Excellent model stairs are very pleasing to the eye, especially now, the fashion circle has not been occupied by various second-generation Internet celebrity IT Girls who can only "walk". If you want to get ahead, it is a basic skill to walk well.

Elite's training base.

Simon enjoyed a live performance, but did not stop too much. He quickly took Grace away, leaving behind a group of girls from all over the world who were extremely disappointed.

Still influenced by Simon, the big butterfly, the fashion circle has become beyond recognition.

Just like this time, except for the two Korean models Shin Caihui and Jeon Woo-jin who were arranged in advance, they were also the kind that had never appeared in history. Simon didn't know anything else. The only thing was Yishui's young face, with a slender waist and long legs, which was pleasing to the eye.

Leaving Brooklyn, Simon took Grace to a shooting range in Greenwich by helicopter.

I haven't played with a big gun for a long time, and for the rest of the afternoon, I spent more than a dozen magazines enjoying myself.

Grace accompanied her throughout the whole process, watching her little man carrying an exaggerated handful of Barrett standing in the shooting range, bang bang bang bang bang bang bang bang bang bang bang bang bang at one moment, thinking of running to be his target, and just being wiped out like that. How great is it.

Stay overnight at the manor in the northern suburbs of Greenwich.

Guests were invited to dinner tonight, including B Girls and Mrs. John Merriwether, the head of the long-term capital management company where B Girls’ husband Mark Shinal is located.

As Alia quickly competed with Bloomberg and showed a stance of overtaking, Alia software has also become an important information dissemination tool for the Westeros system to influence international financial trends. In fact, it is equivalent to the right to speak in finance and is crucial. Therefore, Simon has always been paying attention to the B girl's scattered situation.

However, today's dinner topic is not Aliya, but a long-term capital management company.

Simon asked Girl A to collect data on bond hedging positions in various mainstream countries some time ago, which is the basis for the topic of this dinner.

First of all, let’s talk about the operating methods of long-term capital management companies.

This is a financial transaction model created by John Merriwether during the period of the Solomon Brothers. It once contributed more than half of its profits to the Solomon Brothers. Later, the Solomon Brothers collapsed due to the national debt scandal. Merriwether's team was not affected, but instead left the independent portal and established a long-term capital management company.

Its main operating method is to use the difference in interest fluctuations of bonds in different periods of the world to engage in gambling.

The core is the zero-sum game of futures bets.

Of course, the professional model is very complex, but, to put it simply, for example, the US issuing a batch of 10-year Treasury bonds, with an annual face value of 8%. Due to the different international financial environment, after the bond issuance, the actual transaction process does not necessarily mean that it is 8%, perhaps 7%, or 9%. Of course, this is just for the convenience of examples. The actual volatility is the same as the foreign exchange ratio of the US dollar, which is very low, and may only be 0.01%.

Long-term capital management companies use this issue of positions to bet against others. I am optimistic that the interest rate of this batch of US Treasury bond will rise from 8% to 9% in three months, so I will establish long positions, which is probably the case.

However, because the bond interest rate fluctuation ratio is very, very low, and the 0.01% type, if you want to get enough returns, you need to use more than a hundred times of leverage to build a very large position.

However, the data collected by Simon recently is that the interest rate spread hedging positions currently held by Long-term Capital Management Company exceeds US$300 billion, while the principal used by Long-term Capital Management Company is only US$2 billion, which is more than 150 times the leverage.

If it was ten years ago, even five years ago, this matter had nothing to do with Simon.

It's different now.

As the scale of the Westeros system becomes larger and larger, the correlation between the entire Westeros system and the global economic trend is becoming stronger and stronger, and one prospers and one loses together.

Therefore, Simon does not want to see a large-scale systemic financial risk that may affect the Westeros system.

How did the former long-term capital management company almost trigger a global financial tsunami?

Very simple.

It was probably in the second half of 1998 that the Asian financial turmoil spread around the world, and the eyes turned to Russia. When the bear economy was in jeopardy, it had to seek help from the IMF like many Asian countries.

