Chapter 149: The CDS market is collapsing!

As the latest trading list from Brook Investment was posted, the entire Barton Tavern immediately boiled over like water being boiled. Everyone looked at the message on the LED display in shock and exclaimed loudly. The centre of their discussion was undoubtedly this trading list.

"My God, if I remember correctly, today is not April Fool's Day. A ten million CDS contract is only selling for four million dollars. Is Congressman Brook crazy today?'

'This is definitely the best deal of the day. If I can buy a CDS contract for 4 million dollars and then sell it for 5 million, I will make a net profit of 1 million dollars. Even if I don't get 5 million, if I can sell it for 4.5 million, I will still make 500,000 dollars. This is definitely a sure-fire deal. But unfortunately, I don't have that much money, and this CDS contract transaction cannot be split up.'

'This is a huge loss. I must notify the company. If I can close this deal, I believe my bonus this month will be enough for me to take my wife to Hawaii..."

As he listened to the people in the pub discussing one after the other, Zhou Ming asked Brooke with a smile, 'How does it feel?'

Brooke disdainfully shrugged and said, 'Just some greedy idiots. A little low price will make them tempted. But compared to this, I'm wondering what if they really buy the CDS contract you hung out? You will have to bear a loss of more than 10 million U.S. dollars.'

'Not me, but us, my Congressman Brook,' Zhou Ming reminded Brook, 'but just 10 million US dollars is not a big deal. We can just put up another 100 million worth of CDS contracts for sale. But unfortunately, I don't think anyone here will let me lose 20 million US dollars. Maybe I won't even have a chance to lose 10 million US dollars.'

In the face of Zhou Ming's words, Brooke did not refute because he also agreed. Although the entire pub was discussing the sold-at-a-low-price CDS contracts like crazy, no one actually went to the bar to propose a trading intention.

The reason was simple: those who were eyeing the half a million and one million profits just didn't have enough money in their pockets to make the deal. And those who could come up with the money for the deal weren't just thinking about the half a million and one million profits. They were thinking about why Brook Investment Company was willing to sell the CDS contracts at such a low price. Was it really because they were short of money and wanted to cash in quickly? Or was there some other reason?

You have to know that Brook Investment Company is a company that has experienced bankruptcy, and the one that injected capital to save it was Wharton Insurance Company, which came out of nowhere after the Federal Reserve Bank of Brighton and several other banks withdrew from the rescue. Perhaps this company has some special insider information.

If that's the case, that would be bad. After all, even investment companies like Brook are going bankrupt, and as for other companies in this subprime mortgage crisis, they are even less protected.

CDS contracts have high trading value only if the insured company can continue to pay premiums and the insured risk is low; on the contrary, if the insured company is at risk of bankruptcy and cannot continue to pay premiums, or if the insured risk gradually increases under the influence of the subprime mortgage crisis, so that the expected value greatly exceeds the CDS contract, then these CDS contracts have undoubtedly become worthless.

If there is such a risk, then it is better to dispose of all the CDS contracts in hand before the risk erupts, even if it means losing 500,000 or 1 million, because losing this amount of money is better than losing everything.

It is for this reason that both conservative investors and aggressive speculators choose to act cautiously.

It is also because of this kind of thinking that those 'big shots' began to look for Brooke in the pub. After all, as a senior senator, Brooke

(The chapter is not over, please turn the page) Brooke was a celebrity of sorts, so it was only a matter of minutes before someone came up to talk to him.

'Oh, my dear Senator Brooke, I guessed you would be here when I saw that news. I must say you always manage to surprise me.'

A man in a dark red tuxedo came up to Brooke with a glass in his hand and said, 'You always manage to surprise me.' Zhou Ming still remembered Brooke's introduction earlier and knew that he was Jamal, the chairman of the Caribbean Investment Corporation.

Perhaps it was because of the importance of the matter, or maybe it was because Jamal had a straightforward personality, or maybe it was because of their relationship, but after greeting Brooke, he sat down on the sofa next to Brooke and asked in a low voice, 'My old friend, can you tell me why you are selling the CDS contract at such a low price? Do you know that your current acceptable transaction price will cost you more than 2 million US dollars, and I don't think this is something to be happy about.'

Facing Jamal's question, Brooke shrugged and said, 'Congressman Jamal, I think you're asking the wrong person about this, because it's not my decision.'

Brooke's answer immediately made Jamal realize what was going on. He then turned to Zhou Ming and said, 'This distinguished Chinese gentleman, let me guess, the one who can make such a decision must be you, right?'

Zhou Ming nodded with a smile, but he didn't tell Jamal anything. He just greeted him politely, and then after introducing himself, he asked him in return, 'Don't ask me, I know what you want to ask, but I'm just curious, if I really gave you the answer you wanted, would you really believe me?'

Zhou Ming's rhetorical question left Jamal stunned, and Zhou Ming continued, 'More often than not, instead of giving you an answer as to whether there are any potential problems with this CDS contract, it is better for you to think about it for yourself.'

