Continuing the above...

The bank is bold, the insurance company sees profits, and the top and bottom follow the policy of turning a blind eye. With the joint efforts of both parties, the subprime mortgage growth has exploded.

I have also said many times before that there is no real fool in the capital world. The subprime mortgage volume has grown rapidly, and even insurance companies are a little scared. It has reached an uncontrollable situation. Now housing prices are not falling, or even rising steadily. But what if housing prices fall? This huge insurance policy is enough to be able to die of any insurance company.

What should I do if there is a risk? Of course, I have to pass on the risk, just like the bank transferred the risk to the insurance company, so the insurance company decided to find a next buyer for such subprime mortgage insurance. Well, that is, I will continue to find a buyer, so who is willing to take on this kind of deal?

Of course, it is venture capital companies. What they do is venture capital. As long as they make money and have a big profit prospect, they dare to invest even if the risk is high. Anyway, the venture capital companies don’t have much money in their hands. Sometimes when the risk is small, they are unwilling to invest because high risks are accompanied by high returns.

However, these venture capital companies usually invest in startups, and their investment philosophy is very clear. Even if they only live one of them in the end, such as Masayoshi Sun invests in Ah Li, he can survive his accumulated investment for half of his life.

But more than ten years ago, the Internet bubble burst. Since then, entrepreneurs seem to have not been born yet, and there are very few venture capital companies that can't wait, right? So they aimlessly look for new investment projects, and as long as they can make money, everything is easy to say.

It just so happened that the people of these insurance companies found a venture capital company that could not stand loneliness and had money but had nowhere to spend. The two sides hit it off. The insurance company packaged these subprime insurances and sold them directly to venture capital companies. The most famous of these buyers is Lehman. If you have a conspiracy theory, look at who is standing behind Lehman, then look at who is standing behind American insurance companies, and finally look at who is standing behind the bank, and you can probably see it at a glance.

Of course, we still have to return to the perspective of the ordinary market. The reason why venture capital companies are willing to buy these subprime mortgage insurance is because they judge that housing prices will not fall for the time being. In the future, the premiums paid by banks to insurance companies will be paid directly to themselves. Businesses that are free to make money, and venture capital companies that are addicted to crazy profits turn a blind eye to risks.

No, no, venture capital companies are very confident in themselves. They think that their analysts will analyze in advance when housing prices will fall, and then cash out and leave the market directly.

However, Lehman, who had made quick money for a while, also encountered the same problem with the insurance company at the time. The money came too quickly and they were uneasy, but they were definitely unwilling to change hands again.

More importantly, they felt that these subprime mortgage contracts had greater value and it was a waste to put them in their hands for nothing. So Lehman packaged these subprime mortgage insurances as bonds to Americans, which was the so-called financial products they launched, which passed on the risks and made two money at the same time. Lehman's people have begun to despise the world, but they are just a piece on the chessboard.

As for whom are those financial products sold to? Of course, the middle class in the United States who have spare money but are completely unsure of what this is. These middle class who work hard every day and earn high wages are in the mood to study whether financial products are magical things?

They only know that buying a thing of 10,000 US dollars can earn hundreds of dollars after one year of expiration, which is many times higher than the interest rate of low-interest deposits in banks. In addition, they were born in a capitalist society and were deeply influenced by the concept of baptism of "you don't manage your finances and ignore you". No one thinks that the money is too much, so they naturally buy it without much trouble.

In fact, if everything develops normally, as long as housing prices rise steadily, this is a perfect capital transaction, but except for a few people, who can know that the housing prices in the United States suddenly stopped rising in the summer of 2007.

Why doesn’t it rise? Because all the hot money in the US market has flowed to the opposite shore of the Pacific and Atlantic Oceans!

In 2005, the country of Z relaxed exchange rate controls, and global capital tycoons decided to rush into China, push up China of Z, and then fled at a high level, allowing the people of Z to take over themselves, and by the way, they could create a financial crisis for the rising lion. The plan was quite good and they also took action smoothly.

Since 2006, China's foreign exchange reserves have surpassed the small RB, and then they embarked on the highway and ran all the way.

Of course, the main foreign exchange reserves of Country Z are US dollars. If foreign capital wants to enter Country Z, Congress first exchanges the incoming US dollars for rmb, and then leaves the US dollar as foreign exchange reserves. The increase in foreign exchange reserves represents the increase in foreign capital coming in.