At this critical moment, the long-term capital management company believes that according to practice, Russia will definitely reach a bailout agreement with the IMF, which is the least effective, involving national sovereignty credit. Even if Russia sells its own treasury, it will not allow its own national debt to default.

Since the direction was determined, due to the sharp drop in interest rates due to system panic, long-term capital management companies decisively chose to be bullish and used ultra-high leverage to establish positions of hundreds of billions of dollars.

As a result, everyone knows it.

Russia suddenly turned the table up and stopped playing. It allowed the ruble to depreciate, actively defaulted on the treasury bonds, and closed the trading market.

The result is that not only Russia's domestic bonds, Europe, Latin America and Southeast Asia are all in a state of grief, with a decline across the board, and the extreme market directly led to the breakdown of long-term capital management companies' positions.

The fundamental reason for the international financial market is to take the national credit established by the country behind it for a hundred years as the foundation. Both the winner and lose must be fulfilled. If it cannot be fulfilled, the credit collapses and the entire financial system will be destroyed. Therefore, in extreme market conditions, huge losses will first swallow the trader itself, and then the exchange platform where the position is located. If the exchange capital is also exhausted, if the international financial system does not want to collapse, the state needs to rescue it.

In 1987, the federal government mobilized large amounts of funds overnight to save the Chicago Futures Exchange. That's it.

In the 2008 subprime mortgage crisis, the same extreme market conditions, in order to avoid the collapse of the financial system, the US government even threw hundreds of billions of dollars into the mess left by the huge Wall Street positions to make up for the hole.

In between, the long-term capital management company crisis in 1998, the same is true.

Even if it is only based on the current position of a long-term capital management company, 150 times of leverage can support a maximum fluctuation of 0.67% of the bond interest rate spread. Under normal circumstances, fluctuations at the level of 0.01% will not be overturned. However, the extreme market of the Mao Bear overturns the table directly causes the fluctuation of international bond interest rates to exceed 1% in the short term, and it is inevitable that the liquidation will be overturned.

Inside the manor restaurant in the northern suburb of Greenwich.

John Merriwether thought that Simon was like the rich people who have been flocking to long-term capital management companies in recent years, and he was still proud of his desire to invest money in his own company. Unexpectedly, as he talked, the other party's topic turned to asking him to compress his company's position to avoid extreme market conditions.

Even though the Solomon brothers declined, John Merriwether had not experienced any setbacks in recent years, including the 87 stock market crash that year. Not only did they not lose money, they instead made money from it.

Therefore, even if Simon Westeros, who has a trillion-dollar asset in front of him, John Merriwether, who believes that his model is absolutely foolproof, is still very unhappy: "Simon, maybe you don't know our model very much. Haha, speaking of it, there are definitely not many people who can understand our model. This was formulated by two Nobel Prize winners. I think your concerns are a bit redundant."

Simon has just patiently explained his concerns. Seeing John Merriwether like this, he is not angry. He stands too high and looks down on all living beings. It is difficult for him to have strong emotional fluctuations in too many things. He just said, "John, frankly, how your company operates has nothing to do with me. If the long-term capital management company operates, the winning and losing are limited to itself, and I will not pay attention to it at all, but your position is too large, and the current international financial form may experience extreme fluctuations at any time, which will trigger a systematic financial tsunami. Therefore, you'd better consider my suggestions seriously and compress your leverage ratio to within 50 times as soon as possible, and the position size should not exceed 100 billion US dollars."

Simon's tone was still calm, even if he was still a little reluctant, John Merriwether would not be so stupid as to turn against Westeros. He still nodded: "Okay, Simon, I will think seriously."

Simon continued, with a little bit of a matter of course in his tone: "Not to think about it, John, if you don't respond, then I will respond to you, a few phone calls."

Merriwether's expression is a bit bad now.

Girl B looked at her husband Mark Hill, and then tactfully did not interrupt.

Simon's posture was still dull, but the so-called "a few phone calls" sounded like a thunderclap to Merriwethers.

