Korean TV series: King of Peninsula 1997

Chapter 591 Incident
Two days later in the evening, Chen Yajun was called to the study room under several pairs of ambiguous gazes.

"Why did you remember to call me?" Chen Yijun opened his eyes wide, "Today is not my time."

"Don't let your head be filled with pornographic garbage," Li You glared at her unhappily.

"I arranged for Kinmen Trade, Kinmen Real Estate, and even Kinmen Entertainment. Why do you think I didn't make any detailed arrangements for Kinmen Securities, but just gave simple instructions?"

"Chen Yijun shook his head, threw away the yellow waste in his mind, and answered seriously, because crises are also accompanied by huge benefits."

"That's right," Li You nodded and casually placed the documents on the table.

"Just like what I analyzed before," Li You put his hands together and watched Chen Yijun flipping through the documents, "The cause of the initial subprime mortgage crisis was the excessive leverage ratio and the process of the bubble bursting.

After the real estate boom, falling house prices led to loan defaults, and financial institutions transferred risks through securitization, but ultimately the crisis was triggered by the plummeting value of securitized products.

This is also due to the banks. They first relaxed the lending standards and then packaged and sold high-risk loans. After investors bought these securities, when house prices fell and default rates rose, the value of these securities plummeted.

The key point here is that the root cause of the crisis is actually the collapse of the real estate market, especially the default of subprime loans, which will lead to a drop in the prices of related financial products. "

"Now the time has come. The subprime mortgage crisis has not yet arrived. It's time for Golden Gate Securities to make money."

"Since the beginning of this year, U.S. house prices have been falling and subprime mortgage default rates have been rising. It's time for us to enter the market."

"You should know how to use leverage?" Li You looked at Chen Yajun, not as gentle as usual.

"I know," Chen Yijun also became serious. She carefully described her thoughts, "Before the subprime mortgage crisis, we can short MBS and CDO index futures."

The core of the subprime mortgage crisis was that subprime loans were converted into mortgage-backed securities (MBS) and collateralized debt obligations (CDO) by financial institutions. After they were purchased by consumers, the plummeting prices led to the crisis.

In the market, Li You and others can make huge profits by betting.

“By shorting ABX index futures, betting on its price to fall.”

The so-called ABX index futures refer to derivatives that track the performance of MBS.

It can be understood as betting in advance that this thing will fall, and if the bet is successful, you will make money.

"There is an advantage of leverage. The margin ratio for futures is usually 5% to 10%. With 10 times leverage, if the ABX index falls by 20%, the return rate can reach 200%."

In fact, as far as Li You knows, throughout 2007, this broken index fell from 100 to 50. With a drop of 50%, the return rate can reach 500% using a 10x leverage.

Li You nodded in satisfaction, as long as his woman was not a fool. "After the subprime mortgage crisis caused huge losses to financial institutions, the stock market will be panic-sold. What should I short at this time?"

"Short S&P 500 stock index futures," Chen Yijun tucked his hair behind his ears. "Each point of the S&P 500 futures contract can be worth fifty dollars, the margin is about thirty thousand dollars, and the leverage can reach twenty times. If the index drops by ten percent, the return rate is two hundred percent."

This thing is similar to the above index, and the decline has also reached 48%. With a leverage of 20 times, the short-selling rate of return can reach nearly 1,000%.

These returns alone are enough to earn the money that countless people would be willing to pay for it even at the cost of their heads.

"But you have to choose the right time to do this," Li You reminded, "If you rashly short sell, you will suffer heavy losses."

"clear."

"With these two methods alone, we can make billions of dollars," Li You smiled. "We will start from this month and tentatively build positions. When the subprime mortgage default rate breaks through again in June and July, we will start to increase our positions and be ready to add more in October."

"However, we should also note that the Federal Reserve will definitely rescue the market by cutting interest rates. The stock market is likely to rebound briefly after the interest rate cut, so we should take measures to prevent a short-term rebound in the market."

