Rebirth in 1985

Chapter 1092: The Beginning of the Collapse (Part 2)

The US government has announced a rescue plan, but is it effective? If it was effective, the financial crisis would not have broken out. Of course, some people who don't understand it still believe that the US government's rescue plan is effective.

As far as Lu Shaohua knows, on September 9, U.S. Treasury Secretary Paulson announced a bill plan to improve the economic difficulties caused by the subprime mortgage crisis.

Treasury Secretary Henry Paulson proposed a Troubled Asset Resolution Program (later incorporated into the Emergency Economic Stabilization Act of 2008) that would have allowed the U.S. government to purchase troubled liquid assets (also known as toxic assets) from financial institutions. The importance of this legislation to U.S. financial security is far from certain.

During a consultative meeting between the U.S. Secretary of the Treasury, the Chairman of the Federal Reserve System, and the Chairman of the Securities and Exchange Commission, the Speaker of the U.S. Congress and the President of the United States proposed a plan to further comprehensively address the problems caused by the non-performing assets of financial institutions.

On the eve of the weekend, the Treasury Secretary and President George Bush announced a rescue plan, which included the government allocating $700 billion to purchase illiquid real estate-backed securities, with the goal of increasing liquidity in the subprime mortgage market and reducing the losses that financial institutions that own these securities may face. The draft plan received a positive response from stock market investors, and the specific details of the funding plan are still to be implemented by the House of Representatives.

Of course, some people support this bailout bill, while others are opposed to it. In the United States, there are still some people who are opposed to it. However, in general, the financial crisis has already occurred, and no matter what kind of bill is passed, it is irreversible.

Especially when Lehman Brothers filed for bankruptcy, it was already doomed that no matter how hard the US government tried, or rather, its fake efforts, it could no longer control the situation, and the financial crisis had already occurred.

Lu Shaohua knew this very well, Li Yunqing knew this very well, and Liu Mingzhang and Li Zongen knew this even more. So when Lu Shaohua said that Lehman Brothers was going to go bankrupt, neither Li Yunqing, Liu Mingzhang, nor Li Zongen reacted much.

On the contrary, Liu Mingzhang and the other three smiled gently, as if they were not surprised by anything Lu Shaohua said.

The only exception was Lin Yi, but he did not react much. He just listened quietly and then looked thoughtful, as if he was considering whether Lehman Brothers would really go bankrupt.

But the topic has already been brought up, and it is impossible for Lu Shaohua to take Lin Yi into consideration, because what he is going to say next has nothing to do with Lin Yi, he is just a good listener.

"I think you should have seen the data I gave you. The dates are all marked there." At this point, Lu Shaohua paused again, and then continued. "It can be said that the entire month of September was when the financial storm broke out in full force. It was also the peak period of this financial storm, centered in the United States and sweeping across the world."

What Lu Shaohua said was absolutely well-founded, because Lu Shaohua's memories of his previous life told him that starting from September 9, the situation in the world had become extremely unstable, especially in the United Kingdom, the lackey of the United States. On September 14, the Ministry of Finance implemented an aid plan for Bradford & Bingley, a major British mortgage bank.

What is a rescue plan? It means that the government will provide funds to help the banks. What does it mean that the banks want the government to help them? It means that the banks can no longer bear it. Otherwise, the government would not intervene.

On the same day, Fortis, a large bank and asset company in the Benelux countries, had its assets partially nationalized, with the governments of Belgium, the Netherlands and Luxembourg investing a total of 112 billion euros (about 163 billion U.S. dollars) in the bank. Belgium bought 49% of the assets of Fortis's Belgian division, while the Netherlands did the same with Belgium for Fortis's Dutch division, and Luxembourg agreed to provide a loan for 49% of the convertible shares of Fortis's Luxembourg division.

On the same day, Wachovia, the fourth largest bank in the United States, will be acquired by Citigroup.

From all the information in his memories of his previous life, Lu Shaohua knew that the US government was truly powerless, and the governments of European countries were also powerless. They could only watch the financial crisis roll towards them, unable to resist.

Yes, the financial crisis is actually no different from a natural disaster. Its outbreak is beyond human control. It is precisely because of this understanding that Lu Shaohua dared to conclude that the financial crisis is unstoppable.

"In fact, if you ask me, it's a miracle that the financial crisis has been delayed until now." Liu Mingzhang did not forget to interject. "Looking at the subprime crisis until now, the situation must be unstable. It can be seen from the Dow Jones Industrial Average in New York. It has been up and down, which in itself shows a problem. There is something fishy. But it has been dragged on until now, for nearly a year, what else can it be but a miracle."

