Revisiting Future Path

210. People who see the future are eligible for huge profits

The day after Bear Stearns overturned, Lehman Brothers became the center of focus.

In March 2008, Lehman Brothers announced its first fiscal quarter (October-December 2007) earnings report, announcing a profit of US$489 million. Hedge fund managers who shorted Lehman Brothers stocks gave speeches to high-end investors, sharply questioning that these earnings data came from one-time earnings. Lehman Brothers responded quickly: "They extracted certain specific items from our quarterly report, took out of context, distort the facts, and conveyed false information that slandered Lehman Brothers to the public. This is suitable for them because they short Leiman. Man Brothers shares. All their baseless allegations are for profit."

Lehman Brothers vowed to declare financial health very well.

However, the capital market apparently believes more in the judgment of hedge funds, and Lehman Brothers' stock continues to fall.

In June 2008, Lehman Brothers announced its second-quarter earnings report. As judged by hedge fund short-seller managers, they suffered a huge loss of US$2.8 billion, proving that all the so-called "rumor rejection" were all Lehman Brothers' rhetoric. The capital market no longer believes in Lehman Brothers’ rumors and explanations, let alone the financial status that Lehman Brothers has announced. They feel that the loss of US$2.8 billion is still the result of deliberate fraud. As a result, Lehman Brothers’ stock price accelerated its decline and it had fallen to $19.81 at the end of the month.

The subprime mortgage crisis broke out for the first time in 2007. After Lehman Brothers survived the Fed rescue, the stock price was about $85 per share. In early 2008, Lehman Brothers' stock price was still hovering at $65 per share. At $85, Lehman Brothers lost three-quarters of its market value in just half a year. Moreover, $19.81 is the lowest point for Lehman Brothers since May 2000, and it can be described as returning to eight years ago overnight.

The public did not realize that the economic crisis and tsunami were about to come, and instead regarded the collapse of Bear Stearns and the collapse of Lehman Brothers' stock price as isolated incidents. Even on the relatively professional Wall Street, everyone is talking about Goldman Sachs manipulating the stock prices of Bear Stearns and Lehman, thinking this is a war between financial giants.

However, the arrival of the economic crisis is always lightning fast.

Another of the five largest investment banks in the United States, Merrill Lynch also sent bad news a few days later: in the first quarter of 2008, the net loss was US$2 billion; in the second quarter of 2008, the net loss was US$4.7 billion.

Fannie and Freddie are more dangerous than Lehman Brothers and Merrill Lynch. On July 26, 2008, the U.S. Senate approved a $300 billion housing assistance bill, authorizing the Treasury Department to increase the credit lines of Fannie Mae and Freddie Mac indefinitely, and purchase shares of Fannie Mae and Freddie Mac without a fixed amount if necessary. . However, the positive effects of the US$300 billion housing assistance program are very limited. Public opinion roughly estimates that Fannie Mae and Freddie Mac are still facing a deficit of at least tens of billions of US dollars.

At this time, the people at the bottom blamed the Senate, the Department of the Treasury and others for filling up the shortfalls caused by the greed of the financial giants; investors holding Fannie Mae and Freddie Mac stocks hoped that the U.S. Treasury Department would take more active and effective measures. Return to Fannie Mae and Freddie Mac.

China's economy has developed rapidly in recent years, and the balance of foreign exchange reserves has continuously set new records. Some of them have invested in Fannie Mae and Freddie Mac. No one wants their investment to come to nothing. The Chinese government also eagerly hopes that the U.S. government will make money for Fannie Mae and Freddie Mac. The Secretary of the Treasury Paulson said that he has communicated with the cabinet chief, based on this background.

If he tears his face and insists on shorting, Wei Dongsheng will not only offend the US government, but also offend all investors, including the Chinese government.

Wei Dongsheng answered Paulson cautiously: "I also hope that the market will stabilize."

Paulson nodded slightly: "The market will stabilize, if you actively cooperate."

Wei Dongsheng: "How do you want me to cooperate?"

Paulson: "The Rose Fund stopped short selling."

Wei Dongsheng: "The Rose Fund has stopped short selling."

Paulson: "The Rose Fund still holds a large number of short contracts."

Wei Dongsheng smiled and ironed: "The Ministry of Finance's strength in stabilizing the market is so great that it surprised me. Do I need to announce it to appease the market? The Ministry of Finance has decided to order the Securities and Exchange Commission to introduce permanent measures. From then on, hedge funds can only go long but not short. Contracts are all void; stocks can only rise but not fall, and all transactions that are lower than the current price are void. Such a market is simply fantastic, all stocks will not fall, the problem is only to earn more and less."

After all, Wall Street is the territory of other people's homes, and Wei Dongsheng, Gong Qiuqiu, and Rose Fund do not have an active advantage.

