How does the U.S. monetary emergency ( duplicate )

rss_w (bailout money, had to trillion or more, or do not penetrate why the crisis brain? There is one article pointed out that the root of the crisis of financial institutions a Credit Default Swap, CDS). Then, the sub-prime, leveraged, and what is the relationship between CDS? between them by what kind of interaction of today's financial crisis? analysis of the financial crisis in many articles, has not peruse on these issues to the easy explanation. This periodical offers to understand their own to provide an answer to these answers, for understandable causes, we use several assumed samples. has not proper to argue the Department saluted commentary.
one. lever. At present, many investment banks to earn profits, with 20-30 times leverage, assuming that A's own assets, a bank of 30 million, 30 times the leverage is 900 billion. In additional words, the banks 30 billion of assets A 900 billion as parallel to borrow asset for investment, if the investment earnings of 5%, then A to get 4.5 billion profit, compared to A's own assets, which is 150% of the profits. Conversely, if the investment losses of 5% , then the Bank lost A light all the assets of their 1.5 billion owed.
II. CDS contract. as leverage high-risk, in accordance with the customary, the Bank does not scamper for such a precarious action. So some people think One direction to obtain leverage to do A on B, said the loans do you aid me how to default insurance, the premium I pay you 5 million per annual for 10 years, a total of 500 million, whether my investment does not default,Women's Supra TK Society, then this insurance you took the pearly If breach of contract, you must compensate for me. A thought, if you do not default, I can make 4.5 billion, which takes out 500 million used for insurance, I could net 40 billion. If there is default,Supra Pilot Shoes, anyway, there insurance to amends. So in terms of A This is a business, earn, instead of losing. B is a beautiful male, did not immediately promised A's invitation, but go back and do a statistical analysis of the situation of non-compliance of less than 1%. If you do a hundred schools of business, you can obtain 50 billion total insurance premium, if one of breach of contract, amends up to but 50 million,Supra Shoes, even now the two breach of contract, they can acquire 40 billion. A, B either sides trust that this bargain to their avail, it immediately closed the transaction, the satisfaction of all.
three. CDS market. B do this after the insurance business, C in the afterward jealous. C B to go over there that you sell these 100 CDS Leave me how to give you 200 million for every contract, a total of 200 billion. B think my 40 billion to 10 years to get, there is now a 200 billion changed hands, and there is no risk, why not, so B and C immediately deal. As a outcome, CDS flow as the financial markets like stocks above can be traded and trading. In truth, after C got these CDS, does not absence to wait another 10 years to receive 200 billion, but put it up for sale, priced at 22 billion; D see the production, forget about the 40 billion minus 22 billion, and earn 18 billion, which is the . a resale, C earned 20 billion. Since then, the CDS to repeated speculation in the market, the market value of CDS now has a $ 62,000,000,000,000 Scoop.
IV. the sub-prime. above the A, B, C, D, E, F ... ... are production huge profits, then in the end from where the money came out of it? Basically, the money is alike to A from A and with the investor's profit. and maximum of their income from the U.S. sub-prime loans. People mention that the subprime crisis is due to lend money to the penniless. I disagree on this statement. I meditation that the sub-prime primarily to the mean American real estate investors. These human would have the economic strength ample to buy their own dormitory, but saw rapid increases in house prices, moving from the mind of ​​real estate assumption. They mortgaged their house, borrowed money to purchase investment housing. Interest on such loans to more than 8% -9% , with difficult to handle with their own earnings, but they can proceed to mortgage the house to the bank, borrow money to pay interest, sleight of hand tricks. A very merry at this time, his investment for his money; B is also very amused with the market cheap default rates,Supra Trinity NS Shoes, the insurance business can continue to do so; behind C, D, E, F, etc.,Supra Footwear, onward with money.
five. the sub-prime crisis. prices rose to a definite amplitude to rise not up, nothing responded the back plate. At this point, favor real possession speculators were worried feline aboard peppery bricks. sell the house, to reserve paying lofty amuse rates, and finally to a desperate daytime, the house exercising and arrangement Bank. At this time of default occurred. At this point A was a trace of apologize, big profits are vain, but too loss not there, anyway, there is B for warranty. B do not fret almost, anyhow, the insurance has been sold to C. So now this Where does the insurance CDS were in the G hand. G F just spent 300 billion to buy the hands of 100 CDS, have not had time to alteration hands, suddenly received the news, these CDS were downgraded, including breach of contract 20 , greatly surpassing the incipient estimate of 1% to 2% default rate. each breach of contract to pay 50 billion of insurance money, a total expenditure of 1,000 billion. and acquisition prices 300 billion CDS, G's losses totaled 130 billion. While the G is the name of the nation's altitude 10 large institutions, can not resist such a mammoth wastage. So G verge of collapse.
VI. the financial crisis. If the closure of G, then A cost of 500 million U.S. dollars to buy insurance on the bubble of the soup, even aggravate, leverage investment, along to the antecedent thinking, A lose it all of the assets is not enough debt. So the risk of A bankruptcy swiftly. In appending to A, there is A2, A3, ... ... A20, be arranged to near down all . Therefore G, A, A2, ... ... A20 came attach in front of the United States Treasury Secretary, a neb a cut lobby, G must not fail, it is a failure all over. Minister of Finance, a soft center, put the G to nationalized, then A, ... ... A20 of the insurance money totaling 100 billion U.S. dollars all paid at U.S. taxpayers.
VII. dollar emergency. 100 CDS mentioned on the market cost namely 300 million. The aggregate CDS market amount namely 62 trillion, assuming namely 10% of the gap of compact, rift of contract then there is 6 trillion CDS. This diagram is 300 million 200 periods. If the U.S. government 300 billion of donation value afterward the sum of the 100 billion CDS. then for the repose of those who default CDS, the U.S. administration apt bear the consequences of a 20 trillion. If you do no pay, we must look by A20, A21,Supra Skytop III Shoes, A22, and so an after variant collapse. No material what fathom the U.S. greenback devaluation was unavoidable .
the assumptions accustomed in the enumeration above and the number of discrepancies with the tangible location, yet the U.S. tin not underestimate the seriousness of the financial crisis.