Some people may find it strange that these bad home buyers are really capable of repaying their loans?

Not to mention, they are really capable, because at this time the real estate industry in the United States is developing rapidly, with housing prices one price a day, and housing prices in a city can double within a year.

So a more bizarre situation occurred. After these bad home buyers bought the house through loans, they immediately mortgaged their house and obtained more loans.

This loan is used to repay the loan for buying a house, and on the other hand, it is used to squander yourself and enjoy a wonderful life.

Such a capitalless transaction naturally allowed countless poor people, even proletarians, homeless people to join the home buying army, and the entire loan industry was booming.

As mentioned above, there are two explanations for the subprime mortgage crisis. The above are all explanations for the first type of loan, so what does the second type of loan mean?

It’s very simple, it is the secondary loan extended by these loans.

Seeing that various lending institutions make a fortune through subprime loans, many financial companies and funds were very jealous, but they were not qualified to sell loans, so there would be no access coupons for this market. People on Wall Street felt uncomfortable and heartbreaking!

If fortunately, Wall Street has never lacked smart people, they soon found a way to enter, which is to use secondary financial products.

The banks that were able to issue loans soon discovered one thing, that is, the cash in their own banks was about to shine, but there were still many subprime loans coming in a steady stream.

According to the financial management conditions of any country in the world, banks must first ensure their liquidity, that is, ensure that there is a large amount of funds in the vault to be used to give to customers who come to withdraw money. This is the top priority in stabilizing the entire banking industry. After all, once customers find that the bank's deposits cannot be withdrawn, the sudden run will completely collapse the entire bank.

But you let these lenders and banks watch these businesses but can’t do it. They feel uncomfortable, so the geniuses on Wall Street come to the door.

They said that the completed loans can be packaged into a financial product, that is, financial funds to sell them!

For example, if a 20-year subprime loan has an annual interest rate of up to 5.6%, and there is a stable repayment every month, then this is an excellent fund project!

If the bank sells the loan to the fund in package, the bank can get a large amount of cash, and the fund then sells the loan to investors at a price, so that investors can get a generous amount of interest every year.

At the same time, because this is a mortgage and there is a mortgage on the house, there will be no house purchase, so this is indeed a foolproof fund product with extremely high security and considerable interest!

How about it, is this routine very familiar?

That's right, this is the routine that Boss Jia used when he sold Daqian VCD in the Fusang market. As a result, many financial institutions have discovered it and are immediately experiencing a treasure. They all sighed that Boss Jia is worthy of being the god of business, the god of story, the god of finance, the god of games, and such awesome financial products, only Boss Jia can invent such awesome financial products!

For a moment, financial products such as secondary funds instantly swept the entire financial industry. Countless rich people and investors felt that they had discovered a good deal of making money and investment management. After all, the price of a house cannot fall, which is absolutely impossible!!

Therefore, as soon as these sub-funds are launched, they will be sold out by investors who flock to them.

As long as you dare to sell, I will dare to buy it immediately. In an instant, all the financial institutions made a lot of money, and everyone's faces were full of beautiful smiles.

However, there are so many loans from various lenders, and soon all the loans were sold in the form of subprime funds. In this way, many people who still want to sell subprime funds scratched their heads.

So these people's heads suddenly lit up. Since subprime loans can be packaged into subprime funds, why can't subprime funds be packaged into subprime funds again?

Well, there is no such statement as secondary funds. No matter how many times secondary funds are, they are called secondary funds. Many investors don’t care about so many. When they see secondary funds, their instinctive reaction is to make money, and the annualized rate of return is gratifying, so they buy and buy crazy.

In the craziest 2006, some loans were even packaged and sold as many as five or six times, which was layer after layer, constantly deriveing ​​new financial products, just like cabbage.

At the Wall Street financial conference that year, countless bigwigs praised it as the greatest financial product in the world and the greatest financial innovation in the world. This is the US dream. Only the United States can have such smart financial innovation, which can make countless paupers turn into tyrants with houses overnight, and make countless tyrants even more tyrants.

Later, someone did statistics that through these financial innovations, the output value of the US financial industry increased by tens of trillions of dollars in a few years, which was even greater than the US fiscal deficit.

Outsiders look very awesome, and they are worthy of being Americans. But anyone who is calm will find that this financial product, which has increased by tens of trillions of dollars out of thin air, seems to be a rootless tree, running water duckweed, which is fine on weekdays, but once the wind and rain hit, wouldn't it be...

This is the subprime mortgage crisis. It is conceivable how terrifying the danger such a huge financial plate will be if it collapses.

Some people realize this danger, some people do not realize that people who do not realize that are naturally happy. People who have already realized that they feel that since they have realized that they must run faster than those who do not realize that they will run away in advance. At that time, they will run away with their money in advance, and the losses will be of other idiots, which is so wonderful!

The crisis began at the end of 2006. The housing prices in the United States, which rose year by year, began to slow down at the end of the year, and many regions no longer raised prices. Of course, this is classified as a technical adjustment.

This means that if you adjust it temporarily now, it will still rise in the future.

The entire real estate industry has been rising for more than five consecutive years. Everyone believes that this adjustment is only temporary. By 2007, everything will return to an increase. No one realizes that this is a precursor to the beginning of a storm.

The first obvious reminder of this crisis came from the fact that New Century Financial Company, the American residential mortgage investment company, and Bear Stearns Bank declared bankruptcy in 2007.
Chapter completed!