America's Road to Fame

Chapter 102 The Bond Market Is Still Booming
When William Chen returned to New York, Meta Investment Company had moved from Building 666 to the 35th floor of the Trump Headquarters Building.

At this time, Meta Investment Company monopolizes an entire floor, and has the appearance of a big company.

When the elevator opened from the 35th floor, the head-on was the logo and logo of Meta Investment Company.

"Hello, Mr. William."

Annie is still the front desk of the company. After she saw William Chen coming to the company, she greeted him warmly.

"Annie, you are still so beautiful."

After William Chen briefly chatted with her, he arrived at his new office here under the guidance of Erica.

"It seems that I need to find another assistant?" Erica said to Chen William with some unkindness.

Because up to now, Li Ying has not come back, so she asked this question.

At present, Li Ying and his men are following up Meta Investment Company's investment in Huayi Company. William Chen also transferred the 3 million US dollars that he will borrow from Future Bank into Meta Investment's account again in the form of a loan. The 1 million yuan will be transferred to Huayi Company's account soon.

Moreover, she has to go through the follow-up procedures of the courtyard house for William Chen and connect with the decoration design company, so she probably won't be able to return to New York in the short term.

Through her work in Huaguo this time, Chen Weilian is quite satisfied with Li Ying's ability, so she intends to keep her in Huaguo for a long time, and set up an office there to be responsible for the future business of Meta Investment Company in Huaguo.

Therefore, after talking about this with Erica, William Chen also suggested that she find two more assistants.Moreover, Chen Weilian still recognized Erica's vision now, just like the Li Ying she found before, who is very capable, so finding two more assistants can also become a talent reserve for future preparations.

From Erica, William Chen also learned about the current situation of Building 666.At present, all the tenants in the building have been cleaned up, and Garrett has begun the renovation project of the building with great ambition.

William Chen didn't know the other party's specific thoughts, nor did he know whether he was aware of the current real estate market situation.

However, William Chen believes that with Kushnar's years of experience in real estate, he should be more or less aware of the abnormal atmosphere.

But there is no way to turn back, the agreement has been signed, the financing has been completed with the bank, and the initial cost of the renovation has been spent a lot, so no matter what, we must continue, hoping to complete the renovation.

Thinking of this, William Chen approached John Paulson to inquire about the recent situation of the real estate market.

"I was just about to tell you, Boss, real estate prices have stopped rising now. According to my research, there have been a lot of mortgage foreclosures in some places."

"What about bonds?" William Chen asked curiously.

"Just a few days ago, Goldman Sachs stopped its short-selling service for CDO bonds. Until today, many banks have followed suit. Morgan Stanley and other banks have also suspended this service one after another. The reason is based on the market. Uncontrollable risk."

"Goldman Sachs stopped their short-selling service, will it affect us?"

"They just stopped short-selling securities lending services, the previous ones are not affected, and all the funds in our No. 1 fund have already completed building positions, which has no impact on us. All we need to worry about is the final redemption question."

In the Huaguo securities market, the supervision of bonds is stricter than that of stocks.The United States is just the opposite, because there are more individual investors in the stock market, and if there are large fluctuations, it will cause greater political influence and cause public dissatisfaction, so the supervision is very strict; while the securities market is just the opposite, participating in this market Most of them are institutional investors, and the threshold is still relatively high, so the supervision is relatively lax, and even in many cases, the confusion among them is surprising.

Take Goldman Sachs as an example. What they do is similar to the stock exchanges that issue stocks. In recent years, they have issued two CDO bonds including Abacus Securities and GSAMP (Goldman Sachs Optional Mortgage Products) Trust 2006-S3, which were sold to Those investors who actively purchase such securities.

Because the price of this type of bond continues to rise, and Goldman Sachs has packaged it as a low-risk, high-yield product, it is extremely popular in the market.

In order to obtain greater profits, under the trend of greed, investors often use extremely high leverage to buy these CDO products. Therefore, under a conservative estimate, the scale of these bonds sold by Goldman Sachs alone exceeds 500 billion US dollars .

