Reborn A Trillion-Dollar Real Estate Tycoon, Boss Yang Called Dad

In fact.

Since he made up his mind to sell coal mines and real estate companies, Shen Fei has been sending people to investigate the situation of the US real estate market.

According to the information he received, Shen Fei has a general understanding of the current situation in the United States.

In the millennium, in order to combat the economic recession brought about by the Internet bubble, the US government began to drastically lower interest rates.

Stimulated by low interest rates, American people began to borrow money from banks uncontrollably and used the borrowed money to buy houses, cars, or replace furniture.

As of this year, the average number of credit cards per American is 13, and the proportion of Americans with debt has increased sharply from 6% in the 1970s to 40% now.

And the total debt of Americans has soared from US$460 billion in 2003 to US$3 trillion in 2003.

The emergence of a large amount of cheap funds has caused real estate prices in the United States to rise sharply. In the short six years from the millennium to 2006, the average house price in the United States increased by nearly 70%.

The rising house prices not only make speculators make a lot of money, but also allow people who take out loans to buy houses to get a lot of cash by selling their houses after the house prices rise, or by re-mortgaging the houses after the increase.

All Americans feel that they are becoming richer and richer, and the realization of the American dream is just around the corner.

But Shen Fei knows it very well.

The subprime mortgage crisis will break out soon!

This crisis was caused by a type of housing mortgage loans called subprime loans, and the culprits responsible for creating these subprime loans were large and small banks and financial institutions in the United States represented by Lehman Brothers.

Home mortgage loan is one of many loans issued by banks to individuals.

Under normal circumstances, banks absorb ordinary people's idle funds and lend these funds in the form of loans to help those who temporarily cannot afford the full payment to buy a house.

In this process, the bank charges loan interest to lenders and pays deposit interest to depositors, while itself earns the interest rate difference between the two.

Of course, while banks earn interest differentials, they also bear corresponding risks.

For example, when a lender is unable to repay the loan due to deterioration in its own economic situation, the bank will suffer losses due to the inability to collect the loan.

Therefore, banks usually evaluate the borrower's repayment ability when lending, and require the other party to provide corresponding proof of employment, income source and property. The bank will only lend money when the other party proves that it has the ability to repay.

Such loans, which are only issued to qualified lenders, are called "prime loans."

But at some point, banks will also grant loans to borrowers who cannot prove their ability to repay, and this type of loan is called a "subprime loan."

Now, more than 30% of the loans in the entire United States are subprime loans.

It is self-evident how much risk this means.

When interest rates are low, these are not problems.

But once the Fed raises interest rates, it will cause huge problems.

The information obtained by Shen Fei shows that just last year, the Federal Reserve officially announced that it would raise interest rates to 5%.

This will devastate those borrowing at variable rates.

When they wake up, they suddenly find that their monthly payment has risen sharply with the rise in interest rates, and the amount has already exceeded their affordability.

So they were preparing to sell their houses to pay off the loans, but due to the sudden increase in the number of houses sold on the market, the selling prices of the houses began to fall.

Many borrowers then discovered that even if they sold their houses, the price would not be enough to repay the loans.

So they simply refused to repay the loan and waited for the bank to seize their property.

Due to the decline in house prices, after banks repossessed these houses, they could not make up for the losses even if they were auctioned. These losses were naturally passed on to investors who held "mortgage-backed securities."

Investors who thought they were buying financial products that were as safe as "treasury bonds" discovered that the securities in their hands were actually high-risk investment products with extremely high risks.

There is no way to even get compensation!

Under such circumstances, the U.S. real estate market seems to be on the verge of collapse.

"My people have collected information. In recent months, the stock market shock in the United States will soon spread to the whole world."

Shen Fei looked at Lin Yuan and said word by word.

When Lin Yuan heard his words, his expression suddenly became a little weird.

After a long silence, he raised his head and looked at Shen Fei: "Do you want me to go to the United States?"

"Yes."

Shen Fei nodded: "You go to the United States, and we will short the American real estate market!"

Hearing these words, Lin Yuan's expression changed immediately!

He never expected that Shen Fei actually planned to exploit Yingjiang's national crisis!

PS: This chapter is an excessive one. There is nothing I can do about it. After all, I have to explain to everyone what the subprime mortgage crisis is.

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