Subprime crisis is also called subprime crisis, which is also translated into subprime crisis. It refers to a storm caused by the bankruptcy of subprime mortgage institutions, the forced closure of investment funds and the violent shock of the stock market in the United States. It triggered an imminent liquidity crisis in major global financial markets. The "subprime mortgage crisis" in the United States began to appear gradually in the spring of 2006. In August 2007, it swept the major financial markets in the world, such as the United States, the European Union and Japan.
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2. The subprime mortgage crisis.
The direct cause of the US subprime mortgage market storm is the rising interest rate in the United States and the continuous cooling of the housing market. Subprime mortgage refers to loans provided by some lending institutions to borrowers with poor credit and low income.
The rise in interest rates has led to an increase in repayment pressure. Many users with bad credit feel that repayment pressure is high and there is the possibility of default, which has an impact on the recovery of bank loans.
3. Production principle
The direct cause of the US subprime mortgage market storm is the rising interest rate in the United States and the continuous cooling of the housing market. Subprime mortgage refers to loans provided by some lending institutions to borrowers with poor credit and low income.
The American subprime mortgage market usually adopts a combination of fixed interest rate and floating interest rate, that is, buyers repay their loans at a fixed interest rate in the first few years after buying a house, and then at a floating interest rate.
In the five years before 2006, due to the continuous prosperity of the US housing market and the low interest rates in previous years, the US subprime mortgage market developed rapidly.
With the cooling of American housing market, especially the increase of short-term interest rate, the repayment rate of subprime mortgage has also risen sharply, and the repayment burden of buyers has greatly increased. At the same time, the continuous cooling of the housing market also makes it difficult for buyers to sell their houses or refinance through mortgaged houses. This situation directly leads to a large number of borrowers with subprime mortgage loans can not repay on time, which in turn leads to "subprime mortgage crisis".
Question 2: What is the subprime mortgage crisis? Explain it in the simplest terms first.
Subprime loan is a kind of subprime mortgage loan, which is aimed at individuals with poor credit status, no proof of income and repayment ability, and other heavy debts. Is it understandable that the interest rate of subprime mortgage is higher than the best interest rate for people with good credit? You are unlikely to pay back the money, so I will lend you more interest. There are both risks and profits. As for the institutions that issue these loans, in order to get back the funds as soon as possible, they package these loans and issue bonds. Similarly, the bond interest rate of subprime loans is definitely higher than that of excellent loans. As a result, these bonds are favored by many investment institutions, including investment banks and hedge funds, because of their high returns.
However, this high return has a great premise, that is, American housing prices are rising. How can I put it? House prices are rising and the property market is hot. Although the default rate of these subprime mortgages is relatively high (this is easy to understand, because those people have poor credit status, no proof of income, and other debts are heavy, so it is easy to pay off the mortgage), even if the lending institution can't receive the loan, it can take back the mortgaged house and make a profit if it is sold again, because the property market is booming and house prices are rising.
So, how did the crisis happen? It was in 2006 that the American real estate market began to turn around, and house prices began to fall, making it difficult for buyers to sell their houses or obtain financing through mortgages. Even if the lender can't get the money back and sell the mortgaged house (it's hard to say whether it can be sold, because the real estate market is shrinking and there is no market), it will certainly not make up for the loss of lending. In that case, the bonds issued by it are worthless because the loans associated with it can't be recovered. Didn't the institutions that bought these bonds lose money? Many investment banks and hedge funds bought these bonds or their portfolios, so they suffered heavy losses. For example, a series of events include:
-On February 3, 2007, 13, New Century Finance released the profit warning for the fourth quarter of 2006.
-HSBC Holdings increased its bad debt reserve for its subprime mortgage business in the United States by US$ 6,543.8+0.8 billion.
-Facing the debt of $654.38+074 billion from Wall Street, New Century Financial Corp, the second largest subprime mortgage company in the United States, announced on April 2 that it filed for bankruptcy protection and laid off 54% of its employees.
-On August 2nd, Societe Generale announced a profit warning, and later estimated a loss of 8.2 billion euros (this figure is really huge), because its "Rhineland Fund" with a scale of 654.38+0.27 billion euros and the bank itself had little participation in the US real estate subprime mortgage market. The Bundesbank convened banks from all over the world to discuss a package plan to save the German Industrial Bank.
