New York 2006

Chapter 170 The Great Depression

January 2008, 1, Monday, Eastern Time. Today is a legal holiday in the United States, Martin Luther King Jr. Day. Only a few employees of Future Records were on duty.

Early in the morning, Luo Ji and Lin Qingji stayed in the office of Future Records. The two sorted out Luo Ji's personal finances from last year.

"Do you know Wu Zhenshan from United Bank?" Accountant Lin Qingji asked.

Luo Ji said, "Of course I know. We met at Ms. Clinton's fundraising dinner. At that time, he also wanted me to get a loan from their bank. What happened to him?"

Accountant Lin Qingji said with a smile: "Recent rumors say that his bank invested in derivative securities of subprime loans and suffered serious losses. In addition, many consumer credit customers have defaulted."

Luo Ji sighed: "The banking industry is having a hard time now!"

Not long ago, data from the American Banking Association showed that consumer credit defaults have intensified, with overdue repayment rates rising to the highest level since 2001.

The Wall Street Journal even claimed: “In October and November last year, people optimistically thought that the subprime mortgage crisis was over. However, as everyone knew, the influence of the subprime mortgage crisis was spreading step by step. People lost money in related investments and lost their money. Money, at this time, has evolved into a credit crisis, and now people are unwilling to pay off their credit card bills. This will affect the real economy. I hope the U.S. government can pay attention to this problem and solve this problem as soon as possible."

"Show me that receipt." Lin Qingji said.

Luo Ji and accountant Lin Qingji were chatting while sorting out last year's personal income.It was a financial audit of Luo Ji's personal income.Prepare for the upcoming U.S. tax season.

The two of them sorted out Luo Ji's financial income and consumption.Accountant Lin Qingji looked at Luo Ji in surprise, as if he were looking at a money printing machine: "So, your personal income last year exceeded 2.03 million US dollars."

Luo Ji looked at the personal income report in his hand and murmured, "I still have to focus on the recording industry. This is the source of all my income."

In 2007, the largest source of Luo Ji's personal income was dividends from his record company and his personal share of record sales.

Last year, the "16" album sold 1430 million copies.The singles "Viva La Vida", "Marvin Gaye", "We Don't talk any more" and "We are young" have sold a total of 1000 million units.900 million ringtones sold.These brought Luo Ji a total pre-tax personal income of 1.23 million US dollars.

The songs are used in film and television soundtracks, advertising songs, radio and television broadcasts, etc.His own commercial acting income, as well as his endorsement advertising income, totaled a personal pre-tax income of 2740 million US dollars.

The Logic Tour's global tour generated total sales of US$1.28 million, ranking third last year, and bringing Luo Ji a personal pre-tax income of US$4220 million.

These are all about the music industry, which totals about $1.926 million in revenue.

The remaining more than 1000 million, somewhat unexpectedly, turned out to be YouTube video playback and advertising revenue.

Calculated this way, Luo Ji's personal income in 07 was 2.03 million US dollars.

"You're right, Logic."

Lin Qingji continued: "I have evaluated that, except for your music-related companies, your other companies are currently losing money or are expanding and cannot pay dividends, so music is your core."

"Yes, I know."

Lin Qingji then said: "Boss, you still have 6000 million in cash. If you don't know how to spend it, you will have to spend a lot of money during the tax payment season in April. What's more, you haven't even finished this month yet, and you already have 4 million." That’s a lot of income.”

Luo Ji said with some annoyance: "But I don't have any investment goals right now!"

Lin Qingji suggested: "Why don't you invest in the stock market? Don't you have your own investment company? As long as you invest in it, you will only pay capital gains tax when you sell it. You can just hold it for a long time. Borrow money when you need it. Just consume, you can perfectly avoid paying taxes, and you just have to pay a little interest.”

Luo Ji said, "I've already invested enough in the stock market, let me think about it again!"

