andrew yau

When we were in the van finding our way just now, it just so reminded me of the days in US- driving and getting lost and finding our way it was fun though stressful too especially at night when we had to rush back to homestead cos we got work the next day. And especially so when we had to make our way up the long and winding mountain road. And many a times i will get cheesed off. Ah. I really miss the mountains.


driving to bath county airport to return car.

huimin and keshia are back finally hehe. Huimin came over with yulin yesterday. Actually i had been thinking sometimes how would i react when i see hm will i rush to hug her? haha. But i didnapos;t and she sae my voice change. It has become softer. OH. I guess so. When iapos;m back i can feel my throat suck with some stuff just like before. Anyway when i came back from u.s, people all around me were complaining that i was talking too loudly

and thanks a billion for bringing my Hello Kitty Bank of America Debit Card. So cute though iapos;m not a fan of hello kitty and i din expect her to bring back the corks and bottle caps i collected but din bring back corks were creatively tied together in a string and caps were uniquely stuck to the sticky tape that people always ask me wad izzit weeeeeeee. And my swatch watch which i tot itapos;s long lost in hot springs. And my Alaska quarters weeeee weeee. Happie girl. Though life now is making me not that happie or expressive. Isnapos;t like what i was in u.s i guess. Hm.

life now is. Big big sigh. Iapos;m as bad as usual in studies. Ahha. Forget it. Just try my best and try to get a good job. And leave this place asap. I want to travel travel travel. Donapos;t want commitments, donapos;t want permanent-ness. Well, mb other than a place called home. Ah. Contradicting. But. Nvm. You wonapos;t get it.

i want to do anything i want without being accountable sometimes i canapos;t wait to graduate. So i canapos;t gain more independence. The kind that i had while i was in u.s.

and the next time i visit u.s, i will drive to my hearts out hm, ks, cy, omg. They visited national parks and they are so freaking gorgeous but when is next?

what am i doing here? grz.

anyway the financial crisis is so shit ass. Itapos;s so complicating that iapos;m always so confused over whatapos;s going on. Anyway this time KLCI wasnapos;t as badly hit as others. One reason i came out with is that hedge funds investors who bought stocks globally to diversify their portfolio didnapos;t buy malaysian stocks because of the severe political uncertainty that is rocking malaysia since the ruling coaliation lost of 5 peninsula malaysia states to the opposition party. This is one of the many reasons. Cos for hedge funds, they borrow alot to buy, they had to sell shares to fulfil margin calls. And as share prices fell, they had more margin calls to meet and as they sell, share prices fall even more, and they had to sell more shares to meet more and more margin calls.

how the subprime started is... I shall try to explain. I will find my self in a contradicting role later on. It always just happens.

after the 911 attack, u.s economy wasnapos;t doing well. To boast the economy, u.s government lower interest rates to 1 i think. Lower interest rate means that people will be more willing to spend since it cost lower to spend; investments will increase as cost of borrowing becomes lower.

u.s has been encouraging homeownership. However, many people with poor credit ratings couldnapos;t meet the requirements to become a prime borrower to obtain loans from banks to buy houses. As such, subprime lending came about. People who fall under subprime cat are those who have bad credit ratings- as such they are high risk people. And since they are higher risk people, they have to pay a higher price to get their loans, i.e higher interest rate. With this, everyone in u.s can get loans and buy a house.

with easy credit, houses became high in demand, prices shot up- housing boom, leading to housing bubble. Banks need alot of money to lend out to people. As banks hold alot of mortgages on hand, they hold the borrower houses as colleteral. Since the banks need alot of money and they hold so much colleteral, they use these colleteral to issue securities called Mortgage Backed Securities- MBS. By selling these bonds, they are raising money to feed new lendings. They service the bonds (i.e paying out coupon) by the interest payments they receive from their lending to homeowners. E.g. Homeowners pay them 10 interest but they pay bond holders 8- hence making a profit of 2. As they receive more money to lend out, they hold more colleterals and they issue more MBS. The cycle goes on and on.

one thing to note that these subprime mortagaes when repackaged into bonds, these bonds are divided into different tranches- AAA,AA,A,BBB,BB,B. Question: how can subprime loans that are already so risky be an AAA bond?

with so many MBS, they are put together, along with many other assets and CDOs are created. -colleteralised debt obligation. CDOs somewhat like MBS. Also divided into different tranches. Again, lousy MBS are rated as AAA CDOs. They may be receiving 8 from their MBS and paying out 6 to CDOs holders? or banks buy CDOs that are receive 6 payout. They actually used money borrowed at 2 to buy these CDOs. As they worry about the default on CDOs, they buy credit default swaps at 5. I.e they are guaranteed 5 payout if their CDOs default. As such, they are making a sure profit of 5-2=3.

ah. This one i dunor. Banks are shifting debt on liabilities side to assets by issuing CDOs.
banks have alot of debts. They use they funds from these debts to issue CDOs. CDOs are assets because they have value and people will buy them? er.? bonds are assets because they pay payments. CDOs are assets because they pay too? hm. Wth

anyway, u.s then faced inflation and i/r shot up. People are unable to pay their mortgages for i/r has increased too much. Why theirs isnapos;t fixed i/r is because they are subprime and most of them are in a adjustable mortgage loans. Foreclosures rise as the number of defaulters increase. With an excess supply of house in the market, prices fell. People soon realised that their mortgages is less then the value of their house. E.g u took a 1 million mortgage but now ur house is worth only 700k. And u are left with 800k mortgage. U would rather let the bank take over.

banks had to write-down huge amounts of losses. And with their huge amounts of CDOs, no more payments come from homeowners, no more coupon payments to bondholers, no more payments to CDOs holders. As such, write downs became explosive.

with high leverage since investment banks are not require to have deposit ratios, they are unable to handle the losses. Their equity are way too little to support their liabilities or debts. Shows that their assets are too highly owned by borrowings. As losses are made, not enough equity is able to cover? HUH?

anyway, i want to sleep. Bye.

i lost my wall street pictures. Itapos;s in my friendapos;s computer. If not i will upload a pic here.
andrew yau, andrew yates photography, andrew yates manchester, andrew yates.