In the United States, loans are a very common phenomenon, from houses to cars, from credit cards to telephone bills, loans are everywhere. Locals rarely buy a house in full, usually with long-term loans. but we ...

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 the credit rating is not up to standard, they made up their minds.

It means subprime lender.

About 10 years ago, at that time, advertisements of loan companies appeared on TV, newspapers and streets, or your mailbox was filled with attractive leaflets:

"Have you ever thought about the life of the middle class? Buy a house! "

"Savings is not enough? Loan! "

"There is 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, you must have found a job or been promoted two years later.

I've been promoted to manager, and I'm afraid I can't stand it then! "

"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 will sell it to others, not only for two years, but also

Maybe you can make a fortune! 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. Are you worried about their debts in two years? American citizens who always feel good about themselves will tell you to take action.

All filmmakers can be governors, and maybe I can run for president in two years. )

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, is also familiar with the American economy

History, it is impossible not to know that the real estate market is also risky, so it seems that this income can not be absorbed, and it is necessary to find a partner to share the risks. So A Niu found the leading brother in the American economic circle

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. Find a Nobel economist and look for it.

Come to Harvard as a professor, use the latest economic data model, after some tinkering, come up with several analysis reports to evaluate whether a stock is worth buying. A country's stock market is already in a bubble.

A group of risk-averse people cheated by eating and drinking 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! So economists

After evaluating the data model and the old three samples, the university professor repackaged it and proposed a new product-CDO.

(Note: Mortgaged debt

Mortgage (debt-backed bond) is a kind of bond. 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. Therefore, the investment bank divided it into two parts: senior and ordinary CDO, and assumed the debt.

In times of crisis, senior CDOs have the priority to pay 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 low-risk bonds and relies on the "gold" of investment banks.

"Tongue, of course, 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 financial circles all over the world to buy empty goods and sell more, and it is the wind that licks blood.

Nothing! 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 lending rate of the Bank of Japan was only 1.5.

%; Ordinary CDO interest rate may reach

12%, so hedge funds earn 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, just like the first advertisement of A Niu loan company.

Sample, there won't be things that can't afford a house. Even if there is no money to pay back, you can make a fortune selling the house. The result is from the people who buy houses with loans, to A Niu loan companies, to major investment banks, and to banks.

Well, hedge funds make money, but investment banks are 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.

I knew I was playing with it, so investment banks began to buy hedge funds, intending to share a piece of it. It's like "Old Black" had a bad meal at home and happened to see the annoying neighbor next door.

The puppy will poison it. I didn't expect the puppy to eat it, but it became stronger and stronger. "Old Black" was cheated. Isn't rotten food more nutritious, so I did it myself.

Eat it!

Now hedge funds are very happy. Who are they, bandits who have 10 in their hands and can still try to borrow 10 to play? How can they be honest with a popular CDO now? So they're

Mortgage the CDO bonds in your hand to the bank, get a loan of 10 times, and then continue to chase the investment bank to buy ordinary CDOs. Hey, we signed an agreement, and these CDOs are all ours! ! ! Investment banks are unhappy.

Well, besides continuing to buy hedge funds, they also launched a new product called CDS.

(Note: Credit default.

Swap (credit default swap) Well, Wall Street is a hotbed of these genius products: everyone thinks the original CDO is risky, so I take out some money from it every year.

As a guarantee, it will be given to the insurance company for nothing, but if there is any risk in the future, everyone will bear it together.

The insurance company thought, yes, at present, CDO makes so much money that 1 divides the money into profits without losing it. Isn't that giving us money for nothing every year? Fuck!

Hedge funds thought, yes, it has been earned for several years, and the risks will become bigger and bigger in the future. Just by sharing part of the profits, the insurance company will bear half of the risks. Let's do it!

So once again, everyone is happy and CDS is on fire! But things didn't end there: because "smart" Wall Street people have come up with innovative products based on CD! We assume that CDS has

Brought us

500 million yuan, and now I have newly launched a "Sanmao" fund, which specializes in investing in CDS. Obviously, the risk of this fund based on previous products is very high.