On August 6th, American Mortgage Investment Corporation, the largest mortgage institution in the United States, formally filed for bankruptcy protection with the court, becoming another large mortgage institution in the United States after New Century Finance Corporation.
On August 8, Bear Stearns, the fifth largest investment bank in the United States, announced the closure of its two funds, also because of the subprime mortgage crisis.
-On August 9th, BNP Paribas, France's largest bank, announced the freezing of its three funds, which also suffered huge losses due to their investment in American subprime bonds. This move led to a sharp drop in European stock markets.
-/kloc-In August of 0/3, Mizuho Group, the parent company of Mizuho Bank, Japan's second largest bank, announced that the US subprime mortgage-related losses were 600 million yen. Japanese and Korean banks suffered losses due to the US subprime mortgage crisis. According to the estimation of UBS Securities Japan, the nine major banks in Japan hold more than one trillion yen of US subprime mortgage-backed securities. In addition, five Korean banks, including Woori, invested 565 million US dollars in CDO. Investors are worried that the subprime mortgage problem in the United States will have a strong impact on the global financial market. However, Japanese analysts are convinced that most of collateralized debt obligation invested by Japanese banks have the highest credit rating, and the impact of the subprime mortgage crisis is limited.
Later, Blooming Group also announced that the losses caused by subprime loans reached $700 million in July, but this is only a small amount for a financial group with an annual profit of $20 billion.
However, the crisis triggered by the subprime mortgage crisis has seriously affected the liquidity of various countries. To put it simply, in the current uncertain future of the subprime mortgage problem ... >>
Question 3: The time and process of the American financial crisis in 2008;
On February 3, 2007, 13, New Century Finance issued a profit warning for the fourth quarter of 2006.
HSBC Holdings increased its bad debt reserve by $654.388+0.8 billion for its subprime mortgage business in the United States.
Facing the debt of $654.38+07.4 billion from Wall Street, New Century Financial Corp, the second largest subprime mortgage company in the United States, announced on April 2 that it filed for bankruptcy protection and laid off 54% of its employees.
On August 2nd, Societe Generale announced a profit warning, and later estimated a loss of 8.2 billion euros, because its Rhineland Fund with a scale of 654.38+0.27 billion euros and the bank itself participated in the US real estate subprime mortgage market a little, resulting in huge losses. The Bundesbank convened banks from all over the world to discuss a package plan to save the German Industrial Bank.
On August 6th, the American Mortgage Investment Corporation, the largest mortgage institution in the United States, formally filed for bankruptcy protection, becoming another large mortgage institution in the United States after New Century Finance Corporation.
On August 8, Bear Stearns, the fifth largest investment bank in the United States, announced that its two funds had closed down, which was also due to the subprime mortgage crisis.
On August 9th, BNP Paribas, France's largest bank, announced the freezing of its three funds, which also suffered huge losses due to their investment in American subprime bonds. This move led to a sharp drop in European stock markets.
13 In August, Mizuho Group, the parent company of Mizuho Bank, Japan's second largest bank, announced that the US subprime mortgage-related losses were 600 million yen. Japanese and Korean banks suffered losses due to the US subprime mortgage crisis. According to the estimation of UBS Securities Japan, the nine major banks in Japan hold more than one trillion yen of US subprime mortgage-backed securities. In addition, five Korean banks, including Woori, invested 565 million US dollars in CDO. Investors are worried that the subprime mortgage problem in the United States will have a strong impact on the global financial market. However, Japanese analysts are convinced that most of collateralized debt obligation invested by Japanese banks have the highest credit rating, and the impact of the subprime mortgage crisis is limited.
Later, Citigroup also announced that the losses caused by subprime loans reached $700 million in July, but this is only a small amount for a financial group with an annual profit of $20 billion.
[Edit this paragraph] 5. The development of subprime mortgage crisis
In 2007
February 2007 13
The mortgage risk in the United States began to surface.
HSBC Holdings has increased its bad debt reserve by US$ 6,543.8+0.8 billion for its subprime mortgage business in the United States.
