for its losses."

"Under such circumstances, it will be difficult for the hegemony to be destroyed even if it wants to!"

Chen Mo nodded: "That's the truth, but if the risk reaches a point where the whole world can't bear it, who would dare to pay for the hegemon's losses?

Countries around the world will take the initiative to decouple from the hegemonic currency to avoid financial risks.

At this time, our Daxia Coin has the opportunity to replace it! "

Jiang Pengyue licked her lips and still shook her head: "This is the theory. But there are still many flaws and problems."

“First, if you want to short the behemoth Hegemonic Real Estate, it is equivalent to going against the foundation, Hegemony and all the top powerful and wealthy people in the world.

The short-selling funds you need are so huge that it is unimaginable!

If you use all your own wealth, I'm afraid it's just a drop in the bucket. Where do you plan to raise such a huge amount of short-selling funds? "

"Second, let's put aside all the talk of what is and what is not. Even if you want to short Baguo real estate, there are no financial products on the market to short Baguo real estate!

Your short selling will be carried out against certain real estate companies or banks that hold real estate shares. The best result is that a certain real estate company or a certain bank will be destroyed.

I'm afraid this won't have much impact on the entire Baguo real estate, right?

How do you deal with this? "

Chen Mofeng said calmly: "I can raise funds for short selling with the members of the Hongmeng Club."

"As for the financial products you mentioned... I can ask the central bank of the overlord to make a financial instrument specifically for me.

! A financial instrument used to short-sell Baguo real estate, and then I bought it. "

Jiang Pengyue: "???"

She couldn't believe her ears! ! !

Let the central bank of the overlord give you a financial product specifically designed to short the real estate of the overlord?

are you crazy?

Is there any country that dares to launch financial products that shake the very foundation of its own country?

"Just wait and see the good show!"

Chen Mo started his "coin throwing" action that day.

He flew directly to the central bank of the overlord country, found the manager and explained his purpose.

"I would like to ask our bank to customize a credit default swap product for me - CDS..."

Soon, Chen Mo explained the concept of CDS clearly to the stunned eyes of bank executives.

Before talking about CDS, we must first understand another term - MBS.

In order to quickly withdraw funds and earn interest, banks in overlord countries will package multiple mortgage IOUs into a bond (or you can understand it as a financial product) and sell them to investors, and this bond is MBS.

Generally speaking, those who buy this kind of bonds are the top investment banks in the hegemony, such as Gaosheng and Mogen.

The bank lends money to the lender, gets the lender's IOU, packages it into MBS, and sells it to the investment bank. The investment bank gives the bank cash to ensure that the bank can continue to lend money.

This business became a kind of funding cycle.

for example.

Chen Mo wanted to buy a house and found a bank for a loan of 1 million with an interest rate of 5%.

The bank packaged Chen Mo's loan into a bond and sold it to financial institution A. Financial institution A needs to help Chen Mo pay off all the principal and interest at once (of course the interest will not be 5%, because the financial institution needs Make money from the interest difference.)

After that, Chen Mo's monthly principal and interest repayments were actually not to the bank, but to financial institution A that purchased his loan IOU.

To complete this cycle, it is naturally impossible to rely on banks alone.

Banks not only need to find a steady stream of MBS buyers, but also need to obtain a steady stream of lenders.

However, in a society, the number of people with the ability to repay loans is limited.

In other words, the number of people who qualify for a loan is limited.

Once these high-quality people have finished their loan consumption, how should this cycle continue?

It doesn't matter, the smart bankers of the overlord soon gave the shameless answer.

Since the default risk of the loan has been passed on to the buyer through the product design of MBS, does the lender still have to pay back the money and still have a thin relationship with the bank?

Therefore, in order to increase performance, Baguo Bank lowered the loan threshold and extended loans to credit

Low-income people with low ratings and limited repayment ability.

This is the fundamental origin of the subprime mortgage crisis in 2008.

As for the credit score, it is actually something similar to Alipay’s credit score.

In 2008 Hegemony, the scoring range was 300-850 points.

Generally speaking, a score of 700 or above is considered excellent, but the score of subprime lenders is often less than 500. What's more, it dares to lend to people with scores of more than 300.

By analogy, it is equivalent to registering an account on Alipay and you are eligible to get a mortgage of hundreds of thousands or millions.

No asset verification or spending power verification is required!

It's so outrageous!

Imagine this magical scene.

As long as a homeless person or a low-income household without any continuous income wants to buy a house, he can easily get a loan of millions of national dollars from the bank.

As for whether he can repay the loan later, the bank doesn't care at all.

Because the homeless man's mortgage and part of the interest have been paid off by the investment bank, the bank does not have any risk.

In this case, you are a bank, why don’t you risk your life and engage in subprime loans?

The CDS that Chen Mo wants the central bank of the overlord to customize for himself is actually an insurance.

If the mortgage does not default and the MBS is stable, Chen Mo will have to pay a high insurance premium to the bank.

If the mortgage default rate increases and MBS depreciates, the bank will have to pay Chen Mo a large amount of compensation.

As long as the central bank of a hegemonic country offers this insurance product, all banks and financial institutions across the country can sell it.

This means that Chen Mo has the most direct financial tool that can short-sell Baguo's real estate.

Instead of beating around the bush and thinking about starting from the stock market or other aspects.

To put it bluntly, Chen Mo wanted Baguo's official endorsement to produce a legal gambling product that could be used by all financial institutions related to the real estate industry.

It’s just that this product is betting on the rise and fall of Baguo’s real estate!

The leaders of the hegemonic central bank are very professional and generally don’t laugh unless they can’t help it!

In their eyes, Chen Mo was just a fool who took the initiative to send money to his door!

Is the country's real estate falling due to gambling?

No matter the government, Wall Street, foundations, or even the world's top dignitaries, they will never allow the hegemon's real estate to fall, and there are countless means to hold it back! ! !

The CDS that Chen Mo asked them to do is definitely a sure profit for them!

So, several leaders of the central bank of the overlord pretended to discuss it, and immediately shook hands with Chen Mo with a smile:

"Mr. Chen, congratulations, we have decided to launch CDS, a customized insurance product for you!"