Capítulo 1575: Chapter 574: The Early Arrival of Subpri Loans
If previously, they only ventured into real estate by targeting young people ready to get married.
Then what if the notion of real estate investnt, property appreciation is ingrained into the people’s minds.
Real estate business would then no longer be solely for young people planning to get married, but for all Aricans.
In an instant, the scale of the real estate expanded countless tis!
“I understand, boss, I’ve already thought of how to operate this!”
Looking at the excited expression on Café Jackson’s face, Donnie nodded with satisfaction.
Isn’t that what those real estate developers were doing in later generations?
“That’s not enough!”
Just when Café Jackson thought Donnie’s two ideological views were invincible, Donnie still said it’s not enough?
“Boss, could it be that you’ve long had an idea about this business?”
At this mont, Café Jackson couldn’t help but doubt that even though he just ntioned this idea, Donnie could expand on it with so many thoughts.
If he were to say Donnie hadn’t thought of this business earlier, Café Jackson wouldn’t know how to describe this situation.
Donnie waved his hand, not explaining, but continued,
“There is sothing we still need to be wary of.
If the real estate business really stirs up, countless companies will surely swarm in.
To sell their properties, they will undoubtedly co up with nurous unimaginable incentives.
More importantly, whether they realize it or not, they will follow us in promoting the benefits of hoownership.
So by then, more people will start buying houses.
But we must know, the population of the United States is limited, even if, with economic recovery, the birth rate increases.
There’s absolutely no way it can keep up with the speed at which new communities are erging!”
Café Jackson felt he was almost unable to keep up with Donnie’s thinking.
What he could consider only extended to five years later.
But what Donnie was talking about were things that were obviously ten or even twenty years away.
“So boss, you an to say, there will inevitably be a surplus of houses in the future!”
Donnie nodded and said, “Yes, and no!”
“As long as the real estate business develops, this issue is bound to erge, there’s no doubt about it.
What I’m talking about is ho loans.
If you only see ho loans as the last piece of this business chain, then you’re underestimating this industry.
As I just ntioned, if it’s rely a case of surplus houses, that’s not the biggest issue, the biggest issue is, the economy of the United States cannot always remain in a high-speed developnt phase, the last decade, all Aricans thought the US economy would always develop rapidly.
In the end, they were faced with the Great Depression.
The economic law is like the rise and fall of dynasties, it can’t always be prosperous and rapidly developing.
There are peaks and troughs, that’s the natural law, so after Franklin Roosevelt revives the US economy.
It’ll be another high-speed developnt phase, but when this high-speed developnt phase ends… ”
At this point, Donnie paused and took a sip of whiskey.
Café Jackson impatiently watched Donnie, he had a feeling that what his boss was about to say could potentially change the current business model.
Indeed, there were so genius entrepreneurs who were always on guard against potential crises, but they never had an obvious solution.
Isn’t that what my boss is implying now!
Donnie smiled and continued: “If another economic crisis really occurs, then there will definitely be a large number of people unable to afford their huge mortgage paynts.
At that ti, there would be no one to take over.
Then these properties would beco bad debts, severely affecting the company’s financial health!”
Café Jackson nodded, he hadn’t thought about these things before, but now he understood Donnie’s reasoning and knew it made sense.
During the financial crisis, didn’t we see how many people abandoned their hos, and how many banks collapsed due to bad mortgage debts!
“So what do you an, boss?”
Donnie smiled and said, “It’s simple, turn these people’s loans into securities products, and sell them!”
Buzz!
Café Jackson was stunned, he stood up, pacing back and forth, with a complex expression on his face.
How co I never thought of that?
What Donnie was essentially talking about is the subpri.
Right now, the United States doesn’t even have the concept of subpri yet.
The closest equivalent was the Florida real estate business of yesteryear.
But those real estate developers usually borrowed to buy a piece of land first, and then cycle loans using that land.
And the banks accepted this type of loan.
But what Donnie wants to do now is to turn ordinary people’s ho loans into a new type of security product.
Actual subpri wouldn’t appear in the US until the 1980s!
And now Donnie is introducing this concept fifty years early!
“There is a problem with this!” Café Jackson said excitedly, “This way we can turn these loans into securities products and sell them, so even if the real estate industry explodes in the future, the impact on us is minimal.
But how do we make those bankers believe in this product?”
This was the question Café Jackson most wanted to know now.
Donnie still wore a bright smile on his face, not at all worried about the beast of subpri being released by him, and what impact it would have on the great United States.
“Housing prices are steadily rising, funds from the society are continuously flowing into this industry, then everyone’s attention will be on this sector.
If at that ti, a company specializing in subpri erges, and that company can make big money, guess what everyone else will do?”
Café Jackson understood in his heart, laughing as he said: “Then everyone will enter this industry.”
Imdiate interests will blind everyone’s vision.
Donnie stands in the position of a transmigrator, able to clearly know what this situation will lead to.
But others will be blinded by short-term interests.
“That’s right, by then you just need to sell the company running the subpri business.
Even if there really is another financial crisis then, it won’t affect us!”
Donnie laughed as he spoke.
Café Jackson had now cald himself, speaking seriously to Donnie.
“Boss, this is not sothing that happens overnight, it might even take ten, twenty years to co to fruition!”
Donnie laughed and said, “Then take ten, twenty years to do this business.”
Café Jackson nodded seriously and said, “I understand, I will now focus all my efforts on this task!”
Donnie waved his hand and said, “This matter doesn’t require all your energy, hand it over to a trusted subordinate, you just need to steer the direction from behind.
Now that Robert has left the consortium, there’s a lot of work that needs you to take over!”
Café Jackson again showed an excited expression, knowing this was Donnie’s way of valuing him.
It was also an indirect way of telling him not to worry about his status in the consortium.
“Thank you, boss, I know, however, I do need to set up a frawork for them in the initial stages.
And once that frawork is established, those people can settle down and focus their attention on expanding outside rather than inside!”
Donnie nodded with satisfaction, “Alright, then do as you say!”
Subsequently, Café Jackson raised so of his doubts, seeking clarification from Donnie.
Donnie detailed what he knew to Café Jackson.
The two of them chatted late into the night, Café Jackson had a rough frawork in his mind.
Then he would have to lead his team in making the frawork more detailed.
After Café Jackson left, Donnie leaned back on the sofa.
Donnie was also contemplating whether this plan would affect Venus Bank, after reviewing it, Donnie still thought it shouldn’t be much of an issue!
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