Chapter 1997 Lehman Brothers Is Down!

In September, Fairy Bank was the most talked about by Chinese people, but in the world, everyone's eyes are still firmly fixed on Wall Street.

Perhaps it was Xiao Qi who disturbed this time and space. In August, after Huaguo launched an anti-dumping investigation and anti-monopoly investigation against the three major U.S. car companies, large-scale demonstrations by U.S. car companies were triggered.

These have nothing to do with Wall Street, but the current economic situation in the United States is very pessimistic, and the economy and finance are closely related, so this turmoil has directly affected Wall Street.

Concerned about the jobs of auto workers, several major auto unions in the United States directly demanded the redemption of their bonds in Fannie Mae and Freddie Mac.

This will kill Fannie Mae and Freddie Mac.

They were already on the verge of collapse, and they were exhausted with all kinds of bonds that were required to be paid, etc., procrastinating as much as they could, cheating as much as they could, trying desperately to keep themselves.

But this time is different. The major auto unions in the United States cover millions of workers. These people are the backbone of the manufacturing industry and the foundation of American workers.

The funds used by the auto union to buy bond investments are all the capital of these auto workers.

Once Fannie Mae and Freddie Mac do not pay them and promise to redeem them, the auto workers who have no savings will not be as simple as marching and protesting!

Maybe there will be riots and riots!

But Fannie Mae and Freddie Mac really can't help it. They have a lot of bad debts in their hands, but it is absolutely impossible for them to pay the tens of billions of dollars in bonds of several major auto unions.

However, such a predicament is not without benefits.

At least the federal government panicked.

They were struggling before, but now they can't. Fannie Mae and Freddie Mac can't pay the bonds of several major auto unions, which will kill people!

So the federal government hastily announced that it would take over Fannie Mae and Freddie Mac. They will actively evaluate their bonds and risks, and guarantee a satisfactory answer to the majority of investors.

hear this. The stocks of Fannie Mae and Freddie Mac plummeted again by more than 10%, showing no face to the federal government.

Everyone is not a fool, who doesn't know that Fannie Mae and Freddie Mac have become a mess, with 2.2 trillion US dollars in housing loans, 5.3 trillion US dollars in bonds and other trillions of non-performing assets, even all the banks and funds on Wall Street The companies add up and can't save it.

In the past, everyone still looked at whether Fannie Mae and Freddie Mac could hold on, but now the federal government has come forward to take over. Obviously they just can't do it.

The federal government is a poor man, often shutting down, asking them to spend nearly 10 trillion dollars to save Fannie Mae and Freddie Mac, isn't this an international joke?

Government financial institutions, major banks, investment funds, etc. in various countries are all crying and begging the US federal government at this moment to prevent Fannie Mae and Freddie Mac from collapsing. A hope, if you go bankrupt, you will be delisted. That would really be nothing!

Sadly, as anyone with any sense knows, the bankruptcy of Fannie Mae and Freddie Mac. It is already irreversible.

Immediately after that, the US federal government squeezed out more than 20 billion into Fannie Mae and Freddie Mac. Most of that went to repay the bonds of several major auto unions, which disappointed investors even more, despite the low price of Fannie Mae and Fannie Mae shares, this time plummeting 13%.

The US bond market and housing loan market are completely the most important part of American finance.

Now that Fannie Mae and Freddie Mac, which represent them, have fallen into the brink of bankruptcy, the days of those banks and companies involved in derivative financial products such as subprime debt are naturally becoming more and more difficult.

Xiao Qi has never had a good impression of American investment banks. So it fueled their fire again.

On Tuesday, September 5th, the British Financial Times broke a piece of news.

Lehman Brothers investment bank in deep subprime mortgage crisis. It was originally negotiating with Barclays, the third largest bank in the UK.

Lehman Brothers' liabilities exceeded 600 billion US dollars, but their various assets could add up to more than 300 billion US dollars, and their overall negative assets exceeded 300 billion US dollars.

But if you investigate carefully, you will know that many of the assets of Lehman Brothers have already fallen below the net worth. Once this financial winter is over, it is no problem to turn more than 400 billion yuan into more than 600 billion yuan.

However, such a large sum of money still needs to survive for several years, so a very powerful bank must be taken over to have this opportunity to survive, otherwise not only will it not be able to save others, but it will also involve itself.

Barclays will spend at most three to five years on Lehman Brothers' liabilities and assets, and it will be enough to wipe out the debts.

