Chapter 280

[280] The Bhuta War, Wall Street 1 In fact, the bank's work is very simple. It is all about paying a fee between the depositor and the borrower, which is called the marginal margin (the difference between the loan interest rate and the deposit interest rate).

Because of the merits of simple work, stable salary, and retirement guarantee without error of the manual, the former banker thought like a civil servant. Instead, I could not get out of my mind.

But there are people who can not hide their flashing jokes in any field.

Geniuses were hidden in these simple banknotes, and their genius focused on how to make huge amounts of money at once.

In the early 1980s, when South Korea was unable to escape from the ecology of a backward country, where a coup d'état took place in a gymnasium, three geniuses in the United States came up with unexpected profits in capitalism.

Larry Pink, founder of asset management firm Black Rock, and David Maxwell, CEO of the US Federal Mortgage Corporation, are looking at MBS (Mortgage Backed Security), a mortgage backed security Made … No, I created it.

Until now, mortgage loans were a simple task of borrowing money from home and borrowing principal and interest for 10 years and 20 years. However, it is stable in the banking position, but it is only a matter of lending large amount of money and paying out for a long time. Besides, it was also a task that my bosses tied up.

These three geniuses looked into mortgage loans with the eye of the commodity rather than the sight of the bank.

Mortgage lending is stable and profitable for a long time, albeit with little money.

This was found to be consistent with the stable investment products desired by the retired elderly, financial income earners, and those most reluctant to lose principal, and made mortgage loans a commodity called MBS.

In fact, the reason they came to this idea was the interest rate.

In 1979, as the Federal Reserve raised interest rates, the banking sector suffered from "money" hardening, and the mortgage market began to shake.

There is no one to buy a house in a high interest rate loan.

But politicians always stand on the side of the rich people and prevent them from damaging them by law.

On September 30, 1981, the US Congress called a tactful bill for the banking community it loved.

When the financial institutions arrange housing loans, they defer taxes and moreover, a bill to compensate all the losses incurred in the process.

If you sold out the loan, it became a system where the money was rolled, and the so-called securitization of the bond was opened.

Now the bank has lent a bunch of money to the house, got the commission, and then began to hand it over to the others.

There was no worry of the return of the principal and the loan was not tied for a long time.

The bank has put up a home mortgage loan and has devoted itself to the sales of the company.

Salomon Brothers, an investment bank, split the bond by risk, repackaged it and sold a huge transit fee.

Even if you mix three or four risky lenders in one safe loan, you will be enchanted by receiving a credit rating AAA. In 1983, you earned more than $ 200 million in net profit in one year.

Now, financial people do not spend the weekend with golf. I enjoyed a party on the luxury yacht and I flew to Venezia to fly a private plane to eat a delicious pizza.

The time has come for their party to end, and I'm about to pay for the party at the end of the party.

Of course, party costs are not paid by bankers. The American people will pay for it.

New York Miracle CEO Rachel Arief has been in a long time, and it has been a while and soon turned into a serious face.

"So that means you want to invest in your choices?"

"Yeah. My judgment can not always be right. We will keep investors who believe that MBS is stable, except for those investors who think that risk is big. "

"People who subtract investment?"

"He also wants them to choose. There are stable Treasuries and Hollywood funds. "

"Are you betting on the collapse of mortgage securities?"

"Yeah. If there is an investor who wants to bet on me, that's also their choice. "

"I do not think any investors will follow you."

"What about Rachel? Where are you going to bet? "

Rachel Arief frowned on the forehead.

"I know MBS is a high risk. But I do not think there will be a collapse. I'll make a soft landing. "

"Is the collapse of the US financial collapse?"

Really? The federal government will not let anything go down. The fall of Wall Street will sink not only America but the world economy. "

At this moment, the idea that the American economy collapses is a horrible opinion that it is no different than saying that the United States changes from capitalism to socialist country at once.

"So Rachel is Sustain?"

"No, weighting. Once everything is removed and kept. The next investment is a little further. "

"Then I'll email the customers. I have to make sure that the risk classification is done. "

"How much risk do you think your investment is?"

Though it is absurd to go all the way to the downfall of the US economy, I am sincerely curious because it was me who had never made a mistake.

I did not write the word sure, sure.

"As always, it is half. Is not that true? "

"All at 50%? Your ex-property? "

"I am not a property, but a property in the United States. And I'm still young. I have time and money to start again. "

Rachel still sighs.