However, I put the 5 billion I earned before as a deposit. If this fund loses money, then use this 5 billion to pay in advance. Only when this 5 billion is lost will the principal of your investment begin to lose money.

Damage, and before that, it can be redeemed in advance, with an initial scale of 50 billion yuan. God, is there a better fund than this? 1 yuan face value of the fund, lost 0.90 yuan will not lose their own money.

But every penny is your own! When rating agencies saw this genius idea, they didn't hesitate at all: give AAA rating!

As a result, this "San Mao" can be sold crazy, and various pension funds, education funds, wealth management products, and even banks in other countries have also bought it. Although the initial scale is 50 billion yuan, it can be

It is almost impossible to estimate how many hundreds of millions have been issued, but the deposit of 5 billion has not changed. If the existing scale is 500 billion yuan, only the net value of the fund is not less than 0.99 yuan can the deposit be guaranteed.

You won't lose money.

By the end of 2006, the American real estate, which has enjoyed a beautiful scenery for five years, finally fell from its peak, and this food chain finally began to break. Because of falling house prices, preferential loans

After the arrival of the interest rate deadline, first, ordinary people could not repay their loans, then A Niu Loan Company closed down, and hedge funds suffered huge losses, which further implicated insurance companies and loan banks, and Citigroup and Morgan closed down one after another.

At the same time, the major investment banks that invested in hedge funds also lost money, then the stock market plummeted, people generally lost money, and the number of people who could not repay their mortgages continued to increase ... Finally, the subprime mortgage crisis in the United States.

The machine exploded.

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It should be clarified that not all hedge funds use high-dose leverage. In fact, most hedge funds use little or no leverage. A large class of hedge funds.

The so-called market-neutral hedge funds generally short and long stocks in strict accordance with the ratio of 1: 1, and their volatility is much smaller than the stock market itself. The fund I manage also strictly controls the net risk exposure.

Liquidity is also significantly lower than the stock market itself. A large number of leveraged hedge funds are concentrated in credit hedge funds. /kloc-the long-distance capital company that had an accident 0/0 years ago is a typical example, and their leverage ratio has reached.

Hundreds of times, it controls hundreds of billions of dollars in assets on a scale of billions of dollars, and its madness is far more than that of bears.

Stearns.

The appetite of American bankers will never be satisfied. When most ordinary people run out of mortgage resources,

They set their sights on some people who are not qualified at all. This is the 6 million poor people and new immigrants in the United States. They are poor or have a bad reputation.

The mortgage market in the United States can be roughly divided into three levels: primary loan market, secondary loan market and secondary loan market.

Market). The high-quality loan market is oriented to outstanding customers with high credit rating (credit score above 660), stable and reliable income and reasonable debt burden. These people mainly choose the most traditional 30.

Fixed rate mortgage in 2008 or 15. The secondary market refers to people whose credit score is below 620, who lack proof of income and are heavily in debt. The "ALT-A" loan market is a huge gray area between the two.

Area, including credit score

The mainstream class between 620 and 660 includes a considerable number of high-credit customers with scores higher than 660.

The total size of the secondary market is about $654.38 +0.3 trillion.

Nearly half of them have no proof of fixed income, and the total loans of these people are between 500 billion and 600 billion dollars. Obviously, this is a high-risk market with a high rate of return.

The loan interest rate is about 2-3% higher than the benchmark interest rate.

The loan companies in the secondary market are more "innovative", and they boldly launch various new loan products. More famous is: only interested.

Loans), 3-year adjustable rate loans (ARM), 5-year adjustable rate loans and 7-year adjustable rate loans,

Selective adjustable rate loan (option

Arm) and so on. The common feature of these loans is that in the first few years of repayment, the monthly mortgage repayment is very low and fixed, and after a certain period, the repayment pressure increases. These new products are very popular.

There are two main reasons: first, people think that real estate will rise forever, at least for a period of time that they think is "reasonable". As long as they can sell the house in time, the risk is "controllable"

; Second, it is taken for granted that real estate will rise faster than the increase of interest burden. Especially suitable for short-term speculation-before raising interest rates.

The full name of "ALT-A" loan is "alternative"

"Loan" refers to those who have a good or good credit record, but lack or have no legal documents such as fixed income, deposits and assets. This kind of loan is usually considered to be better than subprime loans.

