Finally, Amaranth Fund surrendered and went bankrupt. The flowers that never faded on Wall Street slowly fell in the cold wind.
Investors in the Amaranth Fund included Goldman Sachs, Morgan Stanley, 3M Retirement Fund, San Diego National Retirement Fund Association, etc. All of these investors suffered serious losses in the end.
The second evildoer is the Blackstone Group, a well-known American alternative asset management and financial consulting service organization, also known as the Blackstone Group.
Speaking of this matter, it has a certain relationship with China.
In 2007, the newly established China Investment Corporation started its first overseas investment, when it bought a 9.4% stake in Blackstone for US$3 billion.
At this time, Blackstone took over EOP Real Estate, which owns many commercial properties in prime locations in major cities, from Sam Zell, known as the "Real Estate Buffett", through a leveraged buyout of US$39 billion.
At the same time, Sam Zell acquired Tribune Media Group, which owns the Chicago Tribune and the Los Angeles Times, for $8.3 billion.
These serial transactions seemed flawless, but no one expected that Sam Zell would go bankrupt due to poor management just after he took over Forum Group, and Blackstone would take over the pinnacle of American real estate, so China's investment in Blackstone ended up with a loss of 2.4 billion US dollars!
On the surface, the emergence of these two evil monsters, Amaranth Fund and Blackstone Group, seems to have no necessary connection, but don’t forget that the main investors of Amaranth Fund suffered serious losses after Amaranth Fund declared bankruptcy!
Look at the main investors of Amaranth Fund, Goldman Sachs, Morgan Stanley, 3M Retirement Fund, San Diego State Retirement Fund Association... These investment institutions not only invested in Amaranth Fund, but also invested heavily in the US real estate market. There is also Blackstone Group, which also invested heavily in the US real estate market at that time!
These investment institutions that invested heavily in the US real estate market for speculation will inevitably affect their investment in the US real estate market after suffering heavy losses in other areas. Therefore, at the same time, the failure of these seemingly unrelated investments led to the beginning of the collapse of the US real estate market.
Since the second half of 2006, the US real estate market has begun to cool down rapidly, and the risk of the subprime mortgage crisis being triggered has become increasingly greater. By the beginning of 2007, the subprime mortgage crisis could no longer be suppressed and was completely triggered!
In February 2007, New Century Financial, the second largest subprime mortgage company in the United States, issued a profit warning for the fourth quarter of last year. On April 2, New Century Financial declared bankruptcy due to its inability to repay debts of up to US$17.4 billion.
In March 2007, HSBC Holdings announced its results and increased its provisions for US subprime mortgages by an additional US$7 billion, totaling US$10.573 billion, an increase of 33.6%. As soon as the news came out, the stock market plummeted that day, with the Hang Seng Index falling 777 points, a drop of 4%.
On August 2, 2007, the Industrial Bank of Germany announced a profit warning, and later estimated a loss of 8.2 billion euros, because of the huge losses suffered by its "Rhineland Fund" with a scale of 12.7 billion euros and the bank's own small participation in the US real estate subprime mortgage market. The German central bank convened the national banking industry to discuss a package plan to save the Industrial Bank of Germany.
The tenth largest mortgage lender in the United States, American Home Mortgage Investment Corporation, formally filed for bankruptcy protection with the court on August 6, 2007, becoming another large mortgage lender in the United States to file for bankruptcy after New Century Financial Corporation.
On August 8, 2007, Bear Stearns, the fifth largest investment bank in the United States, announced the collapse of two of its funds, also due to the subprime mortgage crisis.
On August 9, 2007, BNP Paribas, the largest bank in France, announced the freezing of three of its funds, also because of huge losses from investing in US subprime bonds. This move caused a sharp drop in European stock markets.
On August 13, 2007, Mizuho Group, the parent company of Japan's second largest bank, Mizuho Bank, announced a loss of 600 million yen related to US subprime mortgages. Japanese and Korean banks have suffered losses due to the US subprime mortgage storm. According to estimates by UBS Securities Japan, the nine largest banks in Japan hold more than 1 trillion yen in US subprime mortgage-backed securities.
Later, Citigroup also announced that the loss caused by the subprime mortgage crisis in July 2007 reached 700 million US dollars, which eventually caused the share price of Citibank to fall from 23 US dollars per share to 3 US dollars per share in just half a year, and the market value shrank by 90%......
A series of bad news stunned the United States and the entire world. The U.S. subprime mortgage crisis inevitably evolved into a global financial crisis.
The two housing agencies in the United States were placed under the trusteeship of the US government. Bear Stearns, the fifth largest investment bank in the United States, was acquired by the US government for $236 million. Merrill Lynch was acquired by Bank of America. Lehman Brothers was completely dead...
In particular, the collapse of Lehman Brothers, whose total assets were as high as 700 billion US dollars at the time, directly triggered a global economic crisis!
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