Chapter 1362: 1362
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It's very pleasing to have a good model's step. Especially at present, the fashion circle has not been occupied by all kinds of second-generation it girls who can only walk. If you want to be in the top position, it's the basic skill to walk well.
Elite's training base.
Simon enjoyed a real-time performance, but did not stay too much, and soon left with grace, leaving behind a group of disappointed girls from all over the world.
Influenced by Simon, the big butterfly, the fashion circle has changed beyond recognition.
Just like this time, except for the two Korean models Shen Caihui and Quan Youzhen, who were arranged in advance, they were also the kind that never appeared in history. Simon didn't know anyone else. The only thing is Yishui's young face, slim waist and long legs.
Leaving Brooklyn, Simon and grace take a helicopter to a shooting range in Greenwich.
I haven't played with big guns for a long time. I spent the rest of the afternoon shooting out more than ten bullets.
Grace accompanied her all the way, watching her little man carrying an exaggerated Barrett standing in the shooting range, bang bang, almost dazzled, thinking of running to be his target in a moment.
Stay at the manor in the northern suburb of Greenwich in the evening.
We invited guests to dinner tonight, Mrs. and Mrs. B, as well as Mr. and Mrs. John Merriwether, the head of long-term capital management company, where her husband Mark Shiner works.
With aliya's rapid rivalry with Peng Bo and its anti super posture, Alia software has also become an important financial information dissemination tool for the westero system to influence the international financial trend. In fact, it is equivalent to the right to speak in finance, which is very important. Therefore, Simon has always been paying attention to girl B's show.
However, the topic of dinner today is not aliya, but long-term capital management company.
Simon recently asked girl a to collect the data on the hedging positions of various mainstream national bonds, which can be regarded as the basis of this dinner topic.
Simon had thought about it at first, but after thinking about it, he decided to step in.
First of all, we should talk about the operation means of long-term capital management companies.
This is a financial transaction model created by John Merriwether during his stay with the Solomon brothers. At one time, it contributed more than half of the profits to the Solomon brothers. Later, due to the collapse of the Solomon brothers' national debt scandal, Merriwether's team was not affected. Instead, it left the independent portal and established a long-term capital management company.
Its main operation method is to make use of the interest fluctuation difference of bonds of various countries in the world in different periods.
The core is the zero sum game of futures.
Of course, the professional model is very complicated, but at its simplest, for example, the United States issues a batch of 10-year Treasury bonds with an annual coupon rate of 8%. Because of the different international financial environment, after the issuance of bonds, the actual trading process is not necessarily 8%, maybe 7%, or 9%. Of course, this is just for the convenience of example. In fact, the fluctuation range is the same as that of US dollar and foreign exchange, which is very low, maybe only 0.01%.
Long term capital management companies take this position to bet with others that the interest rate of these US Treasury bonds will rise from 8% to 9% in three months. That's probably the case.
However, because the fluctuation ratio of bond interest rate is very low, the 0.01% one needs to use more than 100 times leverage to build a very large position in order to obtain enough returns.
Just according to the data collected by Simon recently, the scale of long-term capital management company's current interest margin offset position is more than $300 billion, while the principal used by long-term capital management company is only $2 billion, more than 150 times of leverage.
Ten years ago, even five years ago, it had nothing to do with Simon.
Now it's different.
With the increasing scale of the westero system, the correlation between the whole westero system and the global economic trend is becoming stronger and stronger.
Therefore, Simon does not want to see a large-scale systemic financial risk that may affect the westrow system.
How did the global financial tsunami that the long-term capital management company almost caused happen?
It's simple.
In the second half of 1998, the Asian financial crisis spread all over the world, and the focus turned to Russia. When the Maoxiong economy was in danger, it had to seek assistance from the IMF as many Asian countries did.
At this critical time point, the long-term capital management company believes that, as usual, Russia will reach a rescue agreement with the IMF. At the worst, it involves the sovereign credit of the country. Even if Russia smashes the pot and sells iron, it will not allow its own national debt to default.
Now that the direction has been determined, long-term capital management companies decisively chose to be bullish and used super leverage to build hundreds of billions of dollars of positions under the situation of interest rate plummeting caused by system panic.
As a result, everyone knows.
