Chapter 665

Subprime mortgage cloud

When the Iraq War was in full swing, according to previous laws, once the war broke out in the Middle East, it would cause global economic turmoil, oil prices soared, and those who like to short-sell the market would be at a time of uproar. However, not only did this war surprise military experts, but the previous economic laws seemed to have ineffective.

Out of the pessimistic predictions of many economists, the world economy started well in 2003, and had emerged from the haze after the collapse of the US Internet bubble in 2000, showing a thriving color. After a brief downturn in the US economy, the US economy was once again discovered, encouraged by the Federal Reserve Chairman Grispan, continuously lowering interest rates internally and promoting the strong position of the US dollar, and other measures such as the promotion of the strong position of the US dollar, another hot spot outside the Internet economy was discovered, that is, the US real estate industry.

In order to fulfill his campaign promise, the Bush administration soon launched the "Everyone has its own house" plan, using the two government-sponsored secondary mortgage credit market tycoons, Freddie Mac and Fannie Mai, to support the entire US real estate market, and issued many "zero down payment" housing loans, allowing many poor American families to see the hope of realizing the American dream of owning their own residence.

With the rise of the real estate market and the prosperity of industries such as decoration, construction, and furniture, many speculators saw the business opportunities and started to speculate in real estate. The ultra-low interest rate loans launched by the Federal Reserve at this time were even more popular. Soon, large banks across the United States began to actively promote their mortgage business to customers. In order to seize the initiative in the fierce competition, many banks began to target low-income groups that were previously considered to be very risky to repay, but were rejected, and the term "sub-loan" began to become popular.

In the United States, loans are very common, and almost all business activities allow loan consumption. The United States is the country with the largest credit consumption in the world. Locals rarely buy houses in full and usually use long-term mortgage loans. However, unemployment and changing jobs in the United States are common. Some people with unstable income or even no income at all are defined as subprime credit lenders because their credit rating does not meet the standards. In the past, banks refused to deal with each other, but now they are also included in the lending targets. The subprime loan provided to them by banks is simply called "subprime mortgage".

Subprime mortgage is obviously a high-risk loan project. Banks know this very well, but under the influence of the "myth" of US housing prices only rising but not falling, banks believe that lenders can really not afford to pay the money at that time and can auction the mortgaged properties. Maybe the house prices will rise and you can still make less money. Therefore, the domestic housing market is highly prosperous under the stimulation of ultra-low interest rates. With the continuous increase in the popularity of the real estate market, after a brief economic recession in 2001, the US economy began to recover in full swing.

Financial institutions are not philanthropists. They have always believed that money is their own and risk is the norm of others. For their own benefit, while condoning the excessive expansion of subprime mortgages, they also package and bond the subprime mortgages, and sell them in the international market as a financial derivative, and also bring insurance companies, hedge funds, etc. to play with them. Anyway, everyone can enjoy it. As for the high risk of subprime mortgages, after layer by layer, they think they have been passed on. Most private investors who buy financial derivatives can't even understand their operating formulas, so they can just be suckers.

However, Yang Xing's emphasis on the US subprime mortgage exceeded everyone's expectations. Since checking the records of Xingfu Investment, he once again violated the decentralization agreement with Welch and intervened in the operation of Xingfu Investment. He held meetings with the group's senior management repeatedly and demanded that the financial products related to the subprime mortgage be immediately checked and purchased, as if he was facing a great enemy.

In order to take care of Xingfu's investment face and employee enthusiasm, the final conclusion is that Xingfu can participate in investing in subprime loan products, but must establish a stop loss and regular supervision mechanism, especially the hard regulations. All relevant investments must be ended before 2007 and clear all investment accounts. Yang Xing is very tough on this and is unwilling to explain in detail. Some of his subordinates complain that the rich man has many quirks. Yang Xing is not in charge of the specific affairs of the group now, but his power is still there, so naturally no one dares to resist such trivial matters.

Of course, Yang Xing is not always using his identity to suppress others. As the party involved in making money through the Asian financial crisis and the 9/11 terrorist attack, although Yang Xing's subordinates still have some magical power of turning into gold. Although he did not participate in the Iraq War on the surface, he knew history and could still give his subordinates a clear path.

When the Iraq war broke out, investors around the world were worried, not knowing how long the war would last and how much impact it would have. Xingfu Investment bets on the US economy early on that it was minimally affected and would continue to recover. Related commodity prices such as finance and oil futures will continue to rise after a brief adjustment. At the same time, China's economy has also shown a high-speed operation after several years of adjustment. The two engines of the global economy are boosting together and are about to soar!

