Chapter 92 Foreword Fortunate to witness history

Although this chapter is not about technological development, it is very important for readers to understand technology companies. Behind technology companies, there are financial forces that influence their development and business behavior.For listed technology companies, this kind of financial power is represented by investment companies or investment banks.Without investment banks, it is difficult for technology companies to raise capital in financial markets, and it is difficult to conduct mergers and acquisitions and spin-offs.To write this chapter, I have been brewing for a long time, in fact, it has been brewing since I first wrote the first chapter.I thought I could finish this chapter as smoothly as I finished the other chapters, as I originally intended.However, many things have happened in the past six months, even great changes, which made me have to revise my manuscript again and again.

There are always two sides to things.On the one hand, we are lucky to witness history.I experienced firsthand the economic crises that swept across the capitalist world from 1929 to 1933 that I could only read about in history textbooks.On the other hand, all of us will be temporary and even permanent victims of this crisis.When I conceived this series a year ago, there were five major investment companies (Investment Banks) in the United States, Morgan Stanley, Goldman Sachs, Merrill Lynch, Lehman Brothers and Bear Stone.Earlier this year, the nearly century-old Bear Stearns was the first to close.In the nearly 100-year history of this investment company, 97% of the years have been profitable, including several of the most difficult periods, the Great Depression around the world from 1929-1933, World War II, the September 11 terrorist attacks in 2001 and The collapse of the dot-com bubble.But now, a single greedy mistake has bankrupted America's fifth-largest investment bank.In this way, my chapter became a little easier.

Those who are familiar with Wall Street know that the matter is clearly not over yet. In their words, the bad news is not out yet.Sure enough, when I wrote this chapter in the middle, in the first week of early September, the famous Lehman Brothers investment company (Lehman Brothers), which has been losing money this year, failed when it sought funding overseas, and at the same time broke its insolvency On the news, its stock price plummeted 96% by Friday.If its problems are not resolved by the weekend, Wall Street may be bloodbathed on Monday (the original words of the Wall Street Journal are Bloodbath).So U.S. Treasury Secretary Paulson and Federal Reserve Chairman Bernanke convened the largest U.S. commercial banks such as Bank of America and Citibank, as well as the largest U.S. commercial banks such as Goldman Sachs and Morgan Stanley, at the Federal Reserve Building in New York over the weekend. The investment company discussed together to save this time-honored investment company with a history of 160 years, which was born in the Daoguang period of China.However, when Bank of America and Barclays, which were originally interested in acquiring Lehman, found that Lehman's bad debts were as high as 60 to 80 billion U.S. dollars, they all said that they could not absorb so many bad debts without the support of the US government. .The two banks asked Paulson for help, and even the German finance minister called Paulson overnight to ask him to rescue Lehman on Sunday night, that is, before the stock market opened on Monday in Asia, otherwise the consequences would be disastrous.But Paulson always talked about him regardless of the left and right, but refused to pay.At the same time when everyone was seeking to rescue Lehman, Merrill Lynch, the third largest investment company in the United States, also began to falter. It reached a merger agreement with Bank of America at lightning speed.When Lehman's last savior, Barclays, left the negotiating table, Lehman had to declare bankruptcy.The financial media and investors all over the world are waiting for news, and what they get this time is bad news.A few hours later, global stock markets plummeted from Asia to Europe and back to the United States, a drop comparable to the 9/11 terrorist attacks.So far, there are only two remaining of the five largest investment companies in the United States that I want to write about.

When everyone had not had time to blame Paulson and Federal Reserve Bank Chairman Bernanke for being helpless, they soon realized that they had something to hide. The financial crisis was far more serious than originally imagined. The company AIG is also in jeopardy because of excessive losses on loans to non-performing assets. AIG has trillions of dollars in assets and liabilities. It is different from Lehman and Merrill Lynch, because many people around the world have their pension insurance in it, so they have to save it. The collapse of AIG not only means that countless Americans will be old and insecure, but in many other countries in the world, especially Japan, the lifelong pension insurance of the elderly will be ruined.Only then did everyone understand the painstaking efforts of Paulson and Bennanke in refusing to save Lehman. These two helpless people must save money for AIG.

A good fortune does not come in pairs, misfortunes never come singly. AIG’s problem has not been resolved. Morgan Stanley, the second largest investment company in the United States, also has a problem of insufficient funds. It is seeking to merge with a commercial bank. Two bad news came. World stock markets plummeted again.The decline in a few days has been comparable to the Great Depression in the West from 1929 to 1933.I hope that by the time I finish this chapter, Goldman Sachs will not be the only independent investment firm to introduce.Since Goldman Sachs is backed by the famous investor Warren Buffett's Berkshire Hathaway, there should be no problem.In the end, the U.S. government had no choice but to come forward to clean up the mess and nationalize the bad debts of up to 700 billion U.S. dollars, so it was called the United Socialist Republic States of America by many economists.The bill was defeated by the House of Representatives on Monday, September 29, 2008, but both houses had to pass it.

After such an ups and downs, investors lost confidence, and the financial crisis has arrived, the global economic recession is inevitable. In the week after the US bailout plan was passed, the stock markets of developed countries in the world fell by 15%, and the central banks of various countries had to It will take one or two quarters to see the effect of the emergency interest rate cut of 50 basis points, or 0.5%.Even if the financial crisis can come to an end, the real economic crisis has just begun.Technology companies are hardly immune from the financial crisis.In fact, the stock prices of star technology companies such as Google, Apple and RIMM have fallen by more than half, although their performance has greatly improved compared with last year.And some of the companies we have introduced may not exist after this crisis.Many companies that are still profitable have already begun mass layoffs, including many well-known multinational companies, such as Hewlett-Packard, Yahoo and Ebay.Undoubtedly, those multinational companies with long-term and potentially serious problems are likely to be eliminated in this crisis.Some nascent tech companies awaiting funding may die before dawn.However, optimistically, when the crisis passes, some small companies may rise rapidly, just like the rise of Google in 2001-2003, which is not a bad thing.

I've gone a lot off topic here.I want to say, first of all, our world and this society are a whole, and the loss of any party is actually our own loss.Second, Wall Street is much more important to the world economy and life than we originally imagined.They are the financial forces swaying technology companies, and firms like Goldman Sachs, Morgan Stanley, and Lehman, as the "bookmakers" of companies like Google, Microsoft, and Yahoo, have been vocal in many tech mergers and spinoffs. main character.Investment banks all have one thing in common—greed, and the tragedy from Bear Stone to AIG is the result of greed.Wall Street's greed can both make and kill a rising tech star.