Russia suddenly lifted the table and stopped playing, allowing the ruble to depreciate, defaulting on the national debt and closing the trading market.
As a result, not only Russia's domestic bonds, but also Europe, Latin America and Southeast Asia are in a state of grief, falling all over the board. The extreme market directly led to the breakdown of long-term capital management company positions.
The foundation of the international financial market is the national credit established by the countries behind it for a hundred years. If it cannot be realized, the credit will collapse, and the entire financial system will be destroyed. Therefore, under extreme market conditions, huge losses will first devour the traders themselves, and then the exchange platform where the positions are located. If the exchange capital is exhausted, the international financial market will be destroyed, If we don't want the international financial system to collapse, we need state assistance.
In the 1987 stock market crash, the federal government mobilized a large amount of money overnight to rescue the Chicago Board of trade, which is just like that.
In 2008, the subprime mortgage crisis, the same extreme market, in order to avoid the collapse of the financial system, the U.S. government spent hundreds of billions of dollars to make up for the mess left by the huge positions on Wall Street.
Between the two, the long-term capital management company crisis in 1998 is the same.
Even according to the long-term capital management company's current position, 150 times leverage can support the fluctuation of bond interest margin of 0.67%. Under normal circumstances, the fluctuation of 0.01% level will not explode. However, the extreme market of Mao Xiong's lifting the table directly makes the fluctuation of international bond interest rate exceed 1% in the short term, which is inevitable.
In the Manor Restaurant in the northern suburb of Greenwich.
John Merriwether thought that Simon, like those rich people who have been flocking to long-term capital management companies in recent years, would like to invest money in his own company. Unexpectedly, as he chatted, the other party's topic turned to let him reduce the company's position and avoid extreme market.
Even if the Solomon brothers decline, John Merriwether has not experienced any setbacks in recent years, including the 87 stock market crash of that year. Instead of losing money, they have made money from it.
Therefore, even if Simon westero, who has trillions of dollars of assets and once had amazing performance in the hedging field, is in front of him, John Merriwether, who is absolutely infallible in his own model, is still very upset: "Simon, maybe you don't know our model very well. Oh, speaking of it, there are absolutely not many people who can understand our model, It was made with the participation of two Nobel laureates. I think your worry is unnecessary. "
Simon has just patiently explained his worries. Seeing that John Merriwether is so worried, he is not angry. He stands too high and looks down on all living beings. Now it is difficult for him to have a strong emotional fluctuation on too many things. He just said: "John, frankly speaking, how your company operates has nothing to do with me. If the operation of long-term capital management company, the win and loss is limited to itself, I don't care at all, but the scale of your position is too large, and the current international financial situation may have extreme fluctuations at any time, which will lead to a systemic financial tsunami. Therefore, you'd better seriously consider my suggestion and reduce your leverage ratio to less than 50 times as soon as possible, and the size of your position should not exceed $100 billion. "
Simon's tone is still calm, even if his heart is still a little reluctant, John Merriwether will not be stupid enough to turn against westero. He still nods: "OK, Simon, I'll think about it seriously."
Simon continued, with a kind of natural tone: "no consideration, John, if you don't respond, then I will respond for you, a few phone calls."
Now Merriwether's face is a little ugly.
B girl and her husband Mark Hill looked at each other, but did not interrupt.
Simon's attitude is still flat, but the so-called "a few phone calls" sounds like thunder to Merriwether.
It's simple.
a fundamental solution.
Now that Simon has invited Merriwether, he won't waste his breath.
If Merriwether doesn't want to do it, Simon will greet investors in long-term capital management and ask them to divest. With the intricate influence of the westero system, it's not difficult to do this right now.
At the end of the dinner, Merriwether and his wife left first. Simon left B girl and her husband to talk about aliya company, and then sent them away.
It's more than nine in the evening.
Seeing off girl b and his wife, Simon went back to a living room on the side of the villa and asked about one thing. Girl a came over with a piece of information she had just sorted out during the day.
Since the dinner, grace has been listening in. Because she was forced to be a director of the Bank of New York Mellon by a man, she didn't want to look black and let the man down. Grace has made great efforts to teach herself some financial courses, so she probably understood the discussion between Simon and Merriwether during the dinner.
