Here we have discussed about the tips to greatest trade ever and its steps which will provide the help to drives the economic growth and increase the efficiency.

1. The Greatest Trade Ever
By James Sanders

2. One man's refusal to believe in the health of the housing boom tells
us a great deal about the financial crisis and why the crowd can often
be very, very wrong…
The mania that gripped investors in the wild bubble
years of the 00s is widely portrayed as a universal
disease, but a few stubborn souls refused to
succumb. At the time, they were derided and mocked
for not realising that ‘things are different this time’.
They simply didn’t believe the hype.
One such refusenik, hedge fund manager John
Paulson, was not only sceptical about the health of
the over-inflated US housing market, but bet against
it – and won in some style.

3. $15bn in 12 months
The scale of Paulson's bet earned it the title of "the
greatest trade ever“ in Greg Zuckerman’s book. In
any context, it was a truly extraordinary example of
backing your own judgement against the noise of the
crowd.
By hoovering up complex "credit default swaps"
against mortgages – in effect, insurance policies that
would pay out if homeowners defaulted on their
loans. His fund made a cool $15bn in a year, $4bn of
which he took home himself.

4. $1.25bn in a single morning
On a single morning in 2007, when sub-prime lender New Century
announced it was ‘in difficulty’, Paulson's fund clocked up gains of just over
$1.25bn – more than his idol George Soros made in his notorious gamble
against sterling in 1992 when Britain was forced out of the European
exchange rate mechanism.
Others placed similar (much smaller) trades, such as west coast property
developer Jeffrey Greene, a friend of Paulson's before they fell out over his
refusal to invest in his hedge fund. These investors were considered
mavericks or outsiders and had to fight to be taken seriously at the time by
the banks they wished to trade with.

5. Is it different this time?
The financial engineering that blighted these years left bank bosses with
only the vaguest understanding of their own balance sheets, and the trail
that leads from bafflingly complex securities such as "collateralised debt
obligations" to cash-strapped homeowners across the US.
You would hope that Banks and Investors would learn from such an
experience wouldn’t you? You would assume that rules would be in place
to ensure that people are not able to borrow more than they can ever afford
to repay? You might hope that would be the case.
Remember, this was a time when a school cleaner was able to secure an
$800,000 mortgage on a new build house.

6. Auto loans – the next disaster?
The US consumer is being lured into some very suspect loans when they buy
their new wheels. Recently, Wells Fargo admitted it was facing litigation over
its ‘sales practices’, you can read more here.
Many consumers are now taking loans over 6 years, a timescale that enables
the lender to keep the monthly payments as low as possible. Around 42% of all
auto loans are over this timescale, compared to 26% of loans in 2009.
For a breakdown of how the maths works, take a look at this scenario: If a
borrower gets a five-year loan to finance a $20,000 car purchase with a 5.0
percent interest rate, after three years the borrower will have paid $2190.27 in
interest and still have a remaining balance of $8602.98. That same loan
financed over six years would cost the same borrower $152 more in interest
and still have a remaining balance of $10,747, more than $2000 higher.

7. Sound familiar?
The CFPB is a consumer watchdog and advocacy agency created by the
Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, said
the longer loans have higher default rates, have been used more often by
consumers with lower credit, and have on average financed larger amounts
of money. Sound familiar?
“The move to longer-term auto loans is opening up more risk for
consumers,” CFPB director Richard Cordray said in a recent release.
“These loans are more expensive and can result in consumers
continuing to owe even after they are no longer driving their car.”

8. Worrying data

9. Who I Am…
• James Sanders is a property Investor and
entrepreneur who provides the help in business
development and property trading in London.

10. Conclusion
Most Americans go into debt for a car or truck rather than pay cash, CFPB
figures say consumers get financing to purchase 86 percent of new
vehicles and 53 percent of used ones.
In the United States, more than 90 percent of American households have
a vehicle, and auto loans are third only to mortgages and student loans for
household debt.
Vehicles rarely appreciate and they can’t readily be rented out to provide
an income. Mainstream models get less desirable and less reliable as they
get older.
This will end badly.
This time it isn’t different.