hi how are you hey mr. Bennett and we
have let's see what you got you smell
that
what is that Wow what's its new Cologne
no opportunity
no honey okay I smell money okay
Chris this is your basic mortgage bond
all right the originals were simple
they were just thousands of Triple A
mortgages bundled together guaranteed by
the US government the modern ones are
different they're private and they're
made up of layers of tranches the
highest level triple A's getting paid
first the lowest rated B's getting paid
last taking on defaults first now
obviously if you're buying B's you can
make more money but they're a little
risky sometimes they fail Chris
somewhere along the line these B's and
BB he's went from a little risky to
where's the trash I'm talking
rock-bottom FICO scores no income
verification adjustable rates
the default rates are already up from 1
to 4 percent fellas and if they rise to
8 percent and they will a lot of these
triple B's are going to 0 2 and that
you're too close is an opportunity okay
you're saying that at 8% the bonds fail
and we are already at 4% that's right if
they go to 8 it's Armageddon yeah that's
right
how come nobody's talking about this
you're completely sure of the math look
at him that's Mike want your what my
quantitative my math specialist look at
him you notice anything different about
him look at his face that's pretty
racist look at his eyes I'll give you a
hint his name is yang
he won a national math competition in
China he doesn't even speak English
yeah I'm sure of the math actually my
name's Jung and I do speak English Jared
likes to say don't because he thinks it
makes me seem more authentic and I got
second in that national math competition
so you're offering us a chance to short
this pile of blocks how with something
called a credit default swap it's like
insurance on the bond and if it goes
bust you can make ten to one even twenty
to one return and it's already slowly
going bust
ten to one twenty to one know what and
no one's paying attention no one is
paying attention because the banks are
too busy getting paid obscene fees to
sell these bonds but wait you are the
bank where you work for the bank I bet
your margins are pretty nice and fat
let's not talk about my margins by the
way being nice and fat that's a nice
shirt do they make it for men aren't you
the bank guy work for the bank I don't
think like a bank big bank small bank I
like to make money all right let me put
it this way I'm standing in front of a
burning house and I'm offering you fire
insurance on it
Hayes 0b0
double b's zero triple B's zero and then
that happens what is that that's
America's housing market