At this time, holding the fruit tray prepared by herself, she nestled up to the man, and while delivering fruit to the man's mouth, grace asked: "you said that, there may be a default of national debt in Asia or Eastern Europe, which should not be easy to happen?"
Simon took a bite from the apple, continued to read the document in front of him, and said, "it's because everyone thinks it won't happen that we need to pay attention to it."
Grace thought for a moment and said, "since you think this might happen, maybe you can short ahead of time?"
Simon said with a smile: "in the initial accumulation stage, in order to get enough funds as soon as possible, it's OK to make a few free bets. But if we keep doing this, sooner or later, there will be a rollover day. Therefore, for me, financial means are indispensable, but they can only be regarded as assistance. The core is to do all kinds of real businesses, which is the most important issue for the federal government, I remember a funny story told by Warren Buffett. Do you know about Warren Buffett
Grace chin in the man's shoulder point, listen to the appearance: "of course."
Simon continued: "what Buffett said is that a group of financial elites were stranded on a desert island because of an airplane accident. As a result, only two people went to engage in production activities such as planting, gathering and hunting. Everyone else began to play with various financial operations around their production materials. Do you know what the result is?"
"It must be starvation," said Grace with a smile. "But I don't think there's such a group of people who should be stupid enough to do such a stupid thing."
"The problem is that this is the current trend of the federal government, with a large number of entities moving out, and the proportion of investment banking, insurance and other financial industries increasing."
Grace thought for a moment and said, "it's all about globalization. I think it's just a trend of division of labor."
"Imagine," Simon said, "if there are some extreme events in the future, such as war, the sudden rupture of the global supply chain, you will find that the Federation will suddenly become a lonely island where two people engage in production and a group of people engage in finance. What will happen?"
Grace imagines the man's way of thinking, then gives a little shiver and looks up at Simon: "so, what are you going to do?"
Simon continued to look at the information in front of him and said faintly, "we can't change it. We can only take care of ourselves, westerosian. Do you understand that you are also a westerosian now?"
Men's words always seem to have some strange magic, grace listened to what he said, naturally nodded her head, and then she hit him again: "I'm just your westerosian."
"Then don't be lazy. Give me another apple."
"Well, ha ha."
Grace just felt soft and gave an apple to the man with a smile. She carefully held the fruit tray in her hand and glanced at the document Simon had just been reading: "what's this?"
"The draft agenda for the G8 summit."
Grace thought for a moment and then responded: "I saw it on the news recently, the one in Birmingham, England, on June 8."
"Yes."
The G8 summit must be familiar to later generations.
Coincidentally, this year's summit is the first G8, and Russia was only approved to join it in the second half of last year. In addition, the core of this year's agenda is also very interesting, globalization.
Grace continued curiously, "what do you do with this?"
"It's going to be over there," Simon said. "There's a reception over there. Let's get together and have a chat."
"Well."
Grace said that she understood, but it was hard to avoid a bit of worship and pride.
The little man of his family is a group of people who talk lightly, but now the most powerful group of heads of state in the world.
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It's very pleasing to have a good model's step. Especially at present, the fashion circle has not been occupied by all kinds of second-generation it girls who can only walk. If you want to be in the top position, it's the basic skill to walk well.
Elite's training base.
Simon enjoyed a real-time performance, but did not stay too much, and soon left with grace, leaving behind a group of disappointed girls from all over the world.
Influenced by Simon, the big butterfly, the fashion circle has changed beyond recognition.
Just like this time, except for the two Korean models Shen Caihui and Quan Youzhen, who were arranged in advance, they were also the kind that never appeared in history. Simon didn't know anyone else. The only thing is Yishui's young face, slim waist and long legs.
Leaving Brooklyn, Simon and grace take a helicopter to a shooting range in Greenwich.
I haven't played with big guns for a long time. I spent the rest of the afternoon shooting out more than ten bullets.
Grace accompanied her all the way, watching her little man carrying an exaggerated Barrett standing in the shooting range, bang bang, almost dazzled, thinking of running to be his target in a moment.
Stay at the manor in the northern suburb of Greenwich in the evening.
We invited guests to dinner tonight, Mrs. and Mrs. B, as well as Mr. and Mrs. John Merriwether, the head of long-term capital management company, where her husband Mark Shiner works.