Countrywide Financial Corp, the largest subprime mortgage company in the United States, reduced its lending.
New Century Finance, the second largest subprime mortgage institution in the United States, issued a profit warning.
March 2007 13
In the new century, Finance announced that it was on the verge of bankruptcy.
US stocks plunged, with the Dow down 2%, S&P down 2.04% and Nasdaq down 2. 15%.
April 4(th), 2007
After cutting staff by half, New Century Financial Company applied for bankruptcy protection.
April 24(th), 2007
Existing home sales in the United States fell by 8.4% in March.
June 22(nd), 2007
U.S. stocks pulled back at a high level, with the Dow down 1.37%, S&P down 1.29% and Nasdaq down 1.07%.
July 2007 10
Standard & Poor's downgraded subprime bonds, and global financial markets fluctuated greatly.
July 2007 19
Bear Stearns's hedge fund is on the verge of collapse.
August 2007 1
Macquarie Bank said that investors in its two high-yield funds face a loss of 25%.
August 3(rd), 2007
Bear Stearns said that the US credit market is in the worst state in 20 years.
European and American stock markets plunged across the board
August 5(th), 2007
Warren spector, president of Bear Stearns, the fifth largest investment bank in the United States, resigned.
August 6(th), 2007
The real estate investment company, American Housing Mortgage Corporation, filed for bankruptcy protection.
August 9(th), 2007
BNP Paribas, France's largest bank, announced its involvement in the US subprime mortgage, and most of the world's stock indexes fell.
Metal crude oil futures and spot gold prices plummeted.
August 2007 10
The US subprime mortgage crisis spread and the European Central Bank intervened.
August 2007
Central banks around the world injected more than $326.2 billion in 48 hours to save the market.
The Federal Reserve injected 38 billion dollars into banks three times a day to stabilize the stock market.
August 2007 >>
Question 4: When did the subprime mortgage crisis in the United States come? The subprime mortgage crisis in the United States, also known as the subprime mortgage crisis, is also translated as the subprime mortgage crisis. It refers to a financial storm in the United States, which was caused by the bankruptcy of subprime mortgage institutions, the forced closure of investment funds and the violent shock of the stock market. It has led to the crisis of insufficient liquidity in major financial markets around the world. The "subprime mortgage crisis" in the United States began to appear gradually in the spring of 2006 and reached its peak in 2008. It was not until 20 12 that Fannie Mae and Freddie Mac basically recovered.
Question 5: When did the subprime mortgage crisis first start? In 2006
The American subprime mortgage crisis, the full name should be the American real estate market subprime mortgage crisis. As the name implies, subprime mortgage is relative to mortgage with good credit conditions. Relatively speaking, mortgage lenders have no (or insufficient) proof of income/repayment ability, or other liabilities are heavy, so their credit conditions are "secondary". This kind of real estate mortgage is called subprime mortgage.
Compared with the more favorable interest rates and repayment methods available to mortgage lenders with better credit conditions, subprime mortgage lenders are usually forced to pay higher interest rates and abide by stricter repayment methods. This was originally a natural problem, but it has not been really implemented because of the influence of loose credit, active financial innovation and rising prices of real estate and securities markets in the United States in the past six or seven years. In this way, the repayment risk of subprime mortgage loan may become a reality. In this process, some financial institutions in the United States connived at the excessive expansion of subprime mortgage and its related loan packaging and bond scale for their own interests, which made the scale of subprime mortgage default events expand to the extent of causing crisis under certain conditions.
The condition of subprime mortgage crisis is that the credit environment changes, especially the house price stops rising. Why do you say that? As we all know, subprime mortgage borrowers have poor credit status, or they lack sufficient proof of income, or have other liabilities, so it is easy to fail to pay their mortgages and default. However, in the case of loose credit environment or rising house prices, lending institutions cannot recover loans because of the lender's default. They can also refinance, or simply take back the mortgaged house and sell it without losing money. When the credit environment changes, especially when the house price falls, it is not easy to refinance or repossess the mortgaged house for resale, or it is impossible or at a loss. When such incidents occur on a large scale, a crisis arises.