In essence, these things are about making money by making predictions and betting through various research and analysis.

In fact, the billions of dollars that Li You mentioned are still too little considering the huge cash flow he currently holds.

You should know that the United States has passed the American Dream Down Payment Act in the past to lower the threshold for home purchases and issue subprime loans to those with poor credit qualifications. As of 2005, the scale of subprime loans has reached 1.4 trillion US dollars.

Not to mention that it is already 2007 and the scale is far more than this number.

He was afraid that he had made too much and would be exposed to the public and targeted by all sides.

From 2007 to 2008, the biggest beneficiaries of the financial crisis were Goldman Sachs International Investment Bank and various traders involved in real estate finance.

The losers are the investors from various countries including the United States, Japan, Germany, France, etc. who participated in this hunting game as prey, as well as the ordinary people who were unable to pay their loans after the United States entered the market.

After all, he is on the Korean Peninsula. If he were a legitimate white American tycoon, he would dare to make more and make as much as he can.

At worst, I'll be paraded around by American bankrupts and called a vampire. What's the big deal if I've got the money?

But among these big interest groups, a person from the Korean Peninsula would stand out.

Throughout the entire month of March, the outside world was in turmoil, but Li You rarely appeared. He even went to the headquarters of the Kinmen Group less frequently. Most of the time, he turned his study into a center of power.

The wind and rain from the outside world never came in, and living in the manor was as if those wind and rain did not exist at all. Not a single wave caused by the outside world could be seen from inside the manor.

As for the outside world, since last year, house prices in the United States have peaked and fallen, ending a five-year upward trend. The decline has accelerated since January, and now the decline in some areas has exceeded 5%.

This is just the decline in housing prices, and the default rate of subprime loans exceeded 20% in January of this year, as Li You said before. Today's international warning line is still 2%, but the default rate is already close to 30%, completely exposing the underlying asset risks.

Chen Yajun also began to conduct tentative, small-scale short selling. The funds flowed into the market quietly, but these silent funds will gather huge wealth.

But in mid-April, Li Lianchang came to visit Li You specifically for other matters.

It's no wonder he was anxious and nervous, but on April 14, April 15, and April 16, big things happened. First, on the 14th, the neighbor sent another Beidou satellite into space. How can I express my envy?
The satellite navigation system is an important space infrastructure. It not only integrates traditional astronomical navigation and positioning, but also has the advantages of ground-based radio navigation and positioning. It is equivalent to a radio navigation station set up in space, which can bring huge social and economic benefits.

The most important thing is that the satellite navigation and positioning system also involves political, economic, military and other fields, and is of great significance to safeguarding a country's interests.

The world's first global satellite navigation system is the GPS system implemented by the United States in 1973.

Although it is dual-use for military and civilian purposes, for a long time, the United States has provided precise positioning signals to its own military and low-precision signals with interference to other users. In other words, only they know the exact location of any target on the earth, and other countries using this system only know the "approximate" location.

These other countries, of course, include the Korean Peninsula.

Currently, only a few countries in the world can independently develop and produce satellite navigation systems.

Since the beginning of the millennium, China has sent four Beidou navigation test satellites into space and built the Beidou navigation test system.

This system has positioning, timing, messaging and GPS wide-area differential functions within China and its surrounding areas, and has played an important role in surveying and mapping, telecommunications, water conservancy, transportation and other fields.

Thinking of the relationship between Li You and the two American aerospace companies, he became anxious. Even if he just spent money to buy it from Li You's Dome Company, it would be a feasible option.

After all, Li You is still from the Korean Peninsula, and his wealth has not been outflowed, so the people can accept it. Maybe they will even give Li Youan a strange name.

If the American Dome Company under Li You can really produce a qualified satellite and launch it into space, the Korean Peninsula will once again be cleared of some of the people who admire the United States.

We even have a little say in space, so we don’t have to rely on others all the time.

For example, they used to depend on others for 24 hours a day, but now they would be grateful if they could save even one hour.