With aliya's rapid rivalry with Peng Bo and its anti super posture, Alia software has also become an important financial information dissemination tool for the westero system to influence the international financial trend. In fact, it is equivalent to the right to speak in finance, which is very important. Therefore, Simon has always been paying attention to girl B's show.
However, the topic of dinner today is not aliya, but long-term capital management company.
Simon recently asked girl a to collect the data on the hedging positions of various mainstream national bonds, which can be regarded as the basis of this dinner topic.
Simon had thought about it at first, but after thinking about it, he decided to step in.
First of all, we should talk about the operation means of long-term capital management companies.
This is a financial transaction model created by John Merriwether during his stay with the Solomon brothers. At one time, it contributed more than half of the profits to the Solomon brothers. Later, due to the collapse of the Solomon brothers' national debt scandal, Merriwether's team was not affected. Instead, it left the independent portal and established a long-term capital management company.
Its main operation method is to make use of the interest fluctuation difference of bonds of various countries in the world in different periods.
The core is the zero sum game of futures.
Of course, the professional model is very complicated, but at its simplest, for example, the United States issues a batch of 10-year Treasury bonds with an annual coupon rate of 8%. Because of the different international financial environment, after the issuance of bonds, the actual trading process is not necessarily 8%, maybe 7%, or 9%. Of course, this is just for the convenience of example. In fact, the fluctuation range is the same as that of US dollar and foreign exchange, which is very low, maybe only 0.01%.
Long term capital management companies take this position to bet with others that the interest rate of these US Treasury bonds will rise from 8% to 9% in three months. That's probably the case.
However, because the fluctuation ratio of bond interest rate is very low, the 0.01% one needs to use more than 100 times leverage to build a very large position in order to obtain enough returns.
Just according to the data collected by Simon recently, the scale of long-term capital management company's current interest margin offset position is more than $300 billion, while the principal used by long-term capital management company is only $2 billion, more than 150 times of leverage.
Ten years ago, even five years ago, it had nothing to do with Simon.
Now it's different.
With the increasing scale of the westero system, the correlation between the whole westero system and the global economic trend is becoming stronger and stronger.
Therefore, Simon does not want to see a large-scale systemic financial risk that may affect the westrow system.
How did the global financial tsunami that the long-term capital management company almost caused happen?
It's simple.
In the second half of 1998, the Asian financial crisis spread all over the world, and the focus turned to Russia. When the Maoxiong economy was in danger, it had to seek assistance from the IMF as many Asian countries did.
At this critical time point, the long-term capital management company believes that, as usual, Russia will reach a rescue agreement with the IMF. At the worst, it involves the sovereign credit of the country. Even if Russia smashes the pot and sells iron, it will not allow its own national debt to default.
Now that the direction has been determined, long-term capital management companies decisively chose to be bullish and used super leverage to build hundreds of billions of dollars of positions under the situation of interest rate plummeting caused by system panic.
As a result, everyone knows.
Russia suddenly lifted the table and stopped playing, allowing the ruble to depreciate, defaulting on the national debt and closing the trading market.
As a result, not only Russia's domestic bonds, but also Europe, Latin America and Southeast Asia are in a state of grief, falling all over the board. The extreme market directly led to the breakdown of long-term capital management company positions.
The foundation of the international financial market is the national credit established by the countries behind it for a hundred years. If it cannot be realized, the credit will collapse, and the entire financial system will be destroyed. Therefore, under extreme market conditions, huge losses will first devour the traders themselves, and then the exchange platform where the positions are located. If the exchange capital is exhausted, the international financial market will be destroyed, If we don't want the international financial system to collapse, we need state assistance.
In the 1987 stock market crash, the federal government mobilized a large amount of money overnight to rescue the Chicago Board of trade, which is just like that.
In 2008, the subprime mortgage crisis, the same extreme market, in order to avoid the collapse of the financial system, the U.S. government spent hundreds of billions of dollars to make up for the mess left by the huge positions on Wall Street.
Between the two, the long-term capital management company crisis in 1998 is the same.
Even according to the long-term capital management company's current position, 150 times leverage can support the fluctuation of bond interest margin of 0.67%. Under normal circumstances, the fluctuation of 0.01% level will not explode. However, the extreme market of Mao Xiong's lifting the table directly makes the fluctuation of international bond interest rate exceed 1% in the short term, which is inevitable.