If foreign exchange reserves grow slowly, it means that everything is normal and it is formed by the trade surplus.

If the US dollar earned by country Z through exports and selling goods will never increase suddenly, but if the foreign exchange reserves suddenly increase in a short period of time, it means that these US dollars are not earned back, but are rushed in by pure international capital.

The rapid growth of foreign exchange reserves in Country Z indicates that the global hot money is flowing to Z, and the stock market is soaring, investors also make money, and their own stock markets are also rising, and more and more capital follows in, thus circulating, and the money in the domestic market in the United States is becoming less and less, resulting in less and less money that American banks can use to lend. So what should I do? It’s very simple, if I don’t have money, I won’t lend.

All of this is a chain reaction. After ordinary people know that banks restrict loans, the number of people buying houses will naturally decrease, because most people cannot afford to buy a house in full, and no one will buy a house, so housing prices will naturally stop rising.

At this time, the consequences of the crazy lending of banks in the past slowly emerged. Those who had no ability to repay the loans were gradually unable to support the high repayment pressure. They simply chose to pay for their debts, or simply let the bank take away the houses, and a large number of houses poured into the auction market, with oversupply and housing prices began to plummet, and the money they barely sold was far from enough to recover the loans they had released.

Of course, the bank would not watch it lose money and go bankrupt. The backhand that he left at the beginning played a role. The bank found an insurance company to ask for compensation, and the insurance company found a venture capital company, such as Lehman. The insurance premium was only one dollar worth 10,000 US dollars, but now he has to pay 10,000 US dollars. Lehman Brothers cannot afford to pay and went bankrupt in a blast.

The venture capital company led by Lehman went bankrupt and the insurance company could not afford to pay. Then it went bankrupt and the insurance company went bankrupt. The bank could only break its teeth and swallow it. The reserves were only a little, how much loss could it be made up? So the bank also went bankrupt.

As a result, a bigger chain reaction occurred. Due to the large-scale bankruptcy of investment companies, banks and insurance companies such as Lehman, a large number of unemployed people began to appear in the United States. It should be noted that at least one-third or even half of the employed people in the United States are engaged in financial-related industries.

Of course, if it is just a group of unemployed people, it is nothing. At worst, it will just add a few points to the homeless population. In the future, the United States will also open more welfare relief points, which is a trivial matter.

The key is that those who bought financial products of venture capital companies such as Lehman, the middle-class people who bought Lehman financial products were crazy and wanted to make money, but the venture capital company they invested in went bankrupt and their own money was wasted.

You should know that Americans have almost no habit of savings. Most people will overdraw their credit cards as much as they earn. The real purchasing power depends on the middle class who can spend spare money to buy financial products.

But who would have thought that this card would be so big that it would directly make the backbone of the United States miserable. So the subprime mortgage crisis broke out completely in the United States. The main American consumer groups like the middle class directly became the proletariat. In addition, ordinary people who were not rich had no money, everyone had no money to consume, and the products of physical companies were unsold and could not be sold. Capitalists also fled, and would rather transfer the money than pay employees. So they wanted large employees like General Motors and Walmart to start laying off employees and lowering their salaries, and the basic foundation of the physical industry was completely shattered.

Then? It's gone. The US dollar is no longer valuable. The real American rulers are scared and feel that they have played with it. If they don't save it, they may not be able to live anymore. You must know that a large part of their power comes from the US dollar. If the US dollar is no longer valuable, their power will shrink. This is a very simple truth. Can the richest man in Somalia and the richest man in the United States have the same status?

So, these behind-the-scenes players began to put pressure on the US zf, quickly took out the Federal Reserve to save the market, and printed money for me, and passed the debts to other countries. In short, it was a crazy operation, barely stabilizing the dominance of the US dollar. During this period, you will naturally encounter dissatisfaction resistance, such as a country in the Middle East, why should we pay for your mistakes?

The players behind the scenes laughed. They were worried that there was no one to kill the chicken to warn the monkey. What should I do if one popped up so quickly? Fight. The best way to transfer domestic conflicts is to fight and get huge oil reserves by the way. This is much more cost-effective to buy ** to cheat the poor in China.
Chapter completed!