In fact, the symptoms of the US subprime mortgage crisis began as early as the end of 2006. However, it took more than half a year from the appearance of symptoms and the accumulation of problems to the confirmation of the crisis, especially when international financial institutions such as Dambert Stearns, Merrill Lynch, Citibank and HSBC announced that they had lost tens of billions of dollars due to the subprime mortgage crisis. Now it seems that the subprime mortgage crisis will last for a long time and have a great impact because of its wide coverage, complex causes and special mechanism. Specifically, there are three reasons.
First of all, this has something to do with the US financial regulatory authorities, especially the Federal Reserve, shifting monetary policy from loose to tight in the past. As we know, starting from 200 1, the US federal funds rate was lowered by 50 basis points, and the Fed's monetary policy began to shift from raising interest rates to lowering interest rates. After 13 interest rate cuts, by June 2003, the federal funds rate had dropped to 1%, the lowest level in the past 46 years. The loose monetary policy environment is reflected in the real estate market, that is, the mortgage interest rate has also dropped in the same period. The interest rate of 30-year fixed mortgage decreased from 8. 1% at the end of 2000 to 5.8% in 2003. The annual adjustable interest rate of mortgage interest rate decreased from 7.0% at the end of 200 1 to 3.8% in 2003.
The continuous decline of interest rate at this stage is an important factor leading to the continuous prosperity of American real estate and the bubble of subprime mortgage market since 2 1 century. Because of the drop in interest rates, many high-risk financial innovative products have the possibility of production, and also have the opportunity to expand in the real estate market. One of the manifestations is that floating rate loans and interest-free loans are popular, accounting for a rapid increase in the proportion of all mortgage loans. Compared with fixed interest rates, these innovative forms of financial loans only require buyers to bear a lower and flexible repayment amount every month. On the surface, this has reduced the pressure on property buyers and supported the prosperity of the past few years.
Since June 2004, the Fed's low interest rate policy has begun to reverse. By June 2005, the federal funds rate had been raised from 1% to 4.25% after 13 consecutive interest rate hikes. By August 2006, the federal funds rate had risen to 5.25%, which marked a complete reversal of this round of expansionary policies. Continuous interest rate hikes have increased the cost of housing loans, and started to play a role in restraining demand and cooling the market, resulting in a drop in house prices and a substantial increase in the risk of mortgage default.
Secondly, for some time, it has continued to maintain positive interaction with the US investment market and the global economy and investment environment ... >; & gt
Question 6: When will the subprime mortgage crisis end? What does 20 1 1 look like at the end? Generally speaking, the return of the Dow Jones Industrial Average to its pre-crisis level marks the end.
Returning to logging means having the American subprime mortgage index, which is the end of the index returning to the pre-crisis level.
Question 7: What is the subprime mortgage crisis? When did the subprime mortgage crisis in China happen? Subprime crisis, also known as subprime crisis, is also translated as subprime crisis. It refers to a financial storm in the United States, which was caused by the bankruptcy of subprime mortgage institutions, the forced closure of investment funds and the violent shock of the stock market. It has led to the crisis of insufficient liquidity in major financial markets around the world. The "subprime mortgage crisis" in the United States began to appear gradually in the spring of 2006. In August 2007, it began to sweep across the major financial markets in the world, such as the United States, the European Union and Japan. The subprime mortgage crisis has become a global hot issue. The subprime mortgage crisis in China is hard to say
Question 8: How long is the US subprime mortgage crisis likely to last? The first stage was the outbreak in September last year, and the crisis broke out until the end of the year. The second wave is that the crisis worsened from June to March this year, and it entered the third wave from June, which may last for a long time. So you asked me how long it would last. I think it may take six months to a year to stabilize according to the current situation, that is, around the end of this year. If we want to solve this problem, it will probably last for a year or two, or even longer. Because the core problem of this crisis is the credit crisis, it is more difficult to solve this problem, which shows that it is likely to be adjusted in 2008 and the year after.