In the Manor Restaurant in the northern suburb of Greenwich.
John Merriwether thought that Simon, like those rich people who have been flocking to long-term capital management companies in recent years, would like to invest money in his own company. Unexpectedly, as he chatted, the other party's topic turned to let him reduce the company's position and avoid extreme market.
Even if the Solomon brothers decline, John Merriwether has not experienced any setbacks in recent years, including the 87 stock market crash of that year. Instead of losing money, they have made money from it.
Therefore, even if Simon westero, who has trillions of dollars of assets and once had amazing performance in the hedging field, is in front of him, John Merriwether, who is absolutely infallible in his own model, is still very upset: "Simon, maybe you don't know our model very well. Oh, speaking of it, there are absolutely not many people who can understand our model, It was made with the participation of two Nobel laureates. I think your worry is unnecessary. "
Simon has just patiently explained his worries. Seeing that John Merriwether is so worried, he is not angry. He stands too high and looks down on all living beings. Now it is difficult for him to have a strong emotional fluctuation on too many things. He just said: "John, frankly speaking, how your company operates has nothing to do with me. If the operation of long-term capital management company, the win and loss is limited to itself, I don't care at all, but the scale of your position is too large, and the current international financial situation may have extreme fluctuations at any time, which will lead to a systemic financial tsunami. Therefore, you'd better seriously consider my suggestion and reduce your leverage ratio to less than 50 times as soon as possible, and the size of your position should not exceed $100 billion. "
Simon's tone is still calm, even if his heart is still a little reluctant, John Merriwether will not be stupid enough to turn against westero. He still nods: "OK, Simon, I'll think about it seriously."
Simon continued, with a kind of natural tone: "no consideration, John, if you don't respond, then I will respond for you, a few phone calls."
Now Merriwether's face is a little ugly.
B girl and her husband Mark Hill looked at each other, but did not interrupt.
Simon's attitude is still flat, but the so-called "a few phone calls" sounds like thunder to Merriwether.
It's simple.
a fundamental solution.
Now that Simon has invited Merriwether, he won't waste his breath.
If Merriwether doesn't want to do it, Simon will greet investors in long-term capital management and ask them to divest. With the intricate influence of the westero system, it's not difficult to do this right now.
At the end of the dinner, Merriwether and his wife left first. Simon left B girl and her husband to talk about aliya company, and then sent them away.
It's more than nine in the evening.
Seeing off girl b and his wife, Simon went back to a living room on the side of the villa and asked about one thing. Girl a came over with a piece of information she had just sorted out during the day.
Since the dinner, grace has been listening in. Because she was forced to be a director of the Bank of New York Mellon by a man, she didn't want to look black and let the man down. Grace has made great efforts to teach herself some financial courses, so she probably understood the discussion between Simon and Merriwether during the dinner.
At this time, holding the fruit tray prepared by herself, she nestled up to the man, and while delivering fruit to the man's mouth, grace asked: "you said that, there may be a default of national debt in Asia or Eastern Europe, which should not be easy to happen?"
Simon took a bite from the apple, continued to read the document in front of him, and said, "it's because everyone thinks it won't happen that we need to pay attention to it."
Grace thought for a moment and said, "since you think this might happen, maybe you can short ahead of time?"
Simon said with a smile: "in the initial accumulation stage, in order to get enough funds as soon as possible, it's OK to make a few free bets. But if we keep doing this, sooner or later, there will be a rollover day. Therefore, for me, financial means are indispensable, but they can only be regarded as assistance. The core is to do all kinds of real businesses, which is the most important issue for the federal government, I remember a funny story told by Warren Buffett. Do you know about Warren Buffett
Grace chin in the man's shoulder point, listen to the appearance: "of course."
Simon continued: "what Buffett said is that a group of financial elites were stranded on a desert island because of an airplane accident. As a result, only two people went to engage in production activities such as planting, gathering and hunting. Everyone else began to play with various financial operations around their production materials. Do you know what the result is?"
"It must be starvation," said Grace with a smile. "But I don't think there's such a group of people who should be stupid enough to do such a stupid thing."
"The problem is that this is the current trend of the federal government, with a large number of entities moving out, and the proportion of investment banking, insurance and other financial industries increasing."
