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One. Lever. At present, many investment banks to earn profits, with 20-30 times leverage, suppose a bank's own assets 30
A billion is 90 billion leveraged 30 times. In other words,north face hyvent jacket, the bank A 30 billion of assets as collateral to borrow 900 billion of funds for investment, if capital investment
profit of 5%, then A to get 4.5 billion profit, compared to A's own assets, This is 150% of the profits. Conversely, if the investment losses
loss of 5%, then the Bank lost A light all the assets of their own still owes 1.5 billion.

II. CDS contract. The leverage of high-risk, in accordance with the normal, the Bank does not run for such a risky operation
. So someone came up with a way to get leverage to do This insurance is called CDS. For example, bank A in order to avoid the risk bars
found a body shot B. Body B may be another bank, it could be insurance companies, and so on. A on B said, you shall help me to do a credit default insurance
how, my annual premium you pay 5 million for 10 consecutive years, a total of 500 million, if my investment does not default, then this
pen White took the premium you, if breach of contract, you have to for my compensation. A thought, if you do not default, I can make 4.5 billion, which takes out 500 million
to do with insurance, I could net 40 billion. If there is breach of contract, to pay the insurance anyway. So this is an A in terms of earn, instead of losing business. B
is a shrewd man, not immediately accepted the invitation of A, but go back and do a statistical analysis of the situation of non-compliance of less than 1%. If you do one hundred
business,tory burch snakeskin flats, you can get 50 billion total insurance premium, if one of breach of contract,true religion jeans for sale, compensation up to but 50 million, even if the two
breach of contract, they can earn 40 billion. A, B both sides believe that this sale to their advantage, it immediately closed the transaction, satisfaction of all.

III. CDS market. B, after doing this the insurance business, C in the next jealous. C went to B side that you sell these 100 CDS
me how to give you 200 million for each 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,the north face nuptse down jacket, why not, so B and C immediately deal. As a result, CDS flow as the financial markets like stocks
above can be traded, and trading. C after the fact to get these CDS,ugg QQ the most cost-effective and what kind of Ha, does not want to wait another 10 years to receive 200 billion, but put it up for sale,
price of 22 billion; D see the product, forget about the 40 billion minus 220 billion, and earn 18 billion, which is A resale, C earned 20 billion. Since then, the CDS in the market repeatedly copied, and now the market value of CDS has been copying
62 trillion.

IV. Sub-prime. Above A, B, C, D, E, F. ... are making huge profits, then in the end from where the money came out of it? Fundamentally
that the money from A and A is similar to the investor with the profits. Most of their earnings from the U.S. sub-prime loans. People say that the subprime mortgage crisis
machine is due to lend money to the poor. I disagree on this statement. In my opinion, mainly to the sub-prime U.S. real estate investment
ordinary people. Economic strength of these people would have enough to buy their own apartment, but saw rapid increases in house prices, moving from the idea of ​​real estate speculation.
They mortgaged their house, borrowed money to purchase investment housing. Interest on these loans to 8% -9%, and by their own source of revenue
deal, but they can continue to mortgage the house to the bank, borrow money to pay interest, sleight of hand tricks. A very happy at this time, his investment money for his
; B is also very pleased that the market is very low default rates, the insurance business can continue to do so; behind the C, D, E, F, etc., along with money.

five. Subprime mortgage crisis. Rose to a certain degree of price rise is not up, nobody answered the back plate. Real estate speculation at this time were anxious, like ants on a hot pan
. Sell ​​the house, to keep paying high interest rates, and finally to the blind alley of the day, the house training and preparation of the bank. When this
breach occurred. A point was a trace of regret, big profits are vain, but also less loss there, anyway, there is B to do insurance. B do not worry about
, anyway, the insurance has been sold to C. So now the CDS Insurance in there, in the G hand. Just F G had spent 300 billion to buy the 100
a CDS, not enough time to change hands, suddenly received the news, these CDS were downgraded, including 20 default, greatly exceeding the original estimate of 1%
2% default rate. Every breach of contract to pay 50 billion of insurance money, a total expenditure of 1,000 billion. CDS 300 billion plus acquisition costs,After 2010, Society of the classic sentence will be fluent in your mouth, G
total loss of 1,300 million. Although G is the name of the nation's top 10 large institutions, can not withstand such a huge loss. Therefore G verge of collapse.

VI. 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 worse, because A uses
leverage investment, according to the preceding analysis, A lose it all of the assets is not enough debt. Therefore, the risk of A bankruptcy immediately. In addition to A than
, also A2, A3 ,..., A20, all should be prepared to close down. Therefore, G, A, A2 ,..., A20 came together in front of the United States Treasury Secretary, a nose a tear
lobby, G must not fail, it is a failure all over. Minister of Finance, a soft heart, put the G to the nationalization, and then
A ,..., A20 of the insurance money totaling 100 billion U.S. dollars all paid by U.S. taxpayers.

VII. U.S. dollar crisis. CDS 100 mentioned above the market price is 300 million. The GDP is 62 trillion CDS market, assuming that there
10% of breach of contract,jimmy choo hunter, breach of contract then there is 6 trillion CDS. This figure is 300 million 200 times. If the United States * 30 billion of acquisition value after the sum of the CDS
100 billion. Then for the rest of those who default CDS, the United States * for a sum of the 20 trillion. If you do not pay, we must look at
A20, A21, A22, and so one after another collapse. No matter what measures the U.S. dollar devaluation was inevitable.

the assumptions used in the calculation above and the number of discrepancies with the actual situation, but the U.S. can not underestimate the seriousness of the financial crisis.
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