This is safer and more profitable. After all, lenders have no "criminal record" of bad credit, and the interest is generally higher than that of high-quality loan products 1% to 2%.

Is "ALT-A" loan really safer than subprime loan?

That was not the case. Since 2003, "ALT-A" lenders have lost their basic rationality in the fiery real estate bubble, and many lenders are not normal at all.

Proof of income As long as you quote a number yourself, these figures are often exaggerated, so "ALT-A" loans are called "liar loans" by people in the industry.

Lending institutions also vigorously promote various high-risk loan products, such as non-principal loan products based on 30-year amortization.

Schedule shares the monthly payment, but in the first year, it can provide ultra-low interest of 1% to 3%, and only pay the interest without repaying the principal, and then the interest will fluctuate according to the interest rate market in the second year.

Generally speaking, it is also guaranteed that the monthly payment will not exceed 7.5% of the previous year.

Selective adjustable interest rate loans allow lenders to pay even less than normal interest every month, and the difference is automatically included in the loan principal, which is called "negative"

Amortization. So the lender will owe the bank more money after monthly repayment. After a certain period of time, the interest rate of such loans will also follow the market.

Many short-term real estate speculators with "high credit quality" believe that house prices will only rise in the short term, and they will have time to cash out. There are also many people with "average credit" who use this kind of loan.

Houses with a burden far exceeding their actual ability to pay. Everyone is holding the idea that as long as the house price keeps rising, if there is a problem with their ability to repay debts, they can sell the house and return it immediately.

You can still earn a loan, or borrow again (Re-

Finance) take out the value-added part of the money for emergency and consumption. Even if the interest rate rises rapidly, there is still the last line of defense, that is, the annual repayment increase cannot exceed 7.5%. So the risk is small and there is potential.

Why not report high investment?

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According to statistics, in 2006, more than 40% of the total real estate mortgage loans in the United States were "ALT-

A "and subprime loan products, totaling more than 400 billion US dollars, the proportion was even higher in 2005. Since 2003, the total amount of high-risk mortgage loans such as "ALT-A" and subprime loans has exceeded 2 trillion.

Dollars. At present, the default rate of subprime loans over 60 days has exceeded 15%, which is rapidly rushing to the latest historical record of 20%, and 2.2 million subprime people will be swept out of the house by banks. The default rate of "ALT-A" is

3.7%, but its interval has doubled in the past 14 months.

Mainstream economists ignore the danger of "ALT-A", because so far, its default rate is not obvious compared with the already smoking subprime mortgage market, but its potential danger is even worse.

The secondary market is bigger. The reason is that "ALT-A" loan agreements generally "bury" two heavy timing BoB! ! ! Once the mortgage interest rate market continues to rise and house prices continue to fall, it will automatically

Triggered the collapse of this market. For the benefit mentioned above.

In the only loan, when the interest rate goes with the market, the monthly supply will not increase by more than 7.5%. This last line of defense gives many people an "illusory" sense of security. But there are two exceptions, and there are two.

A heavy bob! ! ! , the first Bob! ! ! This is called "timed reset"

(5 years/10 years

Recast). Every five years or 10 years, the repayment amount of "ALT-A" lender will be reset automatically, and the lender will recalculate the monthly repayment amount according to the new total loan amount, and the lender will find out their monthly repayment amount.

The amount of payment is greatly increased, which is called "monthly payment shock" (payment

Shocked. Due to negativity.

The role of installment repayment, many people's total loan debt is rising, their only hope is that the real estate price will rise and sell the house, otherwise they will lose their blood or vomit blood.

Sales. The second Bob! ! ! It is the "maximum loan limit". Of course, people can temporarily ignore the scheduled reset in a few years, but

"negative amortization"

There is a restriction that the accumulated liabilities shall not exceed 1 10% to 125% of the original loan amount. Once this limit is reached, the loan reset will be triggered automatically. It's enough to kill people.

Time, Bob! ! ! . Due to the temptation of coveting low interest rates and the low repayment pressure in the first year, most people choose the lowest monthly payment possible. For example, if you normally pay interest of $65,438+$0,000 per month, you can choose.