Luo Ji sent Lin Qingji away and fell into deep thought alone. He never expected that one day he would be worried about too much money.

At this moment, Xu Youyu from the investment company hurriedly knocked on the door and walked in.

Luo Ji unexpectedly said, "Isn't today a day off? Why are you here?"

Xu Youyu shouted: "Look at the stock index futures on the European Futures Exchange."

Luo Ji quickly opened the software and took a look. The Nasdaq stock index futures index fell by 7%, the Dow Jones stock index futures index fell by 8%, the Frankfurt DAX index fell by 6%, and the Shanghai Composite Index futures index fell by 6%...

Luo Ji shouted loudly: "M-FXXK, what happened? Is Black Monday going to happen again?"

Xu Youyu explained: "There are rumors because of concerns about the subprime mortgage crisis in the United States and the emerging credit crisis that may cause a global economic recession."

Luo Ji thought about it and realized that he had invested a lot in the stock market.He said anxiously: "What should we do now?"

Xu Youyu suggested: "Why don't you wait until the stock market opens tomorrow, clear your position immediately, and then buy it back after a while?"

Hearing this, Luo Ji calmed down: "No, I bought the stock less than a year ago. If I sell it, I will have to pay a high capital gains tax."

"If you continue to buy it back in the short term, you won't have to pay capital gains tax."

Luo Ji thought about Tianqi for a while, then said: "Forget it, don't worry about short-term fluctuations, I am a follower of Buffett. I am very optimistic about these stocks. Even if it is due to the stock market crash, I believe they will rise back in the end. I still Let’s go long term.”

"That's okay. The market is changing rapidly. With such a big drop, there will be a Black Monday tomorrow. Maybe the U.S. government will take action."

Luo Ji said, "How do you say that?"

Xu Youyu continued: "The stock market in the United States is still a little different from the stock market in China. Because of the existence of capital gains tax, people are more inclined to hold stocks for a long time. The top 10% of wealthy people in the United States hold 80% of the securities. Assets determine the direction of the stock market. They are used to holding assets for a long time and rarely liquidate them easily. Coupled with the Black Monday stock market crash in 1987, the U.S. government has many measures to appease this group of wealthy people or to prevent the same mistakes from happening again. Maybe take action."

Luo Ji complained: "Well, stop guessing. Anyway, I no longer believe in the promises of the U.S. government. They said last year that they could solve the subprime mortgage crisis. But what happened, the problem worsened and turned into a global disaster. .During this period, many banks around the world have reported serious losses."

Luo Ji then asked, "By the way, why do you come to the company to work overtime on Sunday?"

"I'm here to study the U.S. banking crisis." Xu Youyu said expectantly: "I feel that the losses of banks that invest in subprime mortgages will further increase. John Paulson has also begun to short these banks. Should we Also get involved."

"Short selling? The profits are limited, but the risks are infinite. It's a bit outweighing the gains."

Xu Youyu explained: "Do you know that in South Korea, their economic model is an export-oriented economy. They are not as big as China, nor are they as established as Japan, so they are known as the sunshine of the world economy. Table. In December last year, South Korea’s exports to the United States fell by 12%, which is a good indication that there is a problem in the U.S. economy.”

Luo Ji asked in confusion: "Is the source due to the subprime mortgage crisis?"

"Well, the impact is deeper than we might have expected."

Xu Youyu continued: "The United States is the largest economy in the world, accounting for the largest annual trade volume in the world. When there is an economic problem in the United States, the first to be affected are industrial countries such as South Korea, China, and Germany. This will cause a chain of consequences. Response. Now all countries around the world are worried about the risk of economic recession. And the U.S. banking industry, the source of everything, may have a bigger hole than imagined. This is a good short-selling opportunity."

Luo Ji was still a little worried: "I'll think about it."

Xu Youyu continued: "Believe me, mathematics will not lie. This is a good opportunity."

Luo Ji reminded: "The company only has 4000 million left."

