Reborn as the youngest son of a chaebol, starting with getting to know his eldest sister-in-law!

The New York Daily CEO immediately became serious.

“So you mean to let investors make their own choices?”

"Well, the current market conditions are such that investors who continue to believe in the stability of MBS will be isolated, and those investors who believe that MBS is risky will have to cut their funds."

"Do you know anyone who is withdrawing their capital? Among the funds currently added, there are not only stable government bonds, but also Hollywood funds. Will mortgage-backed securities face impacts and collapse when the time comes?"

"Yes, if there are investors willing to take over at a high level, that is their choice."

"I don't think any investors are going to follow your idea."

Rachel Aliyev frowned.

"I know there are risks in MBS, but I think in the short term, with ample funds and good market conditions, there will be no collapse. Even if there are risks, it will achieve a soft landing."

Chen Daojun knew that it was obviously impossible for him to convince this guy with just a guess: "Do you really think that if a crisis occurs, it will only be the financial sector of country M that collapses?"

"If a risk occurs, the federal government will do everything possible to prevent it from falling, because the collapse of Wall Street will put the world economy in trouble, not just Country M."

At this moment, the idea that Country M's economy is collapsing is tantamount to fantasy.

"So Rachel's view is to maintain the status quo?"

"No, we can take all the money and keep it, and the next time we invest, we'll look at it a little bit longer, and then we'll send an email to the client to make sure the risk is classified."

It was ridiculous to go all out on Country M's economic recession, but he was really curious because Chen Daojun had never been wrong in a single prediction.

Although Chen Daojun couldn't convince him, the other party was also doing it for the good of the company, and he was not a prophet. He had no reason to blame the other party.

"Then just like before, open half and half, make a good hedge, use half of all my assets, and go short!"

"All in 50%, all your property?" Rachel was one of the insiders who knew about Daojun's net worth. Chen Daojun's aggressive gambling attitude surprised him.

The richer people are, they will not put their eggs in one basket when choosing investments.

Because their wealth is hard-earned, and when they reach a certain level of wealth, there are many ways to make money. No one will be like a gambler and put all their wealth on them.

This is tens of billions of assets. Chen Daojun actually...
Although as a CEO, no one can resist the opportunity to operate huge amounts of money.

But this is too much!

Chen Daojun smiled slightly: "This is not all my property, but the property of Country M. I am still young. Even if I lose everything, I still have time and money to start over."

Rachel was still sighing.

"Would Wall Street be intimidated by taking your money? I wonder if there's ever been a time in the history of Wall Street where so much money was being gambled."

"Only half."

Chen Daojun corrected him.

"Yes?"

"Only half of my assets are going to Wall Street."

Rachel's face broke into a smile.

"The probability is 50%, you only bet half? Isn't it too low-key?"

"I just told you, I only bet half so that I won't be nervous. The other half must be released in London. Finance in the world is not all about Wall Street."

"London?"

Rachel was silent.

As a former world financial center, London is home to more than 5000 financial institutions, including the Bank of England, JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, Citigroup and HSBC.

The scale of London's core area is exactly the same as that of Yeouido, but the scale of liquidity is completely different.

"Yes, you should be able to absorb half of it there, and there are many international speculators joining the market over there."

Rachel's eyes twinkled.

That's because he noticed that if the Wall Street crash did happen, he might be the one to pull the trigger.

It's like dropping a billion-dollar bomb all at once.

Next, the first thing Chen Daojun has to do is to recover the money buried in the mortgage securities.

If it were taken out at once, Wall Street would be a sensation.

However, his sales of mortgage-backed securities were all huge hits. After he left, other institutions would also enter the market, so it would not be a big problem to digest the sales.

"MBS's money has been disposed of, what are you going to do with the money next?"

“It’s a bet that all the mortgage bonds are worthless, so we just have to short the stock index!”

"When will we know the outcome of that bet?"

Rachel still felt unbelievable.

"next year."

Rachel couldn't believe her ears because it happened so fast.

If Chen Daojun said 10 years, he might agree.

After 10 years, even if bad debts start to appear, time can be bought to deal with them, but next year?
how can that be!

Now, country M's growth rate is booming, and its stock market ratings are very high.

Impossible is just another way of saying extremely unlikely.

Chen Daojun thought of the global crisis caused by subprime mortgages in his previous life in 08, and casually said:
"In 2005, when the volume started to really come in, it was a fixed rate of 2% for 2 years, but starting this year it's a variable rate. You're paying more than 10% in interest, but citizens of Country M can't afford it."

"They're stable enough to own a house. It's dangerous, but it's hard to collapse all of a sudden, right?"

"Who said it's stable? Subprime mortgages are literally lower than non-prime, just the lower-middle level. The problem is that if people who can't afford a house own a house, even if you only have 1 house, the interest you have to pay will jump to 30%. , if we encounter layoffs, will we completely collapse?"

Rachel did not correctly see the greedy nature of Wall Street.

Bankruptcy or not, regardless of the risk, those who are eager to make money will just go through the process and get a mortgage approved as long as they show up at the window.

In other words, as long as they can get money from the bank, they will even falsify the income of their customers.

Over time, banks have lent money to people who should not have lent money.

If this continues, it will create huge risks.

"Okay, that's it. So how are you going to gamble?"

"Credit Default Swaps (CDS)."

Credit default swaps are a type of default insurance.

For example, if you have a 1 million won bond from Apple, if Apple goes bankrupt, the 1 million won bond will disappear.

Just buy insurance to avoid this risk.

Insurance sounds complicated, but in fact the internal operation process is also very simple.If bankruptcy occurs within 10 years, the insurance company will pay 20 won per year, provided that the insurance company pays the entire 1 million won.