If you choose to pay only $500, the interest difference of another $500 will be automatically included in the loan principal. This kind of accumulation speed will make lenders confused.

Five years to reset the loan, Bob! ! ! It used to be blown to pieces by the "maximum loan limit".

Since these loans are so dangerous, the Fed will not intervene?

Ge Lao did come forward, and twice. The first time was in 2004. Ge Lao thinks that institutions that provide loans and people who buy houses are too timid, because they don't particularly like high risks.

Adjustable interest rate loan product (option)

Weapons).

Ge Lao complained: "If lending institutions can provide more flexible choices than traditional fixed-rate loan products, the American people will benefit a lot. For those who can and are willing to bear interest rate changes

Traditional 30-year and 15 fixed-rate loans may be too expensive for risky consumers. "

As a result, Fannie Mae, an entrepreneur in the new century and an ordinary homebuyer, gradually got bolder, the situation became more and more outrageous, and house prices became more and more crazy.

So, 17 months later, Ge Lao appeared at the Senate hearing again. This time, he frowned and said: "American consumers use these new loan methods (referring to options).

Arms, etc. It is a bad idea to take on the mortgage burden that they could not bear.

People may never really understand Greg's ideas. Yes, Greg's words are slippery on all sides. What he means is that if the American people can bear the interest rate risk and control it.

You might as well use a high-risk loan. The implication is that if you have no ability, don't join in the fun. Maybe Greg really doesn't know the "financial IQ" of the American people.

Subprime loan CDO: Centralized assets toxic waste

The total amount of toxic waste from subprime mortgages and ALT-A loans is $2 trillion. These toxic asset wastes must be stripped from the balance sheet of the American banking system, otherwise there will be endless troubles.

How to peel it? Is through what we often call asset securitization. There is a famous saying on Wall Street that if you want to increase future cash flow, make it into securities.

If you want to manage risk, turn it into securities. In fact, the essence of financial innovation is that as long as it can be overdrawn,

You can find a way to cash it today. Americans speculate on everything, not only real estate, but also real estate bonds, and these bonds, together with the leverage effect, have magnified the risk by hundreds of times.

. This is why the real estate mortgage securities speculated by Bear Stearns suddenly turned into garbage.

MBS bonds originally secured by subprime mortgages are easy to produce and difficult to sell, because large American investment institutions such as pension funds and insurance funds,

The investment of go-vern ment fund must meet certain investment conditions, that is, the investee must reach the AAA rating of Moody's or Standard & Poor's.

The subprime mortgage MBS is obviously not even the lowest investment grade BBB. Therefore,

Many large investment institutions can't buy it. However, just because formal institutions can't buy it doesn't mean that no one buys it. On the contrary, it is precisely because of its high risk that the return is relatively high.

Some high-risk investment banks on Wall Street, such as Goldman Sachs, took a fancy to the potential high return on investment of these toxic assets at a glance.

As a result, some investment banks began to intervene in this high-risk asset field.

Investment bankers first divide "toxic junk" MBS bonds into different parts according to the default probability.

This is called collateralized debt obligations (CDO). The lowest risk is called "senior CDO”(Senior

Tranche, accounting for about 80%), investment banks are packaged in beautiful gift boxes and tied with gold ribbons. The medium risk is called "intermediate CDO" (interlayer, accounting for about 10%.

), also put in a gift box, and then tied with a silver ribbon. The one with the highest risk is called "CDO" (equity, accounting for about 10%), which is put in a gift box with copper wires.

After the Wall Street investment bank dressed up like this, the ugly asset poison garbage immediately shone.

When investment bankers knocked on the door of asset rating companies again with beautiful gift boxes in their hands, even Moody's BOPs were blindsided. Flowing investment banks talk about how reliable "advanced products" are.

And insurance,

They show the data of recent years to prove how low the default rate of "quality products" is, and then show the mathematical model designed by world-class mathematicians to prove that there will be defaults in the future.