Very simple.

Exhaust the firewood from the bottom of the cauldron.

Since Simon specially invited Merriwether, he would not let himself waste his saliva.

If Merriwether is unwilling to execute, Simon will greet investors of long-term capital management companies and ask them to withdraw their investments. With the Westeros system's intricate influence, it is not difficult to do this at the moment.

After dinner, the Merriweathers left first, and Simon kept the B girl and his wife talking about Aliya's company before sending them away.

It's past nine o'clock in the evening.

After seeing off the B-girls and his wife, Simon returned to a living room on the side of the villa. When asked about something, A brought a piece of information he had just sorted out during the day.

Since dinner just now, Grace has been listening. Because she was stuffed into a position as a director of Bank of New York Mellon by a man, she did not want to let the man down and let him down. Grace has worked hard to teach some financial courses by herself, so she probably understood the discussion between Simon and Merriwether during dinner.

At this time, holding the fruit plate he had prepared himself and snuggled to the man's side, while delivering the fruit into the man's mouth, Grace asked: "The one you said, there may be a national debt default in Asia or Eastern Europe, which should not be easy, right?"

Simon took a bite of the apple and continued to look through the documents in front of him, saying, "It is precisely because everyone thinks it won't happen that you need to pay attention."

Grace thought for a while and said, "Since you think this may happen, maybe you can short it in advance?"

Simon smiled and said, "In the original accumulation stage, in order to obtain enough funds as soon as possible, it is no problem to bet a few times, but if you keep doing this, you will have a day of failure sooner or later. Therefore, for me, financial means are essential, but they can only be considered auxiliary. The core is to do real and physical businesses. The most important issue of the Federation now is to make this happen. Remember Buffett told an interesting little story. Buffett, do you know?"

Grace lit her chin on the man's shoulder, looking at her ears: "Of course."

Simon continued: "Buffett said that a group of financial elites were crippled on a deserted island due to an airplane accident. As a result, only two people went to engage in production activities such as planting, gathering, hunting, etc. Everyone else started to play with various financial operations around the production materials of these two people. Do you know what the result is?"

"It must be all starving to death," Grace said with a smile. "But I think there is such a group of people who shouldn't be stupid enough to do such stupid things."

"The problem is that the current trend of the federal government is like this, with a large number of entities moving outward, investment banks, insurance and other financial industries becoming increasingly large."

Grace thought for a while and said, "Now are you talking about globalization now. I think this is just a trend of division of labor."

"Imagine," Simon Xunshi: "If there are certain extreme events in the future, such as wars and sudden globalization breakdown, you will find that the Federation will suddenly become an isolated deserted island where two people are engaged in production and then engage in finance, what will happen?"

Grace imagined it along the man's way, then shivered a little, looking up at Simon: "So, are you going to do something?"

Simon continued to look through the information in front of him and said lightly: "We can't change, we can only take care of ourselves, Westerosian, do you understand? You are also a Westerosian now."

The words of men always seem to have a bit of strange magic. When Grace heard him say this, she naturally nodded her head and hit him again: "I'm just Westerosian."

"Then don't be lazy and give me another apple."

"Yeah, hehe."

Grace only felt her body soft, and she chuckled and sent an apple into the man's mouth. She carefully held the fruit plate in her hand and glanced at the document that Simon had just been looking at: "What is this?"

"Draft issue for the G8 Summit."

Grace thought for a while before she realized: "I saw it on the news recently, on June 8, that one in Birmingham, England."

"yes."

The G8 Summit is definitely very familiar to later generations.

Coincidentally, this year's summit is the first time that Russia was approved to join the G8 in the second half of last year. In addition, the core of this year's topic is also very interesting, globalization.

Grace continued curiously: "What do you think of this for?"

"It will be over then," Simon said: "A cocktail party has been arranged there, everyone gathers and chats casually."

"Um."

Grace said she understood, but she was inevitably a little bit of admiration and pride.
Chapter completed!