Happy Tycoon

　　 There is a good term in Huaxia, which is called "clothing, food, housing and transportation".

　　 In just four short words, it fully explains the four most basic needs in ordinary people's daily life.

　　 In fact, this word is not only applicable to China, but it is still common in the whole world.

　　 Don’t look at foreigners with yellow hair, white skin and blue eyes, but they still need "food, clothing, shelter, and transportation" in their daily lives!

For a natural person, clothing, food and transportation are all good to say, but this "living" alone is definitely a relatively large burden, especially for a family, if there is no fixed place to live , Can that house still be called home?

　　 Therefore, since ancient times, not only Chinese people, but also foreigners have attached great importance to housing.

　　 This tradition continues to this day and still applies.

　　 Don’t think that this world is just like that. People like to buy houses and land, and the same is true for foreigners. Don’t you see those wealthy foreigners, each one is not a villa, a manor or even a castle? Even foreigners who have no money have to buy an apartment to live in.

　　 Therefore, in foreign countries, since the Industrial Revolution, especially after entering the 20th century, this real estate business has become a very important business. In the development process of any developed country in the world, real estate business has once become an important part of its economic composition, and no one can ignore it.

　　 Even in modern times, the real estate business in the world is still a very important part of the economic composition of various countries, and the government of any country cannot ignore the real estate business.

　　 Take the world’s largest country, the United States, the real estate business is also very important.

　　 The real estate business in the United States is very developed, and it also occupies an important position in the national economy. Of course, because the United States is the fourth largest country in the world, with a land area similar to that of China, but its population is several times smaller than that of China, and even the fraction of China’s population is not comparable. Therefore, the real estate economy is not in the United States’ economic composition. Not as important as the current China.

　　 But even so, once the real estate economy in the United States encounters a crisis, it will inevitably trigger turbulence on the basic level of the economy. As the world's largest economy, once the basic economic turbulence of the United States occurs, it will inevitably trigger economic crises of this kind, which will spread to the world.

　　In fact, since the 1960s, the real estate economy in the United States has experienced four "crises". Every time a real estate economy has a crisis, the entire United States and the world's economy will be turbulent.

　　According to US official data, from 1963 to 2011, in the 47 years from 1963 to 2011, the actual transaction house prices in the United States increased by nearly 14 times. In 1963, compared with the peak in 2007, it rose by 16.7 times. During these 47 years, the US housing prices have risen by an average of 5.9% per year. Generally speaking, US real estate prices have continued to fluctuate slightly, while the general trend has risen steadily.

　　 During these 47 years, the U.S. real estate economy has experienced four relatively large fluctuations. The first occurred in 1969.

In that year, because of the Vietnam War, the sharp increase in oil prices in Arab countries and the embargo of oil, the United States broke out the fifth economic crisis after World War II, which caused the mortgage interest rate to rise from 7% to 8-11%, and the real estate market Prices fell, and the "first real estate crisis" began.

　　 The real estate crisis lasted for about three years. In 1972, housing prices bottomed out and rebounded. They quickly returned to the level before the economic crisis and started to rise sharply in the first few years.

　　 The second real estate crisis in the United States broke out in 1981. In this year, because of the instability in the Middle East and the sharp increase in oil prices, the US economy was severely stagnated and the unemployment rate increased sharply.

　　In this case, the housing mortgage loan interest rate quickly rose to 18%, and the primary loan interest rate was as high as 22%. People are full of negative attitudes towards the market, believing that it is difficult for house prices to rise in the past ten years, so the real estate transaction volume has shrunk sharply.

　　 But in fact, the real estate crisis lasted only two years, and then the housing prices in the United States returned to an upward trajectory.

As for the third real estate crisis in the United States, it was in 1991, but compared to the previous two real estate crises that spread across the country, this crisis has not affected much, and only erupted in a limited number of states such as California. .

　　The third real estate crisis lasted for about two years, and then from 1993, the real estate economy in the United States entered a period of prosperity that lasted for fourteen years, until the arrival of the fourth real estate crisis.