"Dome Company." Li You raised his eyebrows slightly. "I will go to the United States this month to test the research results."

It's not that he doesn't care about the company in the United States.

The Dome has received so much investment and its development is actually quite good.

Bezos' Blue Origin and Musk's SpaceX each have their own focus.

Although Blue Origin has set ambitious goals, it has been focusing on researching various parts of the spacecraft in recent years, such as power and drive systems, space propulsion, multi-channel avionics equipment and flight mechanics, and is constantly improving the spacecraft's guidance, navigation and control systems.

Three years later, Blue Origin produced the BE-3 liquid hydrogen-oxygen engine with a thrust of nearly tons.

The BE-3 is the first all-new liquid hydrogen-fueled engine in the United States since the RS-68 more than a decade ago, and is one of the most advanced engine technologies.

SpaceX is more inclined to overall development and pays more attention to truly private aerospace. It acquires excellent technologies from various companies to achieve space flight.

Just in 2005, SpaceX also purchased a 10% stake in Surrey Satellite Technology with the aim of using related technology.

In addition to Li You's large investment in SpaceX last year, Elon Musk also invested $100 million in order to prevent his own shares from shrinking. For him now, this is not a small amount of money.

But with money to purchase technology and equipment, the progress has been equally encouraging. At the end of last year, SpaceX announced that it had won a contract for commercial orbital transportation services from NASA.

Currently, 'Falcon 1' is the first launch vehicle manufactured by SpaceX, or developed after purchasing technology.

It started its flight mission last year, with a low-Earth orbit carrying capacity of 670 kg. The first stage is powered by only one Merlin engine, using liquid oxygen as the oxidizer and kerosene as the combustion agent.

This is not because it is good, but because
This is cheap.

Blue Origin also manufactures various models of engines, but none of them are as cheap as this one.

Musk is also a businessman. What he is pursuing now is not some high-end success, but the need to popularize and commercialize private space travel. Controlling costs is the most important point.

If Li You remembered correctly, this 'Falcon 1' would successfully send an earth observation satellite into orbit in the future. Its launch cost was less than $10,000 per kilogram, which was much lower than that of NASA.

This is also the model that Li You is going to use to satisfy the appetite of the Korean Peninsula and become a gimmick.

Ordinary people on the Korean Peninsula don’t care about whether it’s high-end or not. They only know that Li You was not bragging and he really used a rocket to send a Korean Peninsula satellite into space.

That's enough.

The second thing is the by-election for members of parliament on April 15th. Because some members of parliament have stepped down or resigned, the vacant seats will need to be re-elected.

To everyone's surprise, the Grand National Party suffered an unexpected defeat in the parliamentary by-election on that day, and the political situation became turbulent again.

Even including small political parties, Roh Moo-hyun's Open National Party still ranked last in the number of seats in this election.

But no matter what, the blow to the Grand National Party is something that the anti-Lee Woo coalition and the anti-Grand National Party coalition in the political arena would like to see.

At this time, another kind of opinion was born. The congressmen in these alliances were no longer obsessed with pushing Roh Moo-hyun to take office. Instead, they felt that...
The argument began to spread that if a pan-ruling coalition was formed, it might be possible to win the election.

"They are going to call themselves the 'Central Reform United New Party'. If that is true, they should have 20 seats."

Li Lianchang sighed, "They are trying to introduce a new presidential candidate. Theoretically, this is feasible."

"And the KMT," Li Lianchang took the tea Li Xuexi poured for him and said thank you quietly, "They are likely to disappear in the long river of history."

"The establishment of this small party is just the beginning. Soon the small parties will unite to form the so-called 'New Party of Grand Unification Democracy' and then put forward suitable candidates to compete with Congressman Choi for the presidency."

Doing their best to stop Emperor Choi Chang is also doing their best to stop Lee Woo behind him. This is what the congressmen are doing. They want to prevent the chaebols from having too much control.

(End of this chapter)