Tok 3 Tok 4

Dear all,

Lin Peh will be migrating to Somalia very soon. Because their Internationally fehmes pirates gaoment damn KENG !

Have fun. Cheers !

Preface: Subprime Loan

In American, just like all the normal human being in the world, when they make any major purchases, they will always ask bank for loan. However, the sorhai american company always like to retrench people and thus the people there the income not very steady one. In Malaysia, when your income not steady you will loan money from AhLoong instead of BANK. But in america, their FBI very power so there is no Ahloong, instead their bank will loan money to all these not steady income people and this type of loan is called Subprime Loan.


Chapter One: How it started

About 10 years ago, all the commercial banks in American were promoting their loan with advertisement like



Since most Ang Mor are only "ada gaya" and "hao-lian" type of people, the bankers came out with special packages for these pokkai fellas. So, Ads like these were flying everywhere:

"No repayment for first 2 years"

"Want to be rich ? Buy Property!"

"Money no enough? Borrow from me!"

"Zero down payment"

"Low rate guaranteed"


Wah ! These packages are damn fierce wan! It basically tell people don't worry for the about repaying the loan because you may strike lottery before payment is due! In the event you don't strike lottery, you can still sell the house that you bought at higher price and pay everything and keep the gain!

Because of packages like this, many American (especially those who think if Black and become president of USA everything is possible) started to borrow money and buy house as INVESTMENT !

So, the banks business become very good, the accounts all look damn solid and all the bankers got huge bonus! But now....got one problem...money all loan out but who can guarantee that these sorhais will be able to pay back when time comes ?


Chapter Two: Investment Banks Also Want

After collecting his huge bonus, the CEOs of the commercial banks also need to do more creative works or else they will be fired soon. So, he went to see the bigger brother - Investment Bank!

For those of you who don't know, the Investment Bank in US is damn power wan ! Their name also damn solid like Morgan Stanley, Lehman brothers, Goldman Sachs. The commercial bank CEOs objective is very simple, they want the Investment Bank to share share and join with them to play the game of Subprime Loan!

Even though the Investment Bank name power, their top management are also same like us eat full nothing to do one. So, they get all those economists, professors, even Nobel prize winners and together go to starbucks drink coffee and blow water.

After many rounds of talking cock, they concluded that these subprime loan is very risky but very exciting and profitable! Something like bank robbery! As a greedy bunch of motherfuckers working for greedy Investment Banks, they decided not to miss this great opportunity so, the Investment Banks are in !


Chapter Three: How The Investment Banks Play

Since Investment Banks are so power and big! They also decided to play it BIG! So, in order for them to raise all the fund to lend it out to those pokkai house owner, they issued something call CDO (Collateralized Debt Obligation). In line with the reputation of Investment Banks, the name CDO also power meaning no one understand! But Lin Peh tell you la, these CDO is actually something like Investment Banks borrow money from the some sorhais but the loan is guaranteed by those pokkai house owner's loan and their fucked up "very expensive" house. So, where to find such sorhai ?


Chapter Four: Hedge Fund is the Real Sorhai?

In order to find the sorhais who are willing to put out such big sum of money for this type loan, the Investment Bankers did a lot of road show and even engage professionals to make their powerpoint presentation look solid.

After that, they invited groups and groups of sorhais to come listen to them talk cock, drink wine and see their powerpoint. When the powerpoint presentation said that the average return on CDO is approximately 12%, the saliva of the Hedge Fund managers started to drool, so they decided to put their money in and play the game also!

Before you jump into the conclusion that hedge fund are the sorhai, let's look at how the hedge fund got so much money....

The basic job function of hedge fund managers are killing each other at wall street without seeing any blood! They are the one who go around the world, screw peoples currency, stock markets, commodities so the CDO is only a small case la !

The hedge fund managers went around the world and look for low interest loan. For example, Japan interest rate has been very low since the day Karaoke machinese was invented. So, the hedge fund went to Japan and borrow at 1.5% which means, they just have to sign a few signatures, get the money from Japanese and then give to the investment banks and they can sit home masturbate and enjoy a net return of 10% without doing anything. With deal like that, the more they borrow, the more their return la ! Do you still call them sorhai?


Chapter Five: Now, Everyone Can Be Rich!?

So, all the deals are now in place and the cash started to flow!

