Vol 3 Chapter 5: CDS

Credit default swap, creditdefaultswap, referred to as cDs.
It is the most common credit derivative product in the financial market bond market.
Similar to a complex of insurance and options, but not exactly.
In the late 1970s, affected by the oil crisis, the financial industry became a complete rubbish. Wall Street elites came to sell insurance products every day, and they were bombarded by customers with brooms or even guns.
The stock market and the bond market are equally difficult. Holding a single marketable security, the yield at maturity of 15 years is only US$10,000.
People have nothing to do, sell on the phone every day, and they are everywhere.
At this time, a man came to Wall Street and joined Salomon Brothers.
He is Lewis Lennery
In 1981, the U.S. Congress passed a bill. The asset securitization that appeared in the 1970s, especially real estate asset securities, has given great opportunities for birth and development. The United States has seen a climax of asset securitization, and the real estate securities market has rapidly expanded in scale, surpassing that of the United States. The stock market has become the world's largest securities market.
At that time, most Wall Street companies were not fully prepared for this sudden change, but Salomon relied on a sensitive sense of the market to establish a complete and standardized asset securitization department as early as 1978.
While other Wall Street companies are still hesitating and wandering, Salomon has earned hundreds of millions of dollars in revenue and has become a leader in the real estate securities market. Lewis Lennery, the general manager of the real estate securitization department, a bond trader who started his career from sending and receiving emails, has become a legend of Salomon.
the reason?
The reason is a new idea from Lewis Lennery.
cDs.
Anyone who buys a house will carry a mortgage with a fixed interest rate and pay it off in 30 years. However, if the price of the house goes down and the mortgage is cut off, the banking industry will suffer a lot of bad debts.
If housing securities are capitalized and a risk hedging tool is made, the risk of investing in real estate will be greatly reduced.
A perfect systemic bond.
People who invest in real estate buying cDs can avoid the losses caused by the downturn of the real estate, because according to the cDs rule, when the price is lower than a certain range value, the party who sells the cDs needs to pay the customer a liquidated damage.
Banks can also purchase cDs, which can avoid bad debts caused by banks due to mortgages.
The government can also benefit from this. As a result, cDs, the financial system develops steadily, and everything is under control?
then?
Then Solomon Brothers became the king of Wall Street.
In 1987, Salomon's capital reached 3.4 billion U.S. dollars, has 6,000 employees, and has branches in major financial centers around the world. Become a giant of Wall Street and an empire in the financial world in the mid-1980s.
Then there was no more.
In 1989, Salomon Brothers vacated a Tokyo Securities short call option, which was sold to major Japanese insurance companies after multi-channel turnover and the credibility of the King of Denmark.
Later, he over-buyed short options and faced huge losses and was acquired by the Travelers Consortium.
Of course, what really made cDs shine was the well-known subprime mortgage crisis, which appeared in China, and quietly appeared in major banking institutions in the next two decades.
Nine in the morning.
Happy Valley, Royal Villa Garden.
Shen Jiannan stood in front of the mirror, stretched out his hands, and let Aso Oriyue and Shinkawa Masako fiddle with him.
The underwear was put on, the pants were put on, the shirt was put on, and the socks were put on. When the suit was put on, a young man with extraordinary temperament appeared in the mirror.
Of course, Shen Jiannan was not idle either.
When Aso Orizuki helped tie his tie, he was still busy with his phone on the phone.
Charlie Cao’s work efficiency is very high, and within a few days, the contract requested by Shen Jiannan has been completely settled.
However, Shen Jiannan was still uneasy.
None of the major banks are vegetarian, and all of them eat meat.
"Charlie. This contract is very important to us. Are you sure there are no loopholes?"
"Boss. Sixteen of us cross-checked it 30 times and revised it a dozen times, and we were sure that there was no problem."
"Wai Rui dog. What about the confidentiality agreement."
"If HSBC violates the non-disclosure agreement, it must pay us $5 billion in damages. The responsibility lies with the individual."
"That's good. Wait for me at the bank gate in a while."
"..."
Hanging up the phone, Shen Jiannan looked at his teeth in the mirror.
With the greedy habit of bankers, now they are giving HSBC such a large luxury gift package, they will definitely go crazy with joy.
"the host."
Aso Oriyuki shouted and put the watch on Shen Jiannan's wrist.
The refreshing emerald stayed on the pulse, which immediately made people feel energetic.
Shen Jiannan stood still.
Aso Orizuki knew, and touched Shen Jiannan's lips with his feet.
"Ok?"
Shinkawa Masako was also very interesting, and took the initiative to send a kiss.
flutter--
A rag doll flew over and hit Shen Jiannan with precision. Seeing this shameless scene early in the morning, Lu Xinyue expressed her dissatisfaction with strength.
With white teeth, Shen Jiannan walked to the door and couldn't help but grabbed Lu Xinyue's head.
moment.
When the two separated, Lu Xinyue rolled her eyes severely.
Since returning to Hong Kong, this guy has become more and more unscrupulous.
Man, really can't get used to it.
Shen Jiannan accepted it as soon as he saw it, pretending to be a fool.
"Enron."
Da da da--
Say Enron, Enron will be there.
Shen Jiannan turned around subconsciously, and was immediately surprised.
Kardashian changed into a standard professional suit, a white shirt, a black suit, and a short skirt barely reaching the knees, which outlined a thrilling and beautiful landscape.
I don't know if the clothes are not suitable, the clothes on the fabric are too strong to be closed completely, and the buttons seem to be in danger of breaking at any time.
"boss."
In order to show that there is no ghost in his heart, Shen Jiannan quickly retracted his gaze and made a lady-first action towards Lu Xinyue.
Lu Xinyue rolled her eyes, ticking away on high heels.
Kardashian kept a half-meter away and followed closely behind her, making it impossible to move her eyes away from the waves.
Shen Jiannan looked at the back of the two, deeply intoxicated.
Suddenly, the Kardashian behind turned her head, her blue eyes cast a wink in an instant.
Like being charged, Shen Jiannan hit the corner of the sofa and almost fell into the mud.
Kardashian couldn't help laughing, ignoring the embarrassment of the big boss, twisting her waist and throwing the shameful guy far away.
endure.
I will endure.
Looking at the undulating backs of the two, Shen Jiannan did not dare to accept the move.
Kardashian is a swallow specially trained by the KGB. If he dares to mess around, he might die miserably and violently.
No, you must ask how Peng Er Crow is trained.
Xiao Niangpi, wait for me~EbookFREE.me~ In the lush yard, Tang Dunhou has been waiting for a long time in the extended Lincoln, waiting for the three people to get into the car, and the car drove out quietly when the accelerator was stepped on.
Central.
HSBC Bank Building.
Cohen Meriweather led a young Chinese woman standing at the door with her hands folded. The two occasionally greeted customers who entered the bank with a slight smile on their faces as a gesture of courtesy.
People who know Cohen Merriweather are very curious.
Obviously, he is waiting here.
However, as the chief executive of HSBC Hong Kong, only the one who visits Meri Weather to borrow money, how many people can let him wait in person at the door.
Is it the Queen of England coming?