nashuaworldcup Chapter 415 Avalanche, a harbinger of doom
Chapter 415 Avalanche, a harbinger of doom
When the two executives from Citibank saw this, they simply started dragging their feet.
I plan to see how my peers respond.
Fuld listened to his men's report with wide eyes.
Due to the acquisition of Xiaorili's mortgage securities products, Lehman Brothers' annual revenue reached a record level of nearly 600 billion U.S. dollars, with income exceeding 40 billion U.S. dollars.
The stock price has also reached US$165.73 per share, which means that Lehman Brothers’ market value has exceeded US$800 billion.
But less than three months later, Lehman Brothers' earnings showed a huge deficit.
"What's going on? Weren't you fine in the past few months?
Even if domestic defaults break out, why do foreign earnings fail to meet expectations? "
Fuld almost roared and questioned a large number of his financial elite.
It took a long time before someone raised their hand and said:
"Boss, after our investigation, we found that Sakurajima's real estate bubble is even more serious. The mortgage-backed real estate securities they sold us contain a large number of junk subprime mortgages!"
Fuld was stunned. He remembered that these products were obviously very profitable.
It was he who finally snatched it back from the Xiaoli Consortium.
"Didn't you check that there were no problems at that time?"
According to their past judgment standards, there is certainly no problem, otherwise they would not have acquired so many mortgage-backed securities.
However, as defaults broke out, many financial institutions suffered losses.
Only then did they realize that the financial products packaged in their childhood contained huge bombs.
Fuld saw that everyone was dull and silent, and he suddenly felt helpless.
But Fuld and others still did not realize that this would plunge Lehman Brothers into bankruptcy.
Just think that everyone is losing money, and you can double your profits in the future.
The first to fall was New Century Financial Company, which was acquired by Gilton.
As the second largest subprime mortgage company, facing a debt collection of US$174 billion from Wall Street, this company controlled by Universal Real Estate announced that it had filed for bankruptcy protection!
Then the beautiful country ushered in a massive wave of bankruptcies.
Mortgage lenders began to fail.
The Federal Reserve and the U.S. fiscal department are a bit overwhelmed.
Just when they were thinking about whether to invest heavily in bailing out the market, bad news came from Huanyu Real Estate - their cash flow had completely dried up!
Huanyu Real Estate has been playing the game of borrowing from the east to make up for the west.
Of course, there was no problem with all this during the real estate boom period, but now mortgage companies have closed down one after another, or they have reduced lending, housing prices have plummeted, and there are only people selling houses in the market, not buying them.
Huanyu Real Estate naturally has a shortage of funds.
The most fatal blow to Huanyu Real Estate was the collapse of New Century Financial Company.
This company is more like the cash machine of Huanyu Real Estate. Now that the money printing machine has stopped, it has naturally caused a series of reactions.
The shareholders of Huanyu Real Estate were shocked to find that debt was a bottomless pit. In the past, any company could survive if they took out some money.
But now that real estate has shrunk significantly, most of the assets managed by Huanyu are long-term fixed assets, which are difficult to realize in this case.
Therefore, since 2007, the share price of Huanyu Real Estate has begun to decline significantly, with a drop of as much as 70% in five months!
From the perspective of market value and debt, the former number one real estate company in the world is already insolvent!
The debt it owes is equivalent to 2006/1 of the beautiful country’s GDP in 6!
Wall Street and White House have tried their best to block news about Universal Real Estate's liabilities, and even banned discussion of it on the Internet.
People are still kept in the dark about this.
The financial director of Beautiful Country contacted several major shareholders to hold a meeting.
Fuld no longer looked as arrogant as he once did.
The CEO of Bear Stearns looked preoccupied.
The president of Merrill Lynch didn't say a word after entering the door, as if he had lost his soul.
The Financial Secretary saw their expressions in his eyes.
"You should all know that Universal Real Estate owes US$2 trillion."
Everyone was still shocked when they heard this number.
Even if all the capital of their five major investment banks were packaged, they would not be able to fill the hole in the world.
What's more, their own situation is not much better, and they may fall into a situation of cash flow drying up at any time.
"Our official opinion is that everyone should spend some money to help Huanyu Real Estate tide over the current difficulties. When the housing market picks up, Huanyu's crisis will naturally go away."
As he spoke, he looked into the eyes of several people.
Fuld stared back:
"Whoever wants to save someone can save him. Anyway, he has no money and his life is at stake."
Several other companies took a look and expressed their attitudes:
"How to save such a big hole? Officials should set an example."
The five major investment banks are also testing the official attitude. If they encounter such a situation, will the state take action?
The Financial Secretary frowned and shouted at the top of his voice:
"You are all the major shareholders of Huanyu Real Estate. If Huanyu falls, you are not far from bankruptcy!"
The leverage of the five major investment banks is so slippery, largely due to the asset valuations brought about by investing in Universal.
If the world explodes with thunder, the stocks of the five major investment banks will collapse!