Strange thing does happen when you have such a huge system running - from the year 2001 to 2006, the real estate market in US was at a super boom ! Everyone was buying houses and make a lot of money ! So, they were right about becoming a real estate tycoon without having to come out with a single cent ! So, from house owners to banks to investment banks to hedge fund all making money ! Damn solid!

However, the investment bankers were not too happy when they see the hedge fund was making so much money from the CDO without having to do any donkey work. So, they got jealous and they themselves also invest in CDO ! It is something like Ahloong themselves go borrow from another Ah Loong !

When that happened, the hedge fund managers see that the CDO was in such hot demand, they also became greedy and they pledge the CDO to banks so they can borrow more money to invest in more CDO and everyone just become richer and richer!


Chapter Six: Let's Insured Everything!

When the Investment Bankers see that the CDOs merry-go-round becoming so big round just like the Eye On Malaysia like that, they also got panic already. So, to play safe, they call the insurance company and tell the insurance company that they want to buy insurance for their CDOs!

Even though the insurance companies are generally greedy motherfuckers, they also not sorhai one. They study the track record of the CDOs and they charge the Investment Banks a heavy premium for it and give this type of policy an even more power name called Credit Default Swap (CDS)!

Since the hosuing market was ok, and everyone was still enjoying huge profit, the Insurance Companies too made very good money from these CDS in the last few years because they just sit there and collect premium without paying out anything!

That's WIN WIN SITUATION - just like what your teacher taught you in school !


Chapter Seven: Not The End Of Story

As usual, eveything that can generate income, people on the the wall street will create a unit trust fund for it. So, over the last few years, Many Unit Trust Fund that invest in CDS were created. However, in order to generate good sales for these Trust, these unit trusts must get good rating from the rating agency.

So, the people on wall street used their creativity to 100% and came out with a brand new idea - Assuming the companies already made $80 Billion in the CDS over the years, they will allocate a portion of it lets say $10 Billion to secured the Unit Trust Fund. Using the $10 Billion as 10% securities, the Fund will sell to the public $100 Billion of the Unit Trust.

That means, if the Fund lost money, the first 10% ($10 Billion) of the loses will be covered by the Insurance. But when it makes money, everything belongs to you! Good Deal or not? Therefore, the rating agency also give the fund AAA (highest) rating ! Since the deal is so good and with AAA rating somemore, everyone also bought! Old man bought! Young man bought! Pension fund bought! Education fund Bought! It was such good business, the Unit Trust decided to issue more Units to be sold ! However, the problem is they never increase the $100 Billion securities! which also means the "reserve" for the losses has decrease from its original 10% to god knows what.


Chapter Eight: No Light At The End Of Tunnel

Just like Old chinese proverb said "Everything You Ate You Have To Vomit Out". The good time came to a stop by end of the year 2006 when the housing prices started to come down, people who bought houses found out there are no more buyers for the houses so they just defaulted on the loan and said FUCK IT !

The Bank try to lelong out those houses but could not find buyer. Citibank, Bank of America all reported huge loses. So, the bank all said FUCK IT !

Since Investment Banks has even bigger stake than the commercial banks in these loans, Morgan Stanley, Lehman Brothers all reported even bigger losses. So, the Investment Banks also said FUCK IT !

When the Hedge Fund saw all the other fellas all fucked, they also cannot escape and Hedge Fund Stake is even bigger! So, Hedge Fund said FUCK IT !

And of course, all the AAA rating Unit Trusts FUCKED !

Now, Pension Fund FUCKED! Education Fund FUCKED! The share market FUCKED! USA FUCKED! Europe Fucked! Japan FUCKED! Australia FUCKED! The Whole World FUCKED ! Bush FUCKED! McCain FUCKED! Obama FUCKED, But......





"US crisis won't affect Malaysia's plan"
Because....

Finance Minister Najib said the economy's fundamentals remained strong, with international reserves at a high of RM404.4 billion and non-performing loans (NPL) in the banking sector declining since 2003 to a present 2.5 per cent.

Due to the melamine-tainted dairy products from China many countries as far as Africa have stopped importing Chinese dairy products.

So, to follow the trend, Malaysia have also banned Chinese dairy imports including those dairy products from Piaomei !


Update (25 September 2008)

Dutch Lady confirmed safe !