"I agree with Mingzhang. It's a miracle that it has been delayed until now." Li Zongen, who was always quiet, spoke at this time, and then he did not forget to throw a question to Lu Shaohua. "According to the data, on September 9, the US stock market will experience a huge fluctuation, but according to normal thinking, it is unlikely."

This is the question Li Zongen raised, and the source of the question is the data provided by Lu Shaohua. According to the data provided by Lu Shaohua, on September 9, the US stock market suffered a severe setback. The Dow Jones Industrial Average fell 29 points in a few minutes and ended down 300 points; the Nasdaq fell 777.68 points and fell below the 199.61-point mark; the S&P 2000 also fell 500%. Finally, the Dow Jones Industrial Average set a record for the largest drop in history that day.

The Dow Jones Industrial Average is definitely a representative index, but a 300-point drop in a few minutes, what does that mean? And how scary it is, Li Zongen couldn't believe it just by saying that. If it dropped 300 points in a morning or an hour, Li Zongen might be able to accept it.

After all, when the financial crisis hit, a drop of more than 300 points a day was normal, but a drop of points in a few minutes was a bit scary and hard to believe, but that was what was written on the data provided by Lu Shaohua.

Perhaps he felt that there was something wrong with the data, so Li Zongen asked the question. Of course, it was not that Li Zongen questioned Lu Shaohua, but he wanted an explanation.

As for Lu Shaohua, he was not a fool, so he naturally heard what Li Zongen wanted to know and agreed, so he smiled and said, "If the US government comes up with a plan that cannot be passed by the Senate, do you think it will hit the stock market?"

This was Lu Shaohua's rhetorical question, and also Lu Shaohua's response to the question raised by Li Zongen.

In fact, on September 9, the US bailout plan, the Emergency Economic Stabilization Act of 29 (HR 2008), grew to 3997 pages and was introduced in the House of Representatives and the Senate later that week. After a 110-minute open vote in the House of Representatives, the bill was not passed by 40 votes in favor and 205 against.

If a bill fails to pass during a sensitive period, the impact will be comparable to that of an ordinary bill. Moreover, the bill itself is aimed at the financial crisis, so the impact will be immeasurable.

"If it is an emergency bill targeting the financial crisis, it may have a huge impact and affect the stock market." Li Zongen said lightly.

"..." Lu Shaohua smiled and said, "If this situation continues, the U.S. Treasury Department will have to introduce some bills, otherwise it will be difficult to convince the public. More importantly, this year is the date of the U.S. presidential election. In order to win the election, the candidates are bound to take some measures. In addition, some people have to express their opinions in order to please the new officials."

The United States is like that, especially in election years, candidates will take advantage of any advantage they can find. Undoubtedly, this year is an election year in the United States, and it happens to coincide with the financial crisis. How could the financial crisis and the election not be linked together?

However, Lu Shaohua's words awakened Li Zongen. After a moment of silence, Li Zongen understood. He smiled and nodded, indicating that he understood.

Since Li Zongen had already expressed that he understood, Lu Shaohua didn't need to explain too much. He swept his eyes across the faces of Liu Mingzhang and Li Yunqing, giving them a questioning look, as if asking them if they had any questions.

Liu Mingzhang and Li Yunqing seemed to have no doubts and both shook their heads.

In fact, Liu Mingzhang and Li Yunqing also had questions, but their questions were the same as Li Zongen's, which were about the Dow Jones Industrial Average plummeting 300 points in a few minutes. Now that Li Zongen had asked and Lu Shaohua had answered, they got the answer and naturally had no more questions.

Everyone had no doubts, so the next things became much simpler. Lu Shaohua began to mobilize and encourage Liu Mingzhang and others. At the same time, Lu Shaohua also told Liu Mingzhang and others that they must work hard on their time, adjust their time, and rest when necessary to ensure that they can be fully alert during this period.

This financial crisis is definitely a protracted war. Add to that the issue of time difference. If Liu Mingzhang and his men fail to adjust well, they might collapse at any time. Each of them is a general, and Lu Shaohua does not want to see anyone collapse during the action.

Liu Mingzhang and the others seemed to understand Lu Shaohua's meaning and made promises one after another.

They all made their promises, and Lu Shaohua had nothing to say. He talked about a few more unimportant issues and then announced the end of the meeting. However, since it was not a formal meeting, Lu Shaohua just waved his hand to express his gratitude. Then he opened two bottles of red wine, sat together to taste them, and chatted about the topic of Bafeng and relaxed.

……