Reinventing the Millennium.

Chapter 838 Lehman Moment
The New York Times has not made any achievements since its establishment.

At the beginning, Summers was very interested, thinking about taking the pulse of the American society and economy, and showing that he had inherited the skills of economists from Dasa.

However, when he got the pulse, he suddenly couldn't make up his mind, couldn't see the situation clearly, and couldn't tell the context. The research report originally scheduled for the first quarter was delayed, and he himself became a little dull because of this delay.

When Fang Zhuo gave a suggestion of "analyzing Lehman", Summers was still not interested, but agreed to do it, and handed over the project to the staff from Harvard Business School.

This research report related to Lehman was going on normally, but as some people in the industry provided quite detailed and reliable data and the changes in the industry over the past few months, things gradually became interesting.

Today's housing market is bloody due to subprime defaults.

The wave of failures of housing subprime mortgage lenders that started in March spread to Bear Stearns, the fifth largest investment bank in the United States, in August, and two of its funds declared bankruptcy.

At the same time, Lehman's stock price once rushed to a high of 72 US dollars.

The reason why the capital market reacted like this is precisely because Lehman has made frequent moves in commercial real estate this year, and its investment has repeatedly hit new highs. The related bond issuance is very popular. Axton, the second largest high-end apartment developer.

The amount of this acquisition is as high as 222 billion US dollars.

Stimulated by this, the capital market believes that Lehman's construction around commercial real estate is quite successful, which is different from institutions such as Bear Stearns, Citigroup, and Merrill Lynch that frequently spread unfavorable news.

Lehman shares bucked the trend and soared.

The problem is that the acquisition, which was announced in May, wasn't announced until August.

During the past four months, the subprime debt crisis and the credit crisis have changed the market for commercial real estate and related mortgage securities, and the commercial mortgage securities issued by Lehman with the Axton project have lost their sales.

Due to market changes, the original customers are increasingly holding tight to their pocketbooks.

Lehman's commercial mortgage securities CMBS can't flow!

It was at this time that the "New York Economic and Social Development Institute" released its first research report since its establishment, analyzing Lehman's failure in commercial real estate, and using this case to issue a stern warning to the US financial market.

——Lehman has a very serious problem, and this problem is probably just a microcosm of the financial market!
——The United States must be alert to the systemic financial risks brought about by the subprime debt problem!
The Lehman case was handled by people from Harvard Business School, and it was a warning that Summers was determined to give after being re-interested in the case.

However, "systemic financial risk" is far less compelling than "Lehman problem".

The data in this NYE ​​research report is very professional. The funds, leverage, process, and problems of Lehman’s acquisition of Axton are all described very expertly. Many figures have caused some institutions to question Lehman in the current environment. .

——For a $222 billion acquisition, the New York Times speculates that Lehman himself actually paid less than $3 million!
——The leverage ratio exceeds 40:1!

Then, once this huge commercial real estate project falls into the hands, those leveraged bills, bank financing, commercial mortgage claims, equity bridge loans...all turned into ropes and tightly strangled Lehman's neck!

Did this project fall into the hands?
The NYE report, citing sources familiar with the matter...

——"Lehman is crazily giving away profits, they are even negotiating prices at 10%, 20%, 30%, crazy, already crazy!"

——"No one dares to buy the CMBS issued by Lehman, and they are all afraid of Lehman's default."

——"Walsh, who is in charge of this project at Lehman, called me. He said that Lehman was willing to take the first $50 billion default risk, but I still didn't dare to take it. I was afraid that this time it would be a $100 billion default. A loss of 50 billion is enough to make me jump off a building!"

From industry changes, funding data to project facts and insider revelations, the NYE research report restores Lehman's predicament in commercial real estate and CMBS in high-definition.

Affected by this, Lehman's stock price took a big dive!

The stock price fell from $72 to $56 in a short period of time, a drop of up to 22.2%!

Lehman urgently held a press conference, denying the research report of NYE, denouncing it as false and smearing.

The bulls then fought back and the stock rallied to $65.

However, before the NYSE report was issued, Goldman Sachs suddenly came out, arguing that the liquidity crisis caused by the subprime debt default had led to substantial instability in the commercial real estate securities market.

The New York Times reported that Goldman Sachs spoke out, and more institutions expressed their views more or less.

The stock market voted with its feet, and Lehman's stock price fell again, plummeting from $65 to $49, and finally rebounded slightly to the $50 mark.

Compared with the high level of 72, Lehman's share price was 50.65 by the time Fang Zhuo was invited to Stanford, a drop of nearly 30%!

An international investment bank lost 3% of its market value in a short period of time, and it was precisely the commercial real estate project that was previously called a model in the market that caused it to suffer.

Regarding everything that happened in a short period of time, when Fang Zhuo was standing in the classroom of Stanford Business School, when he was asked about things that seemed to have some connection with him nowadays, he first sighed sincerely.

"Stimulate."

This is also the common mood of the teachers and students in the business school who came to listen to the guests share their business experience today. Lehman's strengths have become weaknesses, profits have become losses, and the stock price has plummeted from a high level. This is too exciting!
However, what Fang Zhuo found exciting was one of the things that was not disclosed in the research report.

The money that Lehman bought Axton's operations, $90 billion here, came from Fannie Mae and Freddie Mac, the two largest home mortgage lenders in the United States.

And Kong Yu has already started shorting Fannie Mae and Freddie Mae, and has been increasing their positions depending on the situation. He never expected that this investigation of Lehman would involve Fannie Mae and Freddie Mac.

It can only be said that Lehman is indeed strong, and the network resources are also very strong.

"Mr. Fang, I heard that you were shorting Lehman before, and this time the NYSE that issued a research report on Lehman is also sponsored by you. Can I understand that this is your attack on Lehman?" a student asked. also received considerable attention.

Fang Zhuo was very calm: "Before Lehman's window paper was pierced, did you also think that its commercial real estate projects were excellent? Without this report, would the excellent Lehman be the truth in your opinion? "

"Similarly, I did sponsor the New York Institute, because Summers is an economist I respect very much, but, students, I am not the only one who sponsors this institution. Are other sponsors also sniping mines? Man?"

"New York Economics Institute is an objective and independent third-party organization, and I look forward to it providing us with a deeper perspective."

The New York Times is sponsored by Fang Zhuo, but it is too eye-catching to have only one sponsor. Therefore, the New York Times has made some alms, so that if there are more donors, he will be very comfortable in it.

Fang Zhuo continued to respond: "I didn't hide anything when I was shorting Lehman. If I wanted to snipe Lehman, I wouldn't dare to admit anything, but if there is nothing, then there is nothing. I don't need to deny anything."

There is no need to deny anything for himself, but he, Fang Zhuo, has his duty to deny all the needs of the New York Times. He is denying them for the New York Times.

There was applause in the business school, and everyone felt that the top [-] richest people in the world were very sincere.

"Mr. Fang, many media have called Lehman's stock price drop the 'Lehman moment'. What do you think of Lehman's prospects?" Someone asked again.

Fang Zhuo laughed out loud when he heard this question.

"You shouldn't be asking that question to someone who is shorting Lehman."

"Lehman moment?"

"No, I don't think this is the Lehman moment, this is just the beginning for Lehman."

Fang Zhuo made a prophecy related to interests: "Being trapped by business pressure, financial pressure, and environmental pressure at multiple levels, when the stock price starts to fall, the real Lehman moment will not be far away."

(End of this chapter)