Extraordinary Genius

Stocks, futures, bonds, etc. had fallen at a time of severe shocks to global financial markets, but many had found prices of crude oil and gold fluctuating, if not falling at all, but rising slightly.

First of all, those who fled the bond and stock markets entered the futures market. The futures are also futures, which are considered real goods.

They could have saved the bonds or whatever, into dollars or whatever, but the dollar was depreciating, and they were losing money.

The decline in the stock market, coupled with the emergence of a variety of vacant news stories, led to a large number of stockholders fleeing. There are, of course, some investment funds that take advantage of the shortage of stock markets and profit from reverse operations.

Unfortunately, this can't be done any time soon, not with an axe or something, but with no financial company willing to lend you stock.

Everyone knows the stock market is falling so badly, why lend you stock?

Previously, the leverage of many investment firms was constantly increasing, from five to ten times, to thirty times, and even some firms were able to leverage 50 times higher than others.

Don't think these investment firms are stupid, so much leverage is death. They can buy insurance, an insurance policy for credit default swaps.

Banks can't use these high leverages, but what about the funds and companies that invest in high leverage, too risky?

Buy insurance. Of course, this is not insurance in the traditional sense, but the actual effect is the same as insurance.

The fund company called the bank and said the risk of investment is high on my side. How about you help me insure against loan default? Ten years, I pay you 100 million a year, that's a billion dollars.

If I hadn't defaulted, then you'd have taken the premium for nothing, and you'd have made another investment in my premium, wouldn't you?

If I'm in default, then you have to help me pay.

Party A thinks that when I invest in leverage, the profits themselves are several times higher, and I take out a billion dollars to buy insurance, and I still have profits.

After analyzing it, Party B believes that the risk of Party A's breach of contract is extremely low, and may be 1%. So this insurance can be done, and the profit is not low.

If there's only one, then it's not particularly profitable, but what if we can get the same 100 customers? Isn't there a hundred billion in insurance?

Even if one of them is broke, I can afford it. Payment of insurance claims using premiums of other insured persons is in itself a normal means of operation of the insurance company.

So the banks sell this credit default swap insurance contract to the major fund companies and charge more premiums to the companies, and they're safe.

But it's going to take 10 years for this profit to come true. It's too slow, isn't it?

So they talked to the third party, and I had these contracts worth a hundred billion dollars, but it's going to take 10 years to get them, and I'm selling them to you for 50 billion dollars. Do you want them?

After bargaining, a third party buys away this $100 billion contract at a price of $40 billion, and Party B directly sacks $40 billion in profits.

The third party also felt like there was a little too much time in the decade, so he also sold the price after listing, $45 billion, attracted the fourth party to buy, and once they turned around, they also easily lost $5 billion in profits.

With this layering, combined with the appeal of this model, the market for this insurance contract has become extremely large, with a total volume of over $60 trillion.

All of these participating financial institutions, they make money, they make money, they basically come from the leveraged subprime bonds of the original company, and all of these loans end up on top of those credit institutions and lenders.

So only credit institutions and lenders lose, and everyone else makes money. Banks are said not to lose anything as a result, but biased banks are also credit institutions, even the underlying fund companies, investing in subprime loan bonds and so on.

When the lender defaults, the company holding the insurance contract pays off.

And then the last of the pickups went bad, and they had to pay for this insurance. If only one or two breaches do not matter, they can bear it. But how could they not have guessed that the default rate would be so high?

From a few percent to a dozen percent, insurance premiums can't be that high, not to mention they're still layering around.

When the last receiver goes bankrupt, it spills upwards, and then it spills the whole chain step by step.

That's when people started looking for political axes. We're going bankrupt.

But imagine how much insurance you only received at the beginning, but you paid more than a dozen times, if not more.

What if Miguo Axe doesn't have that much money? Simple, they have a two-room group like this, so the two-room group is forced to swallow another such shitty contract.

With the political axe, more foundations are going bankrupt. Some of their parent companies belonged to large consortia, and these losses were not insurmountable.

But now that the political axe has taken over, it would be nice to throw the baggage directly out. Those consortiums, they put their interests first.

So bankruptcy is getting worse, businesses are going bankrupt, individuals are going bankrupt, and that number is soaring.

Also at this time, Obama announced a series of measures aimed at the poor, which attracted too many people to vote for him.

He also claimed that the war waged by the United States against Afghanistan was simply a mistake. If the battle were to be resolved as quickly as they had expected, it would have taken so long to bring down the US economy.

Anyway, Boo Ten is about to step down. At this time, any shitty basin will be buttoned into his head. Many policies are decided by the state, and Boo X's power is far less than that.

The Boo Ten family also worked behind their back, trying desperately to stall, at least let Boo Ten leave his post safely, and then throw it to his successor to prevent their family from running again, when the opponent took it out.

The economic situation in the US is getting worse and the European side is severely affected, even UBS is losing money.

At this time, a lot of money simply escaped from the US market and turned to the European market, which is actually why Europe is trying so hard to save the market, attracting these tourists to join, making their economy better.

The economic situation in the United States was also related to their ability to attract the largest amount of foreign investment in the world.

Those funds went to Europe, and as Feng Yu expected, they joined the futures market, and the biggest investments were in crude oil and gold.

After seeing these news, Feng Yu relaxed a lot. Looks like the crude oil rose to about $100, no problem!

At the time of Feng Yu's rehearsal, a major partner of Feng Yu's business, but serious problems arose.

……