　　 Compared with the previous three real estate crises, the real estate crisis that broke out in 2007 almost killed the United States, and not only caused severe damage to the American economy, but also triggered a worldwide economic crisis. And different from the economic crises caused by the previous three real estate crises, the global economic crisis triggered by the fourth real estate crisis is much more serious. It is not only the US economy that suffered heavy losses, but also the economies of many countries in Europe, Asia, and Oceania. The global financial crisis triggered by the real estate crisis has caused more negative consequences than the U.S. stock market crash in 1987, and has even been hailed as the most serious economic crisis after the U.S. Great Depression in the 1930s!

　　The root cause of this US real estate crisis is the greed of those investors!

　　 The stagflation crisis broke out in the United States in the late 1970s and early 1980s, which not only caused the second real estate crisis in the United States, but also affected the world’s finances.

　　 Under such an economic background, a set of thoughts focusing on reviving traditional liberal ideals and reducing government intervention in the economy and society as the main economic policy goal began to spread in the United States. This set of thoughts is called "neo-liberalism."

　　 Neoliberal economic policies are popular in the United States. Its core content is to reduce government intervention in financial and labor markets, crack down on labor unions, and implement economic policies that promote consumption and drive high growth through high consumption.

　　 Under this kind of economic policy, the US government began to encourage people to eat and consume frantically to promote rapid economic growth. At the same time, another important part of this economic policy is deregulation, including financial regulation.

　　So, since the Reagan administration came to power in the early 1980s, the United States has been enacting and amending laws to relax restrictions on the financial industry and promote financial liberalization and so-called financial innovation. For example, in 1982, the U.S. Congress passed the Gahn-Saint-Germain Depository Institutions Act, giving depository institutions a similar business scope to banks, but they are not controlled by the Federal Reserve. According to the law, savings institutions can purchase commercial paper and corporate bonds, issue commercial mortgages and consumer loans, and even purchase junk bonds.

Later, the U.S. government successively introduced more similar laws in order to eliminate the barriers between the banking industry and investment industries such as securities and insurance, thereby opening up convenience for the so-called financial innovation and financial speculation in the financial market. door.

　　 Against the background of the above-mentioned legal reforms, the speculative atmosphere on Wall Street in the United States has become increasingly strong. Especially since the 1990s, as the Fed’s interest rate has continued to fall, asset securitization and financial derivative product innovation have accelerated, coupled with the luxury consumer culture permeating the whole society and blind optimism about future prosperity, it is for ordinary people. Borrowing and pre-consumption offers the possibility.

　　 In this case, the US real estate economy has started to pick up again, and the real estate market has become more and more popular. Even the bursting of the Internet bubble at the beginning of the new century and the September 11 incident have not stopped the US real estate market from becoming popular.

　　 As the saying goes, capital is like a shark, as long as there is a little **** smell, then capital will chase it up in the first place.

　　 The boom in the US real estate market has naturally triggered the pursuit of capital.

　　 However, before the new century, the capital that lacked supervision was a bit more honest, then after the new century, especially after the 9/11 incident, these capital from Wall Street began to become unscrupulous.

　　 Everyone knows that loans are a very common thing in the United States, and early consumption and food consumption are commonplace in the consumption concept of the American people.

　　 And in the United States, with the exception of the super-rich, the ordinary middle class and the vast majority of ordinary people rarely pay the full amount when buying a house. They usually buy real estate through loans.

　　 But again, unemployment and reemployment in the United States are very common. These people whose income is not stable or even have no income at all, buy a house because the credit rating is not up to the standard, they are defined as sub-prime lenders, referred to as sub-prime lenders.

　　Subprime mortgage is a high-risk and high-yield industry, which refers to loans provided by some lending institutions to borrowers with poor creditworthiness and low income.

The difference between 　　 and standard mortgages in the traditional sense is that subprime mortgages do not require high credit records and repayment ability of the lender, and the loan interest rate is correspondingly much higher than that of ordinary mortgages. Those who are rejected by banks to provide high-quality mortgages due to poor credit history or weak repayment ability will apply for subprime mortgages to purchase homes.

　　 The U.S. subprime mortgage market usually uses a combination of fixed and variable interest rates for repayment, that is, home buyers repay the loan at a fixed interest rate in the first few years after buying a house, and then repay the loan at a floating interest rate.

　　 In the five years before 2006, due to the continued prosperity of the U.S. housing market and the low level of interest rates in the U.S. in previous years, the U.S. subprime mortgage market developed rapidly.