In April 2003, Hong Kong and the Mainland announced that no new cases of ** were found for a month, which meant that the epidemic war that spread to ** was finally won the final victory. Due to Yang Xing's active intervention, the government gave enough warning time and attracted widespread attention. Therefore, the epidemic was controlled several months earlier than the previous life, and the losses of relevant personnel and material were reduced a lot.

The national economy, which entered the fast lane at the end of last year, was not greatly disturbed. The benefits of joining the WTO emerged, exports showed explosive growth, and large domestic infrastructure projects started one after another, leading by the rapid development of real estate, automobiles, and processing and manufacturing industries, driving the domestic GDP growth to 9% last year. Many economists predict that China's GDP growth will regain double-digit growth this year.

However, there are many hidden dangers in rapid economic growth. China is now in an incoming material processing or OEM base in an international division of labor, and its exports to many countries are in a long-term surplus. my country's foreign exchange management system has brought large amounts of foreign exchange to the hands of the country. Although my country's foreign exchange was less than 200 billion US dollars in 2000, Yang Xing's plan to launch a US$300 billion plan made Cheng Canghai sigh at his big deal.

But now is different from the past. The export situation in the past two years is very good. Last year, the country's foreign exchange reserves have nearly doubled. In 2003, the export surplus in the first five months was close to the results of last year. This surprised and happy about the outgoing Prime Minister Cheng Canghai and Wen Rengui. What was happy about is the gratifying foreign trade situation, and what was shocked is the rapid growth of foreign exchange, which felt hot when holding it in his hand.

Since my country's foreign exchange reserves are basically composed of US dollar and US dollar bonds, while Japan's economy is sluggish, the newly issued euro remains to be seen, and there are not many management methods that can be used in my country's foreign exchange management. Of course, such a large amount of foreign exchange cannot only save interest. The State Administration of Foreign Exchange is also considering establishing several sovereign funds according to Yang Xing's suggestion to increase investment value. In addition, the central government has also proposed to diversify the foreign exchange structure, reduce the excessive proportion of the US dollar in foreign exchange reserves, and increase the proportion of gold and other foreign exchange reserves.

In the long history of mankind, there are only two types of currency carriers that are universally applicable - gold and silver. They are difficult to mine as precious metals, small in size and easy to carry and can be stored for a long time, so they have the famous saying of Marx, "Money is naturally not gold, but gold is naturally currency."

Before the 1970s, international powers adopted the gold standard to position their own currencies. The term hard currency came from this. The Empire of Sun and Never Set, Britain once replaced gold as a world currency with its colonies scattered around the world. However, after two world wars, Britain declined and the United States rose. In order to gain the position of hegemony, the United States could not wait to form the "Bretton Woods System" before the smoke of World War II was dispersed.

The core of the Bretton Woods system is to fix the official price of 35 US dollars to one ounce of gold, so that the currencies of other countries are linked to the US dollar. The governments of other countries stipulate the gold content of their respective currencies, and determine the exchange rate of the same US dollar through the ratio of gold content. The US dollar is equivalent to "US dollar". The US dollar suddenly jumped into the world currency and was invincible for a while.

But the times changed, and the situation where the US economy dominated the world was unsustainable in the 1970s. Then President Nixon announced that he would stop directly using the US dollar to exchange gold. The US dollar adopted a floating exchange rate system. The Bretton Woods system collapsed. As the US dollar depreciated sharply, the gold's currency shone.

However, as a precious metal, its investment value has not been completely lost, especially the traditional concept of "hiding gold in troubled times" is still deeply rooted in people's hearts. Many people regard investing in gold as a safe haven during economic turmoil. From 1968 to 1980, the price of gold rose from US$35 per ounce to US$850, ushering in a big bull market. However, as many countries adopted a currency floating exchange rate system, gold foreign exchange reserves and currency qualifications continued to be downplayed, and gold futures returns were greatly reduced. In the first twenty years of the new century, the international gold market fell into a bleak state, and almost all bullish gold investors became losers.

In addition, as a major variable in the gold market, central banks in Western countries have sold their gold reserves, becoming the last straw that crushed the market. The advantage of gold not evaporating on earth and getting worn has become the root of the market at this time. For thousands of years, the gold has been surviving for 125,000 tons, of which about one-third are in the vaults of central banks in various countries, and the rest is private gold storage and jewelry.

Gold prices continue to fall, and central banks of various countries feel that it is not cost-effective to spend manpower and material resources to keep them. Thousands of gold poured into the market, further exacerbating the decline of gold. In 1999, the world's largest gold market price hit a 20-year low of US$256.4, so that some investment experts raised the pessimistic argument that gold prices would fall to US$150 at the beginning of the next century, and gold is at risk of losing its value as a loan commodity or even pure commodity.
Chapter completed!