When JPMorgan Chase acquired Bear Stearns, it forced the Rose Fund to discount the paper-based US$1.5 billion contract to US$600 million through cumbersome restructuring and legal interpretation advantages. If the Rose Fund has a home field advantage like Goldman Sachs, JPMorgan Chase and Bear Stearns must pay $1.5 billion in full; but the Rose Fund is an outsider, the second has no history, and the third does not have enough network resources, so you can only watch. JP Morgan Chase and Belstad cut away 900 million US dollars.

After the overthrow of Bear Stearns, although the US government could not catch the footsteps of the Rose Fund, it still forcibly used the "Iraqi Weapons of Mass Destruction" similar falsehood to sued the Rose Fund and restricted the Rose Fund from transferring short profits outside the United States. As far as the technical level is concerned, both Wei Dongsheng and Gong Qiuqiu have ways to transfer funds beyond supervision. But such behavior not only instantly turns white legal money into gray or even black money, it will also be attacked by various departments of the US government.

Wei Dongsheng is not short of black money.

Regardless of the investment development of Panyang City or the development of the quantum wave circle, white capital is needed to drive the industrial chain.

What Wei Dongsheng wants is white money.

As a result, soldiers came to stand in the way and the water came to cover, the Rose Fund used legal means to fight the US government and its behind-the-scenes. As early as June 2008, the Rose Fund ceased to continue short selling, keeping the previous contract and waiting for Goldman Sachs, Morgan Stanley, Merrill Lynch, and Lehman Brothers to cut their flesh.

Although the Rose Fund has stopped short selling, the short contracts accumulated before have amounted to more than 70 billion US dollars on paper. In other words, if all contracts are paid in full, the Rose Fund will be able to take more than 70 billion US dollars.

In 2008, Warren_Buffett (Warren_Buffett), the top of the Forbes global billionaire list, had a net worth of only $62 billion.

Just two years after the establishment of the Rose Fund, it made a huge profit of Buffett.

Of course, just think about it.

The paper amount is the paper amount, and the performance amount is the performance amount.

The so-called more than 70 billion paper amounts are basically difficult to obtain in full from the Rose Fund. Some require a substantial discount like the Bear Stearns contract, and some are purely bright bubbles.

For example, in a short bet against Indy Mac Bank (Indy_Mac_Bank), Gong Qiuqiu concentrated on focusing on Lehman Brothers and Merrill Lynch at the time, and did not notice that Indy Mac Bank was suddenly seized by federal regulators. The $500 million contract suddenly became a piece of waste paper, and Indy Mac Bank made Gong Qiuqiu home with its death. Gong Qiuqiu later stopped the loss in time and sold the $500 million contract at an ultra-low price of $10 million. In this way, after deducting the previous guarantee fees and other expenses, the net profit of the Rose Fund is only a few hundred thousand dollars.

If it has not been sold at an ultra-low price, the paper fortune of US$500 million in the gambling contract will bring a loss of US$10 million to the Rose Fund.

If the prediction is accurate, it is not a win. It is a win if you can get real money.

The Rose Fund currently no longer expands the short-selling scale, but strives to realize the proceeds from the short-selling, so as not to die with the suffering owner like the Indy Mac Bank contract.

The Rose Fund has time and contract advantages, and has no capital to fight the US government. However, the Rose Fund has long relied on the advantage of short-selling in advance to attract a large number of high-end investors in the upper and middle levels of the US food chain. Among them are Hollywood movie stars, rugby and other sports stars, as well as famous hosts, famous writers, famous media people, and even the old political and business and the second generation of political and business people who want to make a quiet profit. This group of high-end investors have no feelings for Rose Fund, but they have feelings for Rose Fund short-selling returns. In order to obtain sufficient short-selling proceeds, they have pretended to be neutral on their own battlefield and criticized the government agencies for discriminating against the Rose Fund.

Perhaps it is precisely because of this complicated background that Finance Minister Paulson did not simply and brutally dissolve the Rose Fund, but took the trouble to take the opportunity of the Yanjing Olympics to personally meet with Wei Dongsheng to negotiate a flexible strategy.

The US government system is completely different from the Chinese government system. Paulson was chairman and chief executive officer of Goldman Sachs before he took office as Treasury Secretary. Paulson seldom threatened Wei Dongsheng simply and rudely with administrative orders. He was more accustomed to communicating with Wei Dongsheng through business negotiation thinking. Even if he occasionally sacrificed the advantages of government departments, he would use them as weights rather than nirvana in determining the ultimate victory.

Paulson only pretended not to hear Wei Dongsheng’s ridicule that Zhang Buzhun was allowed to fall, and he was not happy or angry and explained his meaning: “The United States is a free market and will never introduce such restrictions. In fact, the Senate approved a total of 300 billion yuan. The US dollar housing assistance bill has attracted a lot of opposition. Administrative intervention is always annoying. If there are other options, I am definitely opposed to the government’s rescue."

"I am not opposed to the Rose Fund short-selling profit. On the contrary, I admire the Rose Fund's success and your vision and determination. If you are willing to immigrate to the United States, I can even recommend you to be the CEO of Goldman Sachs. You can see People in the future are eligible for profiteering rewards."

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