The chances are extremely low,

Even if there is a breach of contract, "ordinary products" and "intermediate products" will be lost first. With these two lines of defense, "advanced products" are almost impregnable. Finally, talk about the development forms of real estate, such as

Thankfully,

Mortgagers can always "refinance" to get a lot of cash, or they can easily sell their property and make high profits. Living examples in life are within reach.

Moody's standard people look at the past figures carefully, there is no flaw, and then repeatedly scrutinize the mathematical model representing the future trend, it seems that there is no problem. Why is the real estate booming?

Yes, of course,

Moody's relies on decades of intuition and the experience of many economic recessions to understand the trap behind these fancy articles.

But I also know the benefits involved. If the gift box is "impeccable" on the surface, Moody's people are also willing to bend the rules. After all, everyone is in the financial sector.

Moody's Standard Bank has to rely on investment banking to make a living, and there is competition among Moody's Standard Banks. If you don't do it, others will do it, and if you don't offend others, you will lose your business. Moody's Standard Bank.

With a stroke of the pen,

"CDO" was awarded the highest rating of AAA.

The investment bank left happily. Figuratively speaking, this process is similar to that of illegal traders collecting waste oil dumped by McDonald's, and then simply filtering and separating it to "turn waste into treasure".

Repackaged and sold to restaurant owners for cooking or fried dough sticks.

After obtaining the CDO rating, investment banks, as underwriters of toxic wastes, have been coming to law firms to establish "special purpose" (SPV).

Legal vehicles), the "entity" is registered in the Cayman Islands according to the regulations to avoid government supervision and tax avoidance. Then,

This "entity" will buy toxic waste of assets and issue CDO, so that investment banks can legally avoid the risks of the "entity". Who are these smart investment banks? They are:

Lehman Brothers, Bear Stearns, Merrill Lynch, Citigroup, Wachovia Bank, Deutsche Bank, Bank of America and other large investment banks.

Of course, investment banks never want to hold these toxic wastes for a long time. Their style of play is quick cash. Promote the "CDO" with the highest AAA rating,

Coupled with the sales talent of investment bankers, it is naturally a piece of cake. Buyers are large investment funds and foreign investment institutions, including many pension funds and insurance funds.

Education funds and various funds managed by the government. But "intermediate CDO" and "ordinary CDO" are not so good to sell. Despite the best efforts of investment banks,

Moody's standard people are also reluctant to endorse these two kinds of "concentrated toxic waste". After all, "professional ethics" has a bottom line.

How to peel off scalding "concentrated toxic waste"? The investment bank painstakingly came up with a brilliant idea to set up a hedge fund!

Production chain of "asset toxic waste"

Investment banks use some "personal" money to set up independent hedge funds, and then "strip" the "concentrated toxic waste" on their balance sheets to independent hedge funds.

Fund,

Hedge funds, on the other hand, buy concentrated toxic waste CDO assets from the same investment bank at a high price, which is recorded on the assets of hedge funds as the entry price.

"(input

Price). Therefore, investment banks have legally completed the work of drawing a clear line with "concentrated toxic waste".

Fortunately, since 2002, the ultra-low interest rate financial ecological environment created by the Federal Reserve has spawned a wave of rapid credit expansion. In such a good situation, the real estate price has doubled in five years.

.

Sub-prime lenders can easily obtain funds to keep monthly payments. Therefore, the default rate of subprime loans is much lower than the initial estimate.

High risk corresponds to high return. Because high risks did not appear as scheduled, high returns immediately attracted people's attention. The trading volume of CDO market is much colder than that of other securities markets.

"Poisonous garbage" rarely changes hands in the market, so there is no reliable price information for reference. In this case,

The regulatory authorities allow hedge funds to use the calculation results of internal mathematical models as asset evaluation criteria. This is good news for hedge funds. After their own "calculation",

A return of 20% I'm sorry to say, 30% is hard to brag to other funds, 50% is hard to get on the list, and 100% may not have exposure.

For a time, hedge funds with "concentrated assets and toxic waste" CDO were popular on Wall Street.

Investment banks are also overjoyed. Surprisingly, hedge funds that hold a large amount of "concentrated toxic waste" have become hot items. Due to the amazing rate of return, more and more investors demand

Join a hedge fund,

With the influx of funds, hedge funds have become money-making machines for investment banks.