Xu Youyu said: "I have learned the lessons from before. This time we only use twice the leverage to ensure the safety of the principal."

"Just double leverage?"

"Yes, I promise! It can also be used as a hedge against your stocks."

“What do you say about hedging risk?”

Xu Youyu explained: "If the U.S. economy really has problems due to the subprime mortgage crisis, then problems will occur in the global economy. The crisis in the banking industry at the source may further intensify, and it will not only be the current credit crisis, but also the current credit crisis. It could turn into a financial crisis."

"financial crisis?"

"That's what it means on the surface. Banks collapse, people panic, and then there is a run on the bank. The crisis worsens, the banking industry deteriorates further, stock prices fall, causing panic, and funds flee the financial market. Even if your stock is the Internet, if a financial crisis occurs, you The stocks will definitely fall accordingly. So we are shorting the banking industry. It is a long hedge against your stocks. Now there are already people in the banking industry discussing the possibility of a global financial crisis."

financial crisis?Luo Ji's intuition came over again.Could this crisis caused by subprime mortgages really evolve into a global financial crisis?
Luo Ji said calmly: "Okay, I still have 6000 million in cash here, totaling [-] million US dollars. You can use it to short the banking industry! Anyway, your year-end bonus is linked to the company's profit, so you can take it easy."

Xu Youyu said confidently: "Don't worry, I will absolutely guarantee the safety of the principal. This time I also plan to invest a little myself, and other employees of the company also want to invest a little. John Paulson has entered the venue, and we still have What’s scary.”

"What about our venture capital strategy?" Luo Ji thought to himself.

Xu Youyu smiled and said: "I will continue to implement it. Recently I have found a headhunting company to recruit several talents related to the venture capital industry."

"Okay, this strategy must continue to be implemented!"

"Ah."

Compared to financial investment, Luo Ji still prefers venture capital. Finance is still too exciting, with ups and downs.

In his Holi game company, Luo Ji only invested 600 million yuan in principal. It has been developed in less than a year. Although it currently has more than 1.4 million in debt and cannot yet see when it will make profits, the valuation has already Came to [-] million meters.

Small investment, big return.Which industry has such returns, only the venture capital industry.

After Xu Youyu left, Luo Ji searched for financial crises on his computer. The one most closely related to it turned out to be the global Great Depression from 1929 to 1933.

After the Wall Street stock market crash in 1929, it triggered an economic crisis in the United States, because the United States was the world's largest economy at the time, and then triggered a worldwide economic crisis.Consumers who have no money tighten their pockets, further triggering an economic recession in the real industry.

It then triggered long-term mass unemployment around the world, changed social relations, destroyed governing governments, helped the extreme right come to power, and ultimately led to the outbreak of World War II.

"No way! Could this financial crisis turn into the Great Depression?"

After reading it, Luo Ji spoke in surprise, but his intuition did not tell him the result.

This is the bug of intuition. It will only tell him that there is such a trend, but not when it will end. Unlike Apocalypse, there is a clear instruction.

"It seems that I am worrying unfoundedly."

Luo Ji smiled. He had learned from the Great Depression. According to the organizational capabilities of modern governments, this kind of thing would never happen again!
"Probably not?"

At night, a car parked in front of the house. Fiona was driving, Luo Ji was sitting in the back, and there were various backpacks behind.Luo Ji and Fiona carried their backpacks and headed to the basement of their home.

Mother Sammy and grandmother Queenie saw it inside the house and came out to help: "What is in here? Why is it so heavy?"

Fiona said coldly: "Gold!"

"How much are these?"

"1000 meters knife."

Mother Sami shouted: "Fili, are you crazy? Why did you buy so much gold!"

Luo Ji put the gold away, nodded with satisfaction, and then took a look at the basement. It was big and spacious.He said to several people with a smile.

"When the time comes, we will remodel the basement and turn it into a survival fortress. This will be even more perfect."

(End of this chapter)