Grace thought for a moment and said, "it's all about globalization. I think it's just a trend of division of labor."
"Imagine," Simon said, "if there are some extreme events in the future, such as war, the sudden rupture of the global supply chain, you will find that the Federation will suddenly become a lonely island where two people engage in production and a group of people engage in finance. What will happen?"
Grace imagines the man's way of thinking, then gives a little shiver and looks up at Simon: "so, what are you going to do?"
Simon continued to look at the information in front of him and said faintly, "we can't change it. We can only take care of ourselves, westerosian. Do you understand that you are also a westerosian now?"
Men's words always seem to have some strange magic, grace listened to what he said, naturally nodded her head, and then she hit him again: "I'm just your westerosian."
"Then don't be lazy. Give me another apple."
"Well, ha ha."
Grace just felt soft and gave an apple to the man with a smile. She carefully held the fruit tray in her hand and glanced at the document Simon had just been reading: "what's this?"
"The draft agenda for the G8 summit."
Grace thought for a moment and then responded: "I saw it on the news recently, the one in Birmingham, England, on June 8."
"Yes."
The G8 summit must be familiar to later generations.
Coincidentally, this year's summit is the first G8, and Russia was only approved to join it in the second half of last year. In addition, the core of this year's agenda is also very interesting, globalization.
Grace continued curiously, "what do you do with this?"
"It's going to be over there," Simon said. "There's a reception over there. Let's get together and have a chat."
"Well."
Grace said that she understood, but it was hard to avoid a bit of worship and pride.
The little man of his family is a group of people who talk lightly, but now the most powerful group of heads of state in the world.
It's very pleasing to have a good model's step. Especially at present, the fashion circle has not been occupied by all kinds of second-generation it girls who can only walk. If you want to be in the top position, it's the basic skill to walk well.Elite's training base.Simon enjoyed a real-time performance, but did not stay too much, and soon left with grace, leaving behind a group of disappointed girls from all over the world.Influenced by Simon, the big butterfly, the fashion circle has changed beyond recognition.Just like this time, except for the two Korean models Shen Caihui and Quan Youzhen, who were arranged in advance, they were also the kind that never appeared in history. Simon didn't know anyone else. The only thing is Yishui's young face, slim waist and long legs.Leaving Brooklyn, Simon and grace take a helicopter to a shooting range in Greenwich.I haven't played with big guns for a long time. I spent the rest of the afternoon shooting out more than ten bullets.Grace accompanied her all the way, watching her little man carrying an exaggerated Barrett standing in the shooting range, bang bang, almost dazzled, thinking of running to be his target in a moment.Stay at the manor in the northern suburb of Greenwich in the evening.We invited guests to dinner tonight, Mrs. and Mrs. B, as well as Mr. and Mrs. John Merriwether, the head of long-term capital management company, where her husband Mark Shiner works.With aliya's rapid rivalry with Peng Bo and its anti super posture, Alia software has also become an important financial information dissemination tool for the westero system to influence the international financial trend. In fact, it is equivalent to the right to speak in finance, which is very important. Therefore, Simon has always been paying attention to girl B's show.However, the topic of dinner today is not aliya, but long-term capital management company.Simon recently asked girl a to collect the data on the hedging positions of various mainstream national bonds, which can be regarded as the basis of this dinner topic.Simon had thought about it at first, but after thinking about it, he decided to step in.First of all, we should talk about the operation means of long-term capital management companies.This is a financial transaction model created by John Merriwether during his stay with the Solomon brothers. At one time, it contributed more than half of the profits to the Solomon brothers. Later, due to the collapse of the Solomon brothers' national debt scandal, Merriwether's team was not affected. Instead, it left the independent portal and established a long-term capital management company.Its main operation method is to make use of the interest fluctuation difference of bonds of various countries in the world in different periods.The core is the zero sum game of futures.Of course, the professional model is very complicated, but at its simplest, for example, the United States issues a batch of 10-year Treasury bonds with an annual coupon rate of 8%. Because of the different international financial environment, after the issuance of bonds, the actual trading process is not necessarily 8%, maybe 7%, or 9%. Of course, this is just for the convenience of example. In fact, the fluctuation range is the same as that of US dollar and foreign exchange, which is very low, maybe only 0.01%.Long term capital management companies take this position to bet with others that the interest rate of these US Treasury bonds will rise from 8% to 9% in three months. That's