America's Road to Fame

Chapter 143 The Season of Harvest

Chapter 143 The Season of Harvest

Time soon came to the end of November, when the subprime mortgage crisis intensified, and its influence far surpassed William Chen's previous life.

Because he remembered that in his previous life, the subprime mortgage crisis lasted for more than half a year before the five major investment banks on Wall Street finally bowed their heads and admitted losses, and then several banks fell into the brink of bankruptcy.

Now that the crisis has only erupted for less than two months, investment banks including Bear Stearns, Merrill Lynch, Citigroup, and Lehman Brothers have already suffered a wave of runs.

Currently, US Treasury Secretary Paulson and Federal Reserve Chairman Bernanke, the politicians who hold the financial power of the US, have begun to discuss how to save these institutions.

At this time, it also means that William Chen’s Meta Investment Company, Fund No. 1 and Fund No. 3 invested in subprime mortgage bonds can already start preparing for the end, because the first stage of the subprime mortgage crisis has come to an end.

Of course, this is only the first stage, and the subsequent impact may last longer.

In the company's office, John Paulson reported the current situation to William Chen:

"Now the real estate market has fallen into a collapse, and the wave of supply cutoffs has come unstoppably. This time, the wave of supply cutoffs is not the one that was maintained within the range of some areas before. Now more than 90% of the United States has passed the secondary level. The houses purchased with mortgage loans have been cut off, and those institutions that accept mortgages, in order to recover the losses, are frantically recovering the mortgaged properties and continue to push them to the market for resale. This has also caused house prices to plummet. It’s down more than 50% from its high.”

William Chen is not surprised by this situation. The New York Observer is also continuing to report on the current situation of the national housing market triggered by the subprime mortgage crisis. Countless people have been evicted from their houses. In this kind of metropolis, it can be clearly seen on the street that the number of homeless people has increased several times than usual.

The impact of the crisis is also spreading to other industries. The most obvious manifestation is the sharp increase in the unemployed population. According to data from survey agencies, the current unemployment rate in the United States has once again exceeded 10%, which means a long-term economic recession. , It is inevitable that it will come, and the biggest headache for the government now is how to save those banks and enterprises that are in deep crisis.

"Does this mean that our CDO short contracts and CDS bonds have ushered in harvest season?"

At present, William Chen is most concerned about this issue, because now is the time to start some acquisitions, but first of all, there must be enough funds, and those assets that he has already fancy are waiting for him to buy the bottom.

"Yes, the 3A-level CDO bond index is about to drop to single digits, while the 3B-level CDO bond index is already close to zero, and the vast majority of CDS bonds have already ushered in Redemption window, we've already started putting the finishing touches on those investments."

Speaking of this, John Paulson couldn't help showing a smile, because this investment against the subprime mortgage crisis, he will personally get 5% of the profit as a share, and it is currently conservatively estimated that only Fund No. 1 will make a profit, It will exceed 200 billion U.S. dollars, which means that with this fund alone, he can personally earn more than 10 billion U.S. dollars.

But now, it is only the first stage of the subprime mortgage crisis, and there will be more profits later.

"It seems that we can announce the current profit forecast to the investors of No. 3 Fund, and hope they will be satisfied."

"That's for sure. After all, such a high profit is probably rare under the current economic situation. Even if the radicals in the small funds involved in short selling can surpass us in terms of profit margins, they The amount of investment is too small, and very few exceed the initial size of 5000 million US dollars."

"Then let's do this, cash out the profits in the bond market as soon as possible, while these institutions are still solvent. It seems that I have to find someone from Goldman Sachs and talk to them about letting the fund add more investors. .”

At this time, it can be seen that the strategy of Meta Investment Company was forward-looking at the beginning. For the investment in the subprime mortgage bond market, they purposefully selected more than 10 powerful large institutions, and each institution ultimately needs The insured amount of CDS paid out is all below 20 billion US dollars, and the counterparties of CDO bonds are all their bond buyers. Except for a few self-operated funds participating in their counterparty institutions, most of them will not cause these institutions losses, so they don't need to worry too much about the final return of earnings.

Now, when the first phase of the subprime mortgage crisis is coming to an end, it is time for William Chen to take part of the profits to carry out his acquisitions.

Of course, you can say that if you invest these funds in continuing to short, there will be greater profits.But you have to know that everything needs to be grasped. There are many people who made money by shorting the subprime mortgage crisis. If you personally earn 200 billion or even 400 billion funds, as long as you have a certain background, it is not a problem .

But if you are too greedy, in the end, you actually got hundreds of billions of assets by shorting the American economy?Such an eye-catching thing will immediately make you stand on the opposite side of the whole society. After all, you can make money by short selling, which is your ability, but if you earn too much, do you really think that the American people have no hatred for the rich?

Besides, it is not very safe to continue to invest all of your wealth in the capital market.You have really gone too far. The official wants to punish you. Knowing your leverage, it is not impossible to release some news casually. It is not impossible for the short-term pull to blow up your position.

So if this is the case, why not take back part of the profits and invest them in acquisitions?And it is not impossible to short William Chen again. It is risky to invest with your own money, but you can use other people's money, just like he is going to increase the capital of John Paulson's private equity fund-Fund No. 3, this Wouldn't it be great for the fund to share 30% of the profits it makes with other people's money?

So on the same day, William Chen did not meet with Lloyd, the CEO of Goldman Sachs, and wanted to discuss future cooperation with him.

"Congratulations, William, my Mr. Billionaire, you can have so much wealth at your current age, you have created a new history."

William Chen's assets at this time would exceed tens of billions, which was already a very certain thing for Lloyd, so he congratulated William Chen as soon as the two met.

Looking at the young man in front of him, Lloyd couldn't help feeling a little envious, because he knew too well what kind of power he could have when his assets reached tens of billions.

Although Lloyd's current power is more dazzling than that of William Chen, the difference between the two is that Lloyd's power is based on his current position as CEO of Goldman Sachs, and the resources he can use at this time are far from Higher than Chen William's.

But once he leaves his current position, the power he has at this time will be greatly weakened.Therefore, his power is time-sensitive, unlike William Chen, as long as he has wealth, his power will always exist, and it will grow bigger and bigger as his wealth increases.

"Thank you for your compliment, Mr. Lloyd. But the same Goldman Sachs has gained a lot this time, hasn't it? I believe that after this incident, you will not only be able to consolidate your position in Goldman Sachs, but also get a lot of money To reward you for such a wise leadership, if I were on the board of Goldman Sachs, I would definitely make such a proposal."

Regarding his assets at this time, William Chen had absolutely no need to hide from a person of Lloyd's status, so he also complimented the other party in the same way.

Hearing William Chen's words, it can be seen that Lloyd is also in a very good mood, with a bright smile on his face:

"Through the last cooperation, William has won the friendship of Goldman Sachs, and now we are on the same front. I don't know if you came to me today for any other cooperation? Or the things you mentioned before are now Are you going to start?"

"Yes, you guessed it right, Mr. Lloyd. That's exactly what I'm here to talk about."

(End of this chapter)