So, what is the US subprime mortgage crisis?

In the United States, loans are a very common phenomenon. They are everywhere from houses to cars, from credit cards to phone bills.

Locals rarely buy a house with full payment and usually take out a long-term loan.

But we also know that unemployment and re-employment are very common here.

How can these people with unstable or even no income buy a house?

Because their credit rating is not up to standard, they are defined as subprime lenders.

Since about 2000, advertisements for loan companies have appeared on TV, newspapers, and on the streets.

Many loan companies have achieved amazing results in just a few months, but once the money has been loaned out, many loan companies are worried about whether they can get it back?

So they found the leading eldest brother in the American economic community - investment banks.

These guys are all bosses with famous names (Merrill Lynch, Goldman Sachs, Morgan). What do they do every day?

Even if you are full, you are still idle, so you hired Nobel economists and Harvard professors, used the latest economic data models, and after some tinkering, produced several analysis reports to evaluate a certain stock.

Is it worth buying? There is already a bubble in the stock market of a certain country. A group of people are cheating and drinking in the risk assessment market. Do you think they see any risks in this?

You can even see it with your feet!

But there is profit, so why are you hesitating? Let’s take over!

So after economists and university professors used data models and evaluation methods, they repackaged it and came up with a new product - CDO (Note: Collateralized Debt Obligation, debt collateral obligation). To put it bluntly, it is a bond. Through issuance and

Selling this CDO bond allows the bond holders to share the risk of the home loan.

If you just sell it like this, the risk is too high and no one will buy it. Assume that the original bond risk level is 6, which is medium to high.

So the investment bank divided it into two parts: senior CDO and ordinary CDO. When a debt crisis occurs, senior CDO has the priority to pay compensation.

In this way, the risk levels of the two parts become 4 and 8 respectively. The total risk remains unchanged, but the former is a medium-low risk bond. With the investment bank's "gold" tongue, of course it sold a lot of money!

But what about the remaining high-risk bonds with risk level 8?

So the investment bank found a hedge fund. Who are hedge funds? They are the people who buy short and sell long, and have the power to influence the financial world around the world. They live a life of licking blood from the edge of a knife. This kind of risk is trivial!

So relying on old relationships, we borrowed money from banks with the lowest interest rates around the world, and then bought these ordinary CDO bonds in large quantities. Before 2006, the Bank of Japan loan interest rate was only 1.5%; the ordinary CDO interest rate may reach 12

%, so hedge funds have made a lot of money just by relying on interest differentials.

As a result, something wonderful happened. At the end of 2001, real estate in the United States soared, more than doubling in just a few years. In this way, just like the advertisement at the beginning of Aniu Loan Company, there would be no need to pay for it.

Regarding the house payment, even if you don't have the money to pay it back, you can still make some money by selling the house.

The result is that everyone from the people who took out loans to buy houses, to Aniu Loan Company, to major investment banks, to hedge funds, all make money, but the investment banks are not too happy!

At first, I thought that ordinary CDOs were too risky, so I threw them to hedge funds. Unexpectedly, these guys made more than me, and their net worth kept rising. I knew I would keep it for fun, so investment banks also started buying hedge funds.

, planning to take a share of the pie.

It's like "Old Hei" had some sour food at home, and he happened to see the annoying little flower dog next door. He originally planned to poison it, but he didn't expect that the little flower dog was not only fine after eating it, but also grew stronger and stronger. "

"Lao Hei" was confused now. Could it be that sour food is more nutritious, so he started to eat it too!

Now the hedge funds are very happy again. Who are they? Bandits who can find ways to borrow 10 yuan for fun with just 1 yuan in hand. How can they still be honest now that they have a sought-after CDO?

So they mortgaged their CDO bonds to banks in exchange for 10 times the loan, and then continued to chase investment banks to buy ordinary CDOs.

Hey, we signed the agreement, and these CDOs belong to us!

!

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The investment banks were unhappy. In addition to continuing to buy hedge funds, they came up with a new product called CDS (Note: Credit Default Swap). Well, Wall Street is the hotbed of these genius products:

Don’t we all think that the original CDO has high risks? Then I will insure it. Every year, I will take part of the money from the CDO as a deposit and give it to the insurance company. But if there is a risk in the future, everyone will bear it together.