probably the case.However, because the fluctuation ratio of bond interest rate is very low, the 0.01% one needs to use more than 100 times leverage to build a very large position in order to obtain enough returns.Just according to the data collected by Simon recently, the scale of long-term capital management company's current interest margin offset position is more than $300 billion, while the principal used by long-term capital management company is only $2 billion, more than 150 times of leverage.Ten years ago, even five years ago, it had nothing to do with Simon.Now it's different.With the increasing scale of the westero system, the correlation between the whole westero system and the global economic trend is becoming stronger and stronger.Therefore, Simon does not want to see a large-scale systemic financial risk that may affect the westrow system.How did the global financial tsunami that the long-term capital management company almost caused happen?It's simple.In the second half of 1998, the Asian financial crisis spread all over the world, and the focus turned to Russia. When the Maoxiong economy was in danger, it had to seek assistance from the IMF as many Asian countries did.At this critical time point, the long-term capital management company believes that, as usual, Russia will reach a rescue agreement with the IMF. At the worst, it involves the sovereign credit of the country. Even if Russia smashes the pot and sells iron, it will not allow its own national debt to default.Now that the direction has been determined, long-term capital management companies decisively chose to be bullish and used super leverage to build hundreds of billions of dollars of positions under the situation of interest rate plummeting caused by system panic.As a result, everyone knows.Russia suddenly lifted the table and stopped playing, allowing the ruble to depreciate, defaulting on the national debt and closing the trading market.As a result, not only Russia's domestic bonds, but also Europe, Latin America and Southeast Asia are in a state of grief, falling all over the board. The extreme market directly led to the breakdown of long-term capital management company positions.The foundation of the international financial market is the national credit established by the countries behind it for a hundred years. If it cannot be realized, the credit will collapse, and the entire financial system will be destroyed. Therefore, under extreme market conditions, huge losses will first devour the traders themselves, and then the exchange platform where the positions are located. If the exchange capital is exhausted, the international financial market will be destroyed, If we don't want the international financial system to collapse, we need state assistance.In the 1987 stock market crash, the federal government mobilized a large amount of money overnight to rescue the Chicago Board of trade, which is just like that.In 2008, the subprime mortgage crisis, the same extreme market, in order to avoid the collapse of the financial system, the U.S. government spent hundreds of billions of dollars to make up for the mess left by the huge positions on Wall Street.Between the two, the long-term capital management company crisis in 1998 is the same.Even according to the long-term capital management company's current position, 150 times leverage can support the fluctuation of bond interest margin of 0.67%. Under normal circumstances, the fluctuation of 0.01% level will not explode. However, the extreme market of Mao Xiong's lifting the table directly makes the fluctuation of international bond interest rate exceed 1% in the short term, which is inevitable.In the Manor Restaurant in the northern suburb of Greenwich.John Merriwether thought that Simon, like those rich people who have been flocking to long-term capital management companies in recent years, would like to invest money in his own company. Unexpectedly, as he chatted, the other party's topic turned to let him reduce the company's position and avoid extreme market.Even if the Solomon brothers decline, John Merriwether has not experienced any setbacks in recent years, including the 87 stock market crash of that year. Instead of losing money, they have made money from it.Therefore, even if Simon westero, who has trillions of dollars of assets and once had amazing performance in the hedging field, is in front of him, John Merriwether, who is absolutely infallible in his own model, is still very upset: "Simon, maybe you don't know our model very well. Oh, speaking of it, there are absolutely not many people who can understand our model, It was made with the participation of two Nobel laureates. I think your worry is unnecessary. "Simon has just patiently explained his worries. Seeing that John Merriwether is so worried, he is not angry. He stands too high and looks down on all living beings. Now it is difficult for him to have a strong emotional fluctuation on too many things. He just said: "John, frankly speaking, how your company operates has nothing to do with me. If the operation of long-term capital management company, the win and loss is limited to itself, I don't care at all, but the scale of your position is too large, and the current international financial situation may have extreme fluctuations at any time, which will lead to a systemic financial tsunami. Therefore, you'd better seriously consider my suggestion and reduce your leverage ratio to less than 50 times as soon as