Question 9: How many economic crises have occurred in the world? When is the specific time? The First World Economic Crisis (1857)
1929- 1933 capitalist world economic crisis 1973- 1975 oil crisis
1987 Black Monday
1997 southeast Asian financial crisis
The subprime mortgage crisis in 2008
Question 10: what is the subprime crisis of real estate in the United States? In the United States, loans are a very common phenomenon, from houses to cars, from credit cards to telephone bills. Locals rarely buy a house in full, usually with long-term loans. But we also know that unemployment and re-employment are very common phenomena here. How can these people with unstable income or no income buy a house? Because their credit rating is not up to standard, they are defined as subprime lenders. Since 2000, advertisements of loan companies have appeared on TV, newspapers and streets, or your mailbox has been filled with attractive leaflets: "Do you want to live a middle-class life?" Buy a house! ""not enough savings? Loan! " "No income? Looking for A Niu Loan Company! " "Can't afford the down payment? We offer zero down payment! " "Worried that interest is too high? We offer a preferential interest rate of 3% for the first two years! " "Still can't afford it every month? It doesn't matter, you only need to pay interest in the first 24 months, and you can also repay the loan principal two years later! Think about it, after two years, you must have found a job or been promoted to manager, and you are afraid that you can't afford it! " "Worried that you can't afford it after two years? Oh, you are too careful. Look at how much the house has risen now compared with two years ago. Then you can sell it to others, not only for two years, but also at a profit! Besides, you don't have to pay. I believe you can do it. Dare I borrow it? Dare you borrow it? "Under such temptation, countless American citizens did not hesitate to choose a loan to buy a house. A Niu Loan Company has made amazing achievements in just a few months, but all the money has been lent out. Can it be redeemed? Mr. A Niu, the chairman of the company who is also familiar with American economic history, can't be unaware that the real estate market is also risky, so it seems that the income can't be absorbed by himself, and it is necessary to find a partner to share the risk. So A Niu found the leading brother in American economic circles-investment bank. These people are big names (Merrill Lynch, Goldman Sachs, Morgan). What do they do every day? Even if you are full, you are idle, so you find a Nobel economist, a Harvard professor, use the latest economic data model, make some repairs, and make several analysis reports to evaluate whether a stock is worth buying. A country's stock market has been bubbled, and a group of risk-averse people cheat to eat and drink in the risk assessment market. Do you think they see the risks? You can tell with your feet! But there are profits, so why hesitate? Take over! Therefore, economists and university professors repackaged the data model and the old three-sample evaluation, and put forward a new product-CDO (Note: Debt-backed Bond), which is a bond after all. By issuing and selling such CDO bonds, bondholders can share the risk of housing loans. If you sell it like this, the risk is too high or no one will buy it. Assume that the risk level of the original bond is 6, which belongs to medium and high. So investment banks divide it into two parts: advanced CDO and ordinary CDO. In the case of debt crisis, the old CDO enjoys the priority of compensation. In this way, the risk levels of the two parts become 4 and 8 respectively, and the total risk remains unchanged, but the former belongs to medium and low risk bonds. With the investment bank's golden words, of course, it sold a full house! But what about the remaining high-risk bonds with a risk rating of 8? So the investment bank found a hedge fund. Who is the hedge fund? It is the role of the world's financial community to buy empty goods and sell more, licking blood. This is a small risk! So relying on the old relationship, I borrowed money from the bank with the lowest interest rate in the world, and then bought this part of ordinary CDO bonds in large quantities. Before 2006, the loan interest rate of the Bank of Japan was only1.5%; The interest rate of ordinary CDO may reach 12%, so hedge funds will make a lot of money just by interest difference. In this way, something wonderful happened. At the end of 200 1, American real estate soared, more than doubling in just a few years. In this way, just like the advertisement at the beginning of the A Niu loan company, there will be no problem of not being able to afford the house. Even if there is no money to pay back, you can make a fortune selling the house. As a result, everyone from mortgage buyers to A Niu loan companies, major investment banks, banks and hedge funds made money, but the investment banks were not very happy! At first, I thought the risk of ordinary CDO was too high, so I threw it to hedge funds. I didn't expect these guys to earn more than themselves, and their net worth is still rising. I know I keep it for fun, so investment banks start to buy hedge funds, intending to take a slice of it ... >>