novelden Chapter 1032 Going a little deeper
Chapter 1032 Going a little deeper
Cheng Yingjie pointed at Su Yang and laughed. This kid, Su Yang started to make up for it before he even asked.
If it would not happen, if he did not trust Su Yang, why would he travel thousands of miles and make a special trip to Jiangcheng City?
But now that he was here, no matter how Su Yang tried to evade the question, he had to ask. This matter was the most important thing that had weighed on him in recent times. He had already made a decision, but still felt uneasy.
After much thought, I decided to listen to Su Yang's opinion.
Even if there are disagreements, he can analyze from multiple angles to verify whether his answer is correct.
"You should be aware of the 2008 subprime mortgage crisis. This global financial storm ultimately caused terrible losses to the economies of various countries."
Su Yang nodded.
People often talk about the 2008 financial crisis and the 2008 subprime mortgage crisis.
But many people have no idea about this global financial crisis.
The so-called financial crisis was caused by subprime loans, which led to the explosion of the real estate bubble in the United States.
What is a subprime loan?
If we were to say who is best at judging people by their behavior, it would definitely be the banks.
Every year, banks issue a considerable number of loans. Some loans that are borrowed by companies with stable income, collateral, stable repayments, multiple businesses, and strong capital are called high-quality loans.
Subprime loans, on the other hand, can also be called low-quality loans that cannot generate stable income for banks.
Borrowers of this type of loan may have no income, no job, and no assets. With their bad debt rates remaining high, they are naturally listed as poor-quality loan users by banks.
Most people would wonder why banks are willing to lend money to such a group of people who clearly have no ability to repay.
The source of all this evil is naturally the continuously rising housing prices in the United States. In a low-interest environment, as speculators buy a large number of properties, capital wants to attract more people to buy houses, and banks want to gain more profits.
The loan standards have been relaxed on a large scale for those who have no repayment ability, allowing them to buy houses and experience the joy of rising housing prices and increased asset value.
From 2001 to 2006, housing prices in Country M continued to rise, even reaching an extremely terrifying level.
It was like a huge bubble that kept getting bigger and bigger...
Until the day it breaks.
There are two main reasons for the bursting of the real estate bubble in Country M.
The first is that since 2004, the Federal Reserve has continued to raise interest rates, causing loan costs to soar.
Originally, if you borrow one million yuan, you only need to pay 1% interest each year. However, with the increase in floating interest rates, you now have to pay 4%, 5%, or even 6% interest each year.
Most people are unable to repay the interest and are forced to default.
Originally, it wouldn't be a big deal at this point, but if you want to blame someone, it's because these M banks, in order to transfer risks, packaged all the housing loans into various bonds, funds, and insurance.
They even package these things as high-yield, low-risk products and sell them everywhere.
Imagine that one day someone bought a fund and made considerable profits because of the continued rise in housing prices in Country M. Suddenly one day, the fund began to suffer huge losses and fall.
So what's the first thing you do?
Definitely sell this fund and stop loss in time...
All holders of US mortgage securities, funds, and insurance have also made this decision.
As a result, these banks that sold their mortgage loans encountered a liquidity crisis, commonly known as a run on the bank…
Too many people came to exchange their securities for real money, and these American banks simply could not afford to pay so much money.
At this time, we also encountered the second problem of bubble bursting...
The continuously falling housing prices are becoming less and less valuable, and the loans in hand are even more valuable than the houses.
Then a large number of subprime loan borrowers who have no jobs, no assets, and no income will naturally choose to go to hell with you. I won’t pay back the money I owe to the bank…
Then, bad debt rates surged.
The banks were unable to collect the money they had lent out, and the value of the securities, funds, and insurance they had issued plummeted...
The second largest subprime loan company in Country M went bankrupt.
Lehman Brothers Bank went bankrupt...
Merrill Lynch was acquired by Bank of America...
The United States urgently took over the two largest housing mortgage companies in the United States, Fannie Mae and Freddie Mac.
Although it seems that the financial crisis was prevented, in fact, it is more appropriate to say that it was the unlucky people who bought US bonds who survived this disaster for the United States.
In fact, in 2008, the global stock market evaporated more than 30 trillion US dollars in total, and the Dow Jones Index of the United States fell directly by 54%.
Even the global GDP fell into the worst recession since World War II because of this financial crisis.
Now that Cheng Yingjie mentioned this matter, Su Yang couldn't help but frown, and he couldn't guess Cheng Yingjie's purpose.
Cheng Yingjie smiled and continued, "I want to ask you, will there be such a situation in the next two years?"
Su Yang shook his head: "Within ten years, there may not be such a big crisis."
Cheng Yingjie nodded slightly without saying anything.
According to Su Yang, such a crisis will occur again in ten years.
"After the US subprime mortgage crisis, the countries that suffered the most were European countries."
"Country Y and Country D are both facing huge losses due to holding a large amount of bonds and funds from Country M."
"The three major banks on Island B went bankrupt, and as a result, Island B almost went bankrupt..."
"We have to guard against such a big financial storm and financial crisis."
Cheng Yingjie turned his wheelchair and sat next to Su Yang.
"Last year, the Greek government announced that its fiscal deficit rate exceeded 12%, and the rating agency of the United States has downgraded the sovereign credit rating of European countries."
"If we encounter the 2008 subprime mortgage crisis again, such a global financial crisis will inevitably have a serious impact on domestic exports."
"Moreover, a large amount of investment will be invested in China and returned to Europe to rescue the market..."
Su Yang frowned, already knowing the purpose of Cheng Yingjie's trip.
Sure enough, because the Greek government's deficit ratio soared, rating agencies downgraded the sovereign credit ratings of European countries, which has begun to lead to the depreciation of the euro.
The European debt crisis has been brewing quietly.
Moreover, Cheng Yingjie had already discovered it in advance...
But they cannot determine whether this European debt crisis is local, small-scale, and will end soon.
Or just like the subprime mortgage crisis in the United States, it will sweep the world.
Of course, he knew something about such a big thing, but it was indeed difficult for him to give advice and show off his skills in front of Cheng Yingjie.
"Or, could you please ask a more detailed and in-depth question..."
"I really can't answer that."