Chapter 2250 Shorting the ABX Index
Solomon at this time had the same idea as countless high-ranking officials in the previous life. They all thought that the moment of Bells and other companies was the end of the subprime mortgage crisis. As long as they survived this time, they would probably pass this hurdle.
Little did they know that even in the previous life without Chen Mo's interference, the moment of Bells and other companies was just the beginning of the subprime mortgage crisis, not to mention that Chen Mo added so much to the subprime mortgage crisis in this life!
So Solomon followed the script written by Chen Mo and followed the plot of rescuing Bells and other companies and buying the bottom of the ABX index.
On the other side.
The sun sets and the stock market is about to close.
Chen Mo extinguished the cigarette in his hand and ordered calmly: "Close the position, stop shorting Bells and other companies!"
Han Li asked in surprise: "Boss, Bells and other companies' stock prices have just been cut in half, and panic has just begun to spread, why stop?"
Chen Mo smiled and said: "The Foundation and the official hegemony will definitely rescue the market, and the force will definitely be great. It is not appropriate to continue shorting.
Besides, our main battlefield will start tomorrow, and the main force can't continue to focus on the stocks of a mere investment bank. That's too petty."
Han Li's eyes lit up: "Then what should we do tomorrow?"
Chen Mo's mouth curled up slightly: "Short the ABX index!"
Han Li's body shook!
The ABX index, also known as the subprime mortgage bond price composite index or the subprime derivative bond composite index, is the "barometer" of the subprime mortgage market. Its index decreases as the risk of subprime securities assets increases.
Shorting this thing is similar to the routine of shorting futures.
From 2000 to January 2008, no financial institution in the world dared to short the ABX index!
After all, no one believes that housing prices will fall. Even if they do, financial institutions around the world believe that the hegemony can stabilize CDO and MBS and will never let the price of subprime bonds fall.
And just now, the first person in the world who dared to short the ABX index appeared! ! !
That was his boss Chen Mo! ! !
"He shorted the most difficult and largest financial instrument in the world. No wonder everyone calls him the "God of Shorting".
If he is not a god, he really doesn't have the courage and guts!"
Han Li said excitedly.
According to Chen Mo's instructions, Han Li closed the position.
All the money was deposited into the company account, ready for the toughest battle tomorrow.
In the evening, He Chaoling wore a cool and casual summer outfit, elegantly holding a tray with ice cubes, fruit plates and a bottle of wine that Chen Mo loved to drink.
"The third master just sent the information. Bells and others have asked for help from the hegemony Fed. I don't know if the foundation will help." He Chaoling said as she poured a glass of wine for Chen Mo, who was soaking in the constant temperature swimming pool in the living room, and added a few pieces of ice.
Chen Mo drank it all in one gulp, looking at the vast starry sky outside the French window:
"The foundation dare not not save it. No one cares if companies like Bell go bankrupt, but no one can bear the negative effects after its collapse."
"Tomorrow, whether it is the government or the foundation, they will definitely intervene in a high-profile and strong manner, and will definitely buy the bottom of the ABX index to stabilize market confidence."
He Chaoling: "The subprime mortgage crisis is too terrible, all financial assets are depreciating."
Chen Mo nodded: "Well, now we are entering the depression stage of financial deleveraging, that is, the self-reinforcing liquidity contraction stage, lenders stop lending, investors withdraw funds, and all financial assets All are depreciating. The best strategy at this time is to keep cash.
When the subprime mortgage crisis is coming to an end and high-quality assets have fallen to the bottom, people with a lot of cash can buy at the bottom, and that is the moment to truly change their fate.
I don’t know how many people can rely on this crisis to replace the previous rich and become the new rich in the world. "
After a moment of silence, He Chaoling asked with a little concern: "I feel that the housing prices in Hong Kong and the mainland have also risen a bit outrageously in recent years.
But we don’t have financial derivatives such as MBS, CDO, and CDS, so there will be no financial crisis, right? "
Chen Mo smiled.