possible, and the size of your position should not exceed $100 billion. "Simon's tone is still calm, even if his heart is still a little reluctant, John Merriwether will not be stupid enough to turn against westero. He still nods: "OK, Simon, I'll think about it seriously."Simon continued, with a kind of natural tone: "no consideration, John, if you don't respond, then I will respond for you, a few phone calls."Now Merriwether's face is a little ugly.B girl and her husband Mark Hill looked at each other, but did not interrupt.Simon's attitude is still flat, but the so-called "a few phone calls" sounds like thunder to Merriwether.It's simple.a fundamental solution.Now that Simon has invited Merriwether, he won't waste his breath.If Merriwether doesn't want to do it, Simon will greet investors in long-term capital management and ask them to divest. With the intricate influence of the westero system, it's not difficult to do this right now.At the end of the dinner, Merriwether and his wife left first. Simon left B girl and her husband to talk about aliya company, and then sent them away.It's more than nine in the evening.Seeing off girl b and his wife, Simon went back to a living room on the side of the villa and asked about one thing. Girl a came over with a piece of information she had just sorted out during the day.Since the dinner, grace has been listening in. Because she was forced to be a director of the Bank of New York Mellon by a man, she didn't want to look black and let the man down. Grace has made great efforts to teach herself some financial courses, so she probably understood the discussion between Simon and Merriwether during the dinner.At this time, holding the fruit tray prepared by herself, she nestled up to the man, and while delivering fruit to the man's mouth, grace asked: "you said that, there may be a default of national debt in Asia or Eastern Europe, which should not be easy to happen?"Simon took a bite from the apple, continued to read the document in front of him, and said, "it's because everyone thinks it won't happen that we need to pay attention to it."Grace thought for a moment and said, "since you think this might happen, maybe you can short ahead of time?"Simon said with a smile: "in the initial accumulation stage, in order to get enough funds as soon as possible, it's OK to make a few free bets. But if we keep doing this, sooner or later, there will be a rollover day. Therefore, for me, financial means are indispensable, but they can only be regarded as assistance. The core is to do all kinds of real businesses, which is the most important issue for the federal government, I remember a funny story told by Warren Buffett. Do you know about Warren BuffettGrace chin in the man's shoulder point, listen to the appearance: "of course."Simon continued: "what Buffett said is that a group of financial elites were stranded on a desert island because of an airplane accident. As a result, only two people went to engage in production activities such as planting, gathering and hunting. Everyone else began to play with various financial operations around their production materials. Do you know what the result is?""It must be starvation," said Grace with a smile. "But I don't think there's such a group of people who should be stupid enough to do such a stupid thing.""The problem is that this is the current trend of the federal government, with a large number of entities moving out, and the proportion of investment banking, insurance and other financial industries increasing."Grace thought for a moment and said, "it's all about globalization. I think it's just a trend of division of labor.""Imagine," Simon said, "if there are some extreme events in the future, such as war, the sudden rupture of the global supply chain, you will find that the Federation will suddenly become a lonely island where two people engage in production and a group of people engage in finance. What will happen?"Grace imagines the man's way of thinking, then gives a little shiver and looks up at Simon: "so, what are you going to do?"Simon continued to look at the information in front of him and said faintly, "we can't change it. We can only take care of ourselves, westerosian. Do you understand that you are also a westerosian now?"Men's words always seem to have some strange magic, grace listened to what he said, naturally nodded her head, and then she hit him again: "I'm just your westerosian.""Then don't be lazy. Give me another apple.""Well, ha ha."Grace just felt soft and gave an apple to the man with a smile. She carefully held the fruit tray in her hand and glanced at the document Simon had just been reading: "what's this?""The draft agenda for the G8 summit."Grace thought for a moment and then responded: "I saw it on the news recently, the one in Birmingham, England, on June 8.""Yes."The G8 summit must be familiar to later generations.Coincidentally, this year's summit is the first G8, and Russia was only approved to join it in the second half of last year. In addition, the core of this year's agenda is also very interesting, globalization.Grace continued curiously, "what do you do with this?""It's going to be over there," Simon said. "There's a reception over there. Let's get together and have a chat.""Well."Grace said that she understood, but it was hard to avoid a bit of worship and pride.The little man of his family is a group of people who talk lightly, but now the most powerful group of heads of state in the world.