What they value is Lehman Brothers' network of contacts in various countries and the various elite talents it has, which is very beneficial to Barclays' global layout.

Facing Barclays Bank's entire plan to "save Lehman Brothers", that is, to acquire Lehman Brothers, whose market value has fallen by 94% for US$1.7 billion, the executives of Lehman Brothers have no objections, but the key is that they The eight executives in the company actually demanded a "golden parachute" severance payment of US$2.5 billion before agreeing to the acquisition.

Hearing such unreasonable and ridiculous conditions, Barclays backed down, and the negotiations between the two banks were about to break down.

Ok.

The financial industry in the United States was already in the midst of the wind and rain, and hearing such a super explosive news, it immediately produced a strong earthquake.

Originally, this news should have been disclosed a few months later, and those executives of Lehman Brothers were spurned by the people of the whole United States because of this, and became synonymous with greed and shamelessness.

That was the reaction a few months after the collapse of Lehman Brothers.

Now that it is revealed at this critical juncture of the negotiations, the reaction of the United States will be even more intense.

"I can't believe it, are these people full of shit? It's definitely a good thing that someone took over the mess of Lehman Brothers and prevented this century-old store from dying! These stupid executives, aren't they? Can’t wait for the collapse of Lehman Brothers?”

"It was this group of incompetent guys who brought Lehman Brothers to the brink of bankruptcy. And now this group of guys, facing the company they work for, instead of asking to save it, they are ignoring the company for their own benefit. Benefits, really shameful and hateful!"

"Oh my god, am I not mistaken? They only paid 1.7 billion dollars to buy Lehman Brothers, and these executives actually demanded 2.5 billion dollars in 'golden parachute' severance pay. How dare you fire them more expensive than Lehman Brothers?"

"Bah! Look, this is the kind of person who runs Wall Street. These bastards really want money!!"

"They are a disgrace to the United States. People who live like them are simply top-notch scum! Be careful not to be struck by lightning when you go out!"

"..."

Countless people have expressed their anger on various occasions, including ordinary people, government officials, senators, movie stars...etc.

Even the various elites on Wall Street did not dare to say words of sympathy for them in the face of interviews, and many of them hurried past with their faces covered.

The most angry ones were actually the middle and low-level employees of Lehman Brothers.

The treatment of Lehman Brothers is actually very good. They are all afraid that after the collapse of Lehman Brothers, they will fall into a situation where they will have nothing to cook, so they most hope to be acquired by Barclays Bank.

Now that such a big scandal has been revealed, the employees of Lehman Brothers are all angry, and they ran to the offices of the eight board executives to yell and curse, and it is said that they almost caused a physical conflict.

Under such circumstances, Barclays Bank of the United Kingdom immediately held a press conference, announcing that it would abandon its takeover plan to "save Lehman Brothers" because of "certain unattainable conditions".

Lehman Brothers executives also announced the next morning that they would file for bankruptcy protection today. The 158-year-old Lehman Brothers has finally come to an end.

As soon as the news came out, the U.S. dollar and the three major U.S. stock indexes all fell, and the market once again entered panic.

Lehman Brothers was the second of the five largest investment banks on Wall Street to fail.

But in the eyes of investors, this is not the end.

Because there is another of the five major investment banks next to it—Merrill Lynch, which is also deeply involved in the subprime mortgage crisis, and its losses are no less serious than Lehman Brothers.

Now that Lehman Brothers can't hold on and collapsed, will the next one be Merrill Lynch?

If Bank of Merrill Lynch goes bankrupt, will the next giants such as Washington Mutual Bank, American International Group, Citibank, etc., also declare bankruptcy?

With so many giants collapsing, what serious consequences will the dominoes trigger? Will the U.S. financial economy never recover?

Etc., etc.

Huge pressure and depression, like mountains, weigh on the hearts of almost every American.

Do not!

The source of the financial turmoil in the United States this time is the subprime mortgages they created themselves.

But the problem is that the subprime debt turmoil is not only popular in the United States. The financial giants in the United States have sold subprime debt bonds to the world. The leverage effect of trillions of dollars is a huge trauma to financial institutions all over the world.

When the United States collapses, everyone will be hit hard.

Such a severe situation is undoubtedly the biggest global crisis since the Great Depression in the 1930s.

And, frighteningly, it looks like such a global financial crisis is inevitable.

The severe financial tsunami shock is coming! ! (to be continued ~^~)