He poured a glass of wine for He Chaoling and motioned her to sit in the swimming pool.
"You need to understand the essence of these financial derivatives. These things are actually equivalent to the iron chains that Cao Cao used to connect the warships in the Battle of Red Cliffs. They are not the core of the crisis, they are just channels that transmit and amplify the crisis."
"The core of the crisis is always debt.
This subprime mortgage crisis is caused by the residents and financial institutions of the hegemonic country, who are burdened with excessive debt.
The scammers on Wall Street have spread the debt risk to the whole world through financial products.
And now, it only manifests itself as the collapse of the financial industry, and the moment of real explosion has not yet arrived!"
Chen Mo said with a smile.
"Hasn't it arrived yet? I feel that this crisis is already very serious." He Chaoling said in horror.
The fifth largest investment bank is on the verge of bankruptcy, house prices have fallen by 30% in two months, countless people have stopped paying their loans, and countless properties have been taken away by banks...
Even so, the moment when the crisis really breaks out has not yet arrived?
Oh my God!
The moment when the subprime mortgage crisis breaks out in full...isn't it almost like the end of the world?
"Bells and others are the fifth-ranked investment banks. Let me ask you, who is the first-ranked investment bank?" Chen Mo asked.
"It's Lehman Brothers." He Chaoling responded, holding the wine in her hand, but her eyes were reluctant to leave Chen Mo for a moment.
Her eyes were almost thread-like.
When a man shows his wisdom, he is so charming.
"The moment of Bears and others has come, is the moment of Lehman Brothers far behind?
If Lehman Brothers can go bankrupt, what about other investment banks?
Investment banks can go bankrupt, what about commercial banks?
When banks can go bankrupt and depositors' deposits cannot be guaranteed, is there anything else that is trustworthy?"
"You have studied economics, so you should know the importance of "liquidity", right?
Let me give you an example. I went to a village and paid a deposit of 100 yuan at the hotel to go upstairs to see the guest rooms.
The hotel owner took my 100 yuan and went to the restaurant to pay the 100 yuan meal bill he owed.
The restaurant owner took the 100 yuan to the butcher shop to pay for the meat on credit.
The butcher shop owner took the 100 yuan to pay for the livestock from the farm.
The farm owner took the money and went to the hotel to pay for the credit for the beautiful woman.
At this time, I was Without a satisfactory room, he went downstairs, took the 100 yuan deposit from the hotel, and left.
In this story, the money did not increase by a dime, but all the accounts of all people in all circles were balanced, and everyone could continue to credit each other in the future to continue to maintain the development of this small economic circle.
And this is "liquidity"!
"
"Once the credit system collapses, people holding cash will no longer trust anyone, liquidity will disappear completely, companies will not be able to borrow money, purchase goods, or trade, and ordinary people's normal borrowing will stagnate, they will not be able to borrow money to buy houses, and they dare not manage their finances. Credit can support the economy or destroy the economy. "
"So, I can answer your question with certainty. Even if there is no subprime mortgage, no CDO, no CDS, as long as the credit system collapses, what is coming will still come. "
After Chen Mo finished speaking, he raised his head and drank the wine.
"Then...what if "locking liquidity and maintaining housing prices"? Can it solve or prevent the crisis from coming? "
He Chaoling asked.
Chen Mo smiled: "You have read too much about Paulson's group of experts recently, right? How can you still believe such words?"
"High-leverage assets, without "liquidity", basically only live or die in a moment.
A house without liquidity will be like a bloodthirsty tumor, sucking up cash flow.
The high returns of real estate companies are obtained by high leverage, high liquidity and high turnover. Without "liquidity", real estate companies will owe more and more debts, and finally leave a large number of unfinished buildings, all of which are bankrupt due to huge debts."
After listening to this, He Chaoling seemed to have been enlightened. She held the glass of wine and fell into a state of thinking for a long time. Even when Chen Mo went back to rest, she didn't notice it...