Simply put, California's finance minister invested government funds in high-risk bond transactions in order to make money. At first, he made money, attracted investment from other departments except finance, and even borrowed money, about $78 billion, and became a fund! The domestic government relies on taxes, state-owned enterprises and grants, while foreign countries are miserable, self-financing and self-management. This is the disaster caused by democracy.

Seven or eight billion dollars, you can't make much money by speculating in bonds step by step. It is said that the person in charge of the fund has made several leverage tools. You can understand that the principal multiple of futures has expanded to 20 billion US dollars, and the income and risk have increased more than three times ~

As a result, the Federal Reserve suddenly raised interest rates, bond prices plummeted, and the 20 billion plate lost nearly 2 billion. In fact, it is only 10%, but the principal is 78 billion. As a result, the California government declared bankruptcy ~

As for risk management, there is nothing to learn. It's just that stop loss management is particularly important when making leveraged investments, or hedging should be used when buying high-risk bonds! In fact, at that time, as early as 1994, financial knowledge and information were relatively lacking, and the Fed wanted to raise interest rates. The $78 billion fund manager actually didn't know. This is really a lack of communication or market information. If it is in China, it is estimated that the bosses of big funds knew a month ago that the central bank would raise interest rates. When will they lose money?