　　 Under such circumstances, many financial derivatives related to subprime loans have appeared one after another. Among them, the most famous financial derivatives are "guaranteed debt certificates", referred to as CDO, and "credit default exchange", referred to as CDS.

　　In the real estate lending market, in order to share risks and share profits, loan companies find investment banks, and investment banks bond them to bonds, resulting in a "guaranteed debt certificate"-CDO.

　　 In order to make huge profits, many investment banks use 20-30 times leverage. For example, a Zhangsan Investment Bank has its own assets of US$3 billion and uses 30 times leverage. That is, it uses US$3 billion assets as collateral to borrow US$90 billion of funds for investment. If the investment makes a profit of 5%, then Zhang The third investment bank earned a profit of US$4.5 billion, which is a huge profit of 150% relative to its own assets.

However, the risk of leveraged operation is high. According to normal operation methods, Zhang San Investment Bank should not carry out such risky operations, but it cannot stand up to such operations to obtain high profits, so some people have come up with a way to use leveraged investment as insurance. This kind of insurance is "Credit Default Exchange"-CDS.

　　 The specific process of CDS generation is as follows: Zhang San Investment Bank finds Li Si, and Li Si may be another investment bank or insurance company. Zhang San provides insurance for leveraged operations and pays Li 45 million U.S. dollars in insurance premiums each year, a total of 500 million U.S. dollars for ten consecutive years. If the CDO did not default, Zhang San would still earn US$4 billion in addition to the US$500 million in insurance premiums. If the CDO breached the contract, Li Si would pay for it anyway.

　　 This is credit default exchange!

　　 In fact, CDS is essentially a kind of insurance-Party A pays premiums, and if the underlying asset defaults, Party B compensates for the loss. But if it is named "insurance", it will be subject to strict supervision of insurance products, so the name "financial innovation" is "swap".

　　 The original intention of CDS was to share the risk. Originally, the default risk was only borne by the lender. Now through the financial products created, investors of all kinds can share the risk together while gaining income.

　　The motive of chasing profit quickly gave birth to the art of speculation. To meet the demand, Wall Street developed a series of financial derivatives such as CDX, CDXIG, etc., and the subject of insurance became a package of CDS and indices.

　　 As housing prices have been rising, risks have not evolved into losses, insurance premiums are getting lower and lower, and the scale is getting bigger and bigger...

　　 Everyone knows that the speculators on Wall Street are the most greedy guys in the world. With such a huge profit, how can these speculators stand it?

　　 Still take Zhang San and Li Si just now as a metaphor.

　　 For Zhang San, this is an investment that makes a profit without losing money. But Li Si is not a fool either. Through statistical analysis, less than 1% of defaults are in the prosperous market. Therefore, if I, Li Si, do 100 such insurances in a row, I can get a total of 50 billion U.S. dollars in insurance money. If one of them defaults, the maximum compensation amount is only 5 billion U.S. dollars, and my younger sister can still earn 45 billion U.S. dollars. Now!

　　 What a great deal this is! So most of the "Zhang San" and "Li Si" on Wall Street and the "Zhang San" and "Li Si" from various countries all over the world-these Zhang San and Li Si are all over many countries in Europe, America, Japan and Oceania! In the more than ten years of growth in US housing prices ~www.readwn.com~ enjoy an unprecedented wealth carnival.

However, if the real estate market in the United States has been so hot, whether it is CDS or any other CDX, CDXIG, they will be able to bring huge profits to these speculators, but things will be reversed. No matter how hot the market is, it will eventually decline or adjust. One day, once the market declines, this group of speculators will inevitably pay a huge price for their madness.

　　The real estate market in the United States is hot again, but the rise in housing prices is bound to be limited. Once housing prices have risen to the point where they can no longer rise, then these financial derivatives will no longer be taken up immediately.

　　 Especially the Federal Reserve raised interest rates 17 times in a row between 2004 and June 2006, raising the federal funds rate from 1% to 5.25%.

　　 The sharp rise in interest rates has increased the burden of mortgage repayment for home buyers. The real estate market in the United States, which has been hot for more than a decade, has finally reached its head...

　　 As it says in the lyrics of a song, "eat mine and spit it out, take mine and give it back to me".

　　 So, an economic collapse started with subprime mortgages as the fuse. Later generations called this economic collapse the "subprime mortgage crisis"!

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