Jamal thoughtfully got up to leave, but at that moment, there was suddenly a burst of enthusiastic cheering from the bar, and then the head waiter of the tavern quickly came over to tell Zhou Ming that someone had already submitted a trading application.

This made Jamal feel a little shocked. He really wanted to stay and see how Zhou Ming would react next, but he understood that this was very rude, so he slowly left. In the end, he heard Zhou Ming happily tell the head waiter to add ten more CDS contract sales orders of ten million US dollars, and the price had once again been lowered to 3.95 million US dollars.

"Mr. Brook, I think you and Mr. Jamal are somewhat acquainted, right? So in your impression, is he a decisive person?' Zhou Ming asked, watching the departing figure of Jamal.

'Jamal and I have been friends for a long time. Although politicians never have true friendships, at least I know this person,' Brooke replied with a nod. 'He is decisive in character. As long as he thinks there is a risk, he can give up immediately without hesitation. Three years ago, during the stock market crash, he sensed that there were problems in the stock market and withdrew his capital from the stock market in advance. At that time, it was only September, and the stock market crash would not happen until October 19th.'

'This makes me feel at ease. I believe that with one Jamal, there will be more people who believe in the future,' Zhou Ming said.

What Zhou Ming just did was deliberate, with the aim of making Jamal worry about the subprime mortgage crisis. Only in this way would he sell the CDS contracts together. As long as Jamal starts selling, in the current environment of the subprime mortgage crisis, it will easily trigger concerns about CDS contracts in the entire market, and then a large-scale sell-off will break out. As for Zhou Ming, this is the effect he wants.

Over there, as Jamal returned to his seat, the other 'big shots' who had been preparing to come over also sat back down, keeping a close eye on Jamal and waiting for his move.

Everything was just as Brooke had described. After returning to his seat, Jamal immediately called the waiter.

(The chapter is not finished, please turn the page) Five minutes later, a new sale appeared on the LED display at the bar: 10 contracts for the sale of 10 million CDSs at a price of 3.99 million US dollars.

This news was like dropping a red-hot iron ball into a pot of boiling water, and it immediately boiled again.

'Oh my god! Why is this happening? Could it be that Brook Investment has really gone beyond redemption? Otherwise, why would he accept losses again and again? This is so puzzling! I'm so glad I didn't agree to the 4 million dollar deal, or I would have missed out!"

Countless people exclaimed at the LED display, and Zhou Ming let out a sigh of relief when he saw the numbers on it. Although there was no trader information displayed, he could tell who had made the deal just by seeing Jamal's actions.

It was all ten million US dollars. This does not mean that the price of all CDS contracts is exactly this much, but the CDS contract for this transaction is more than ten million. In order to distinguish between customers, market brokers and the tavern itself can bundle contracts into several different tiers, so that they can directly provide corresponding services when they see the price.

Perhaps it seems that the figure of 3.99 million US dollars is only 10,000 US dollars less than Zhou Ming's 4 million, but the problem is that he has set off a downward trend, which is what Zhou Ming wants.

Looking around at the 'bigwigs' around him, who were frowning tightly, Zhou Ming knew that they were still hesitating, and Zhou Ming also knew that they could not hesitate for long.

Another five minutes passed, and the LED display at the bar changed again: Brook Investment Company was selling twenty 10 million dollar CDS contracts at a price of 3.95 million dollars.

This news surprised everyone again. Zhou Ming glanced over at Jamal, who seemed to have not expected his news to be released so quickly. He hurriedly found a waiter and immediately revised his price to 3.94 million dollars.

Faced with these numbers that jumped three times in ten minutes, there was an uproar in the entire Barton Bar. It should be noted that this is not a real exchange, and the numbers on the LED display are not updated in real time, but are actually individual quotes. Therefore, although the private transaction prices are very inconsistent, the public LED prices are generally very consistent and often do not change for several hours. But now they are changing so frequently that even the slowest person will feel that something is wrong.

As for those 'big shots' with their special seats, if they had any doubts before, they are now completely sure of their suspicions.

So they all beckoned to their respective waiters, and within a few minutes, the LED display suddenly showed a lot of new information: selling a $10 million CDS contract for $3.93 million...selling a CDS contract for $3.92 million...selling a CDS contract for $3.9 million...selling a CDS contract...

The price numbers on the LED display were gradually dropping, which made everyone look dumbfounded, because they had just seen the 'big shots' with a lot of money ask the waiter for it. So now...

"The CDS market has collapsed!'

No one knew who had suddenly shouted this, but it was like the last straw that broke the camel's back. The entire Barton Tavern immediately went crazy, and everyone grabbed their mobile phones or used the phone in the pub to frantically call their companies. Despite their different accents and words, they all meant the same thing: 'The CDS market has collapsed, we must sell all our CDS contracts!'

In the frantic tavern, while everyone was desperately trying to sell their cds contracts, and the price was falling all the time, no one noticed that the sale price of Brook Investment had only stopped at 3.95 million US dollars.