"Just moving your money will make Wall Street nervous. I would have liked to have moved as much money as I did in Wall Street history. "

"Half the time."

Yes. it is.

"I will spend half of my assets on Wall Street."

Rachel smiled at her face.

"Is it 50% chance that you only get half? Is not that right? "

"What do you mean? You said a little before? Wall Street will be nervous? So I'm only half asleep so I do not get nervous. The other half should go to London. I do not think the world's finance is all about Wall Street, right? "

"The City?"

The City is a short name for the City of London. It is the smallest administrative district in London, the center of London's history and the heart of the financial district. It is also a self-governing law area enjoying independent autonomy.

It is home to more than 5,000 financial institutions including the Bank of England, JP Morgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup and HSBC. The width of the city is exactly the same as that of Yoido, but the size of the moving money is different.

"Yeah. Half of them will be able to digest. Everyone would like to say that they have come out of the house. "

Rachel's eyes shook.

If Wall Street collapses, the trigger knows I might be pulling.

Because they are dropping billions of bombs at once.

The first thing we had to do was to collect the money we had on the mortgage securities.

If you take it out at once, Wall Street is sulky. I changed the commodities very little by little and sold home mortgage securities carefully so as not to be different from usual transactions.

Since it is a popular product, there was no major problem in digesting the quantity sold.

"MBS has been disposed of. What are you going to do with this money now? "

"It's a bet. Mortgage bonds are all turned into a paper stoppage! "

"When do you know the result of that bet?"

Rachel still had an unbelieving look.

"Next year."

It is an expression that I do not believe is coming too soon. If I said 10 years, I might have nodded my head. In 10 years, even if bad debt starts to take off, it will take time to fix it, but next year it will be impossible.

Impossible is nothing more than a sparse probability.

"Since 2005, we have begun to pour water in earnest. The fixed interest rate is 2% for two years, but variable interest rate is applied from this year. We have to pay more than 10% of the interest, but the American people do not have it. "

"They are stable enough to have a house. It will be dangerous, but can not it collapse at once? "

"Who is stable? Sub-prime, literally not prime, below grade, candidate level. The problem is that people who do not have enough space have around three or four houses. Even if you only have three, you have 30% interest to pay. "

Rachel, who has been a stable investor, has not seen Wall Street's greedy nature.

Whether it is risky or not, risky or small, those who are in a hurry to get the money in front of you draw the number and approve the mortgage if the person appears at the counter.

"All right, come on. So how do you bet? "

"Credit default swaps (CDS. Credit Default Swap). "

Credit default swaps are a type of insurance against default.

For example, Apple has 100 million won in bonds, and if Apple fails, 100 million won will fly in the air. To avoid such a risk, it is insurance. The insurance method is also simple.

If a bankruptcy occurs within 10 years, the insurer pays 200,000 won annually on condition that the company pays 100 million won in full amount. The reason for the cheap insurance is because Apple is a very strong company and there is no chance of default in 10 years.

Insurance is cheap because there is no danger.

If a company has a low creditworthiness and is not healthy, the premium will go up.

The funny thing here is that the greedy Wall Street guys have turned insurance into gambling.

If you do not have one 10 won bond, you can also buy insurance. Anyone can get 200,000 won a year and receive 100 million won if Apple fails in 10 years.

You can bet on Apple's stocks, even if you do not have one. If you win a bet, you earn 100 million.

Rachel shook her head.

"I have not issued a credit default swap for financial products yet. Howard, you want to buy something that does not even exist. "

When the conclusion fell, Rachel sighed.

"You can make it. People in the financial sector who believe that mortgage-backed securities are safe will be welcomed with a double glance if they pay insurance money. I do not think it's a problem because it is difficult to pay insurance premiums. "

"Who are those people in the financial sector who will listen to this ridiculous story?"

"Goldman Sachs, Deutsche Bank, Morgan Stanley, Barclays Capital, Merrill Lynch, Citigroup, Bank of America, Credit Suisse, JP Morgan, UBS. There are numerous. "

"Why are not Bear Stearns and Lehman Brothers? These are the top groups? "

Rachel seemed to be sarcastic when the name of the super – sized financial company that controlled Wall Street in my mouth came up.

"Oh, the two companies are going to be out of supply. I do not have money because I do not have a credit default swap contract. "

Rachel has just opened the door with the assertion that the super big finance is going to be ruined next year, not to mention an American saying.