For people in China, the reason why insurance is cheap is because Apple is a very healthy company and there is no possibility of bankruptcy within 10 years.

There is no risk, so insurance is cheap.

If the credit rating is low and the company is not sound, the insurance premium will of course go up.

Interestingly, greedy Wall Street tycoons have turned insurance into a gamble.

Even people without a bond can purchase insurance.

If Apple goes bankrupt in 10 years, anyone who pays 20 won a year can get 1 million won.

Many people think that even without Apple's stock and bonds, you can bet on whether it will go bankrupt.

The insurance money paid every year is the chip for betting, and if you win, you will make a hundred million.

Rachel shook her head.

"We have not issued credit defaults for financial products. Harry Potter, you are buying a product that does not exist. No company will give up this kind of business."

Rachel sighed as the conclusion was futile.

"I believe that anyone in the financial sector will welcome it, including Goldman Sachs, Deutsche Bank, Morgan Stanley, Barclays Capital, Merrill Lynch, Citigroup, Bank of America, Credit Suisse, JPMorgan Chase, UBS, and countless others."

"Who in the financial world would listen to such a ridiculous story about bankruptcy?" Rachel asked.

"Why not include Bear Stearns and Lehman Brothers? Are they also top conglomerates? Those two companies will go bankrupt."

When Chen Daojun concluded in front of Rachel that these two very large financial institutions would go bankrupt next year, the other party opened her mouth wide.

In the conference room, analysts and fund managers from various financial companies were listening to Daojun's speech with sparkling eyes.

Some of them had taught Daojun about funds and financial derivatives a few years ago, but they also listened attentively.

Chen Daojun arranged a task that must be completed.

Everyone only expressed doubts, and some opened their mouths in shock.

"Harry, these companies are at the top of Wall Street. In a place that makes dozens of times more money than we do every day, isn't it a bit ridiculous to calculate the limit of solvency?"

They browsed the list of companies that manipulate currencies around the world, and when they said this, they actually represented a professional statement.

Chen Daojun didn't want them to understand everything, but he had to explain the possibilities.

“Think of it this way, all of our daily customers can get their money back in one go, so so far, so good?”

"Probably, any losses caused by sudden withdrawals by customers will be borne by the customers themselves."

This is a very normal answer.

We are only responsible for increasing the value of customers' money every day, but it is not gambling.

So Chen Daojun continued to ask: "But if someone suddenly appears, hands out a credit default swap contract, and collects US$1 million, this US$1 million must be paid from our daily money, not the customer's money, there is this Is it possible?"

Everyone thought Chen Daojun asked the wrong question.

They never promised all their customers a one-time withdrawal of money.

But Chen Daojun smells that now they only consider this situation, but they are not willing to tell the answer they already know.

"Our Zhudai can withstand risks, but this year someone will have to give up bonuses and leave the company. For Zhudai, someone should be responsible for the loss of US$1 million."

Looking at their sad faces, Chen Daojun continued.

"Imagine that the same thing happened to Goldman Sachs, Deutsche Bank, Morgan Stanley, Merrill Lynch and other companies, but the claim amount was US$100 billion. Can those companies survive by cutting wages and laying off workers like us?"

Considering such a large amount of funds, the cash flow of ordinary companies cannot be sustained at all. They already have the answer in their hearts, but they are not willing to admit it.

"That's the result I want, how much can the big financial institutions pay out of their own cash flow? They can't afford it, I can afford it, but what is the amount that would push the extreme option of declaring default and bankruptcy...?"

"That may be true, but we also need to consider their business philosophy, reputation, shareholders and social awareness."

"Are you saying that it's difficult to come up with the absolute maximum solvency just by looking at the numbers?"

“The effort may be based solely on numbers, but it won’t go to the extreme.”

Chen Daojun pointed directly at Rachel without thinking.

"You are the team leader of this project. The maximum possible short position. The deadline is 2 weeks. Choose the most suitable company, not the largest company, and then report to me."

Everyone, not just Chen Daojun, looked confused as he pointed at Rachel, but that didn't change Daojun's decision.

He wanted to figure out the solvency of the financial company while drafting short-term contracts with another expert.

This is because mortgage-backed securities are not a single product but rather a mixture of many liabilities, so it is necessary to set a standard for each security.

We selected the top 50 companies with the highest trading prices every day and gave them our own AAA rating.

To others, AAA is a symbol of safety, but to me, it's like a lottery ticket with the biggest bonus.

While Daojun was conducting stock analysis, Rachel contacted him quietly, and he had a very anxious expression upon meeting him.

"What's wrong."

Chen Daojun frowned.

"I've been talking around Wall Street... Harry, and I've found some people who think the same way you do."

Of course it exists.

Chen Daojun already knew how those people made money and followed the same path as them.

But he still pretended to be surprised and asked:
"Already? Who, those people?"

"Greg Lippman, Steve Eisman, John Fowles, Ben Hockett. There are individuals and institutions."

"When did they start?"

“Those guys had been there for two years and it wasn’t until last year that the money started coming in.”

"They must have lost a lot of money, haha."

That's natural, and as the value of mortgage bond products rises, it's a losing bet.

Because we have been betting continuously for two years, if it is an institutional investment, there will definitely be customer complaints, or a large amount of investment funds will be withdrawn.

"Goldman Sachs manages over $2000 billion in mortgage-backed securities alone, and the largest bet on that was only $7 million, and just to put that into perspective, they're going to face huge losses right now, maybe it's cut in half. "

If it is 2000 billion U.S. dollars, it is 200 trillion won.

As of 2007, the entire country's fiscal budget was only 230 trillion won.

Such a heavy amount of funds can naturally have a huge impact on the entire market, and his subordinates will naturally know this situation. (End of chapter)