This is the size of the CDO bonds of Goldman Sachs alone. The five major investment banks on Wall Street, plus the rest of the banks, and even investment institutions in Europe, Asia and other places, have entered this market because of greed, resulting in a very large overall size of CDO bonds. fear.

At the same time, in order to obtain greater profits, they also provide short-selling services for CDO bonds, that is, securities lending services.The principle is not complicated——

If investors are not optimistic about the future price of this type of bond, they can use margin to borrow certain CDO bonds, buy them at high prices, buy them at low prices, and then return the bonds.

So in fact, the opponents involved in shorting CDO bonds are not banks such as Goldman Sachs, who will not put themselves in this danger, but investors who buy CDO bonds.Of course, there are also some banks that see the profits of CDO bonds and use their own funds to buy these products.

Now Goldman Sachs is suspending this type of securities lending service, and no longer lends out CDO bonds. John Paulson speculates that the issuers of these subprime mortgage bonds should have smelled the danger, so they will not Then lend out the CDO bonds to let others sell short. You must know that if the CDO bonds really fall in the end, not only the investment institutions that bought the CDO bonds they lent at high prices will suffer losses, but also Goldman Sachs themselves. A pile of repaid bonds in hand.

The role of Chen William in choosing John Paulson to lead these investments is reflected. Among the many CDO bonds—conservatively estimated, there are tens of thousands of CDO bonds on the market—John Paulson can Based on his years of research on this market, he helped William Chen choose the varieties with the greatest potential for profit, and allocated investment funds to diversify the opponents, so that the investment can obtain the greatest possibility of profit redemption.

"The current market is very crazy. People have been disclosing endless mortgage foreclosures. It is obvious that the CDO bonds claimed that the foreclosure rate was less than 5% at that time. It is absolutely false, but the bond market seems to be unable to see the negative news. Same, still prosperous, and institutions are constantly selling CDS bonds..."

John Paulson said with disbelief: "Only a few institutions are aware of the risks. I received a call from Goldman Sachs, asking if I could repurchase some of the CDS securities they sold to me before, and some cautious institutions Institutions have begun to buy CDS securities to hedge risks. But too many banks are still crazy about the high expected returns of CDO securities. In their words, the temporary decline in house prices is nothing but Like scratching an itch."

"Isn't that great? Mr. Paulson, I still have 2 million dollars here. I hope you can seize this rare window-those top organizations want to escape, and they have to show some signs of safety , and even began to deceive other institutions and investors who knew nothing about this market. This window is rare, use the money and continue to increase CDS bonds.”

……

Walking on Fifth Avenue in New York, the city was still bustling at this time, William Chen looked at the passing pedestrians, the elites in a hurry, and the ladies in high-end fashion.

I don't know what kind of changes will happen to their fate when the subprime mortgage crisis comes. Will they become unemployed, become impoverished after bankruptcy, or start to live on a budget because of the sharp drop in income?

Having just discussed the consequences of the subprime mortgage crisis with John Paulson, William Chen inevitably had these thoughts in his mind.One thing that is certain is that the sooner any crisis breaks out, the less destructive it will be.

The subprime mortgage crisis has been postponed for another two years, like a boulder that was about to fall, but has been pushed to a higher mountain.Then when it rolls down, it must be more powerful and more destructive.

William Chen walked near Building 666, found a coffee shop, and took a seat by the window.

Through the window, you can just see the building not far away.Garrett moved very quickly. At this time, the surroundings of No. 666 building were surrounded, and the construction of the building renovation had already started in full swing.

"Did you just come back today? William."

When William Chen was immersed in his own thoughts, at some point, Uncle Tom had already sat in front of him.

"Yes, just arrived in New York this morning, Uncle Tom, how are you doing?"

Tom gestured towards Building 666, and said, "As you can see, the Kushnar Group is fully promoting the renovation of the building."

"It wasn't like this a few days ago. Garrett proposed to us to postpone the renovation and revise the agreement signed at that time, but we rejected it according to your instructions. And we invited Deloitte to monitor the 666 The current funds of the special account for the renovation of No. [-] Building, so they can only speed up the progress."

(End of this chapter)