留学生金融硕士论文 Financial crisis of generation, influence and countermeasures
directory
1. Preface 2
2. The financial crisis of the main factors have 3-5
2.1 financial market incomplete information theory 3
2.2 loan interest rate and risk 3
Enterprise 2.3 excessive debt financing 4
2.4 a deterioration in the non-financial department assets 4 or 5
2.5 to the financial crisis of the analysis of the five
3. The U.S. subprime mortgage crisis the cause analysis of the five-14
3.1 the subprime crisis happened five background
3.2 loose credit conditions and soaring housing bubble 6-7
3.3 Wall Street financial derivatives to abuse of 7-9
3.4 Wall Street the financial policies of the radical 9 to 11
3, 5 regulators oversight and policy mistakes 11-12
3.6 credit rating agencies negligence 12
3.7 the U.S. government handling of the crisis analysis 12
3.8 the financial media function is lost 12 to 14
4. After the financial crisis the development trend of global economic 14-16
4.1 the global economy will wander at the bottom 14 or 15
4.2 the weak dollar 15
4.3 global inflation 15
4.4 global industrial structure will quickly restructuring 16
5. The financial system reform 16-17
5.1 the duties and financial institutions
5.2 international standardization and accounting system
5.3 financial laws to establish the system of 17
5.4 financial institutions of information release system set up 17
5.5 to reduce financial market information unequal risk of 17
5.6 inhibit artificial monopoly, maintain the balance of economic 17
5.7 control and supervision of credit transactions credit 17
5.8 establish a financial market crisis response mechanism of 17
6. Last word 18
7.
8. Appendix
Introduction
The British economist John Maynard Keynes has said: history in 1929 could be compared to the great depression of the deadly state also is 400 years before and after the dark ages, this two periods at least a little bit looks really is the same, and that is, although it is harmful to people's empathy, but do not understand what is in the way. In 1929, the great depression is probably about business activities of all human memory impression most deadly historical events, and in 80 years later, the United States was again the subprime crisis such a swamp, but economics thinks generally, now look worse than in 1929. Overnight, bear stearns, real estate beauty, beauty, the room lehman brothers, merrill lynch, American international group, financial giants one went down, once smile ao of the global capital markets the fifth largest investment bank, Goldman sachs and Morgan Stanley only in supported earnestly. People can not help but ask: the financial crisis for any produce? This paper thoroughly to financial crisis factor analysis- -the financial market incomplete information theory, the size of credit to influence of the size of the economy and the economic basis, the decline of psychological crisis led to the expected capital chain rupture. Through the analysis of 2008 years in the U.S. subprime mortgage crisis from the causes of summarized conclusion: crisis first performance of the real estate market collapse, and then present a bank, the stock market crash in the complex symptoms. In the economic globalization of increasingly today, the outbreak of the global financial crisis of the world economy has comprehensive strike which can lead to global economic recession, we should seriously study the financial crisis and the law of development of sports, try to guard against and to eliminate the negative effect.
A financial crisis, the main factors of produce
1.20 since 80 s economists use incomplete information theory is introduced to on the financial market area of research. Gertler, Bernanke and Gilehrist who studies show that compared with the product and factor markets, financial market is an incomplete information of the market. In financial markets, the information in the lending is the distribution of both parties not symmetrical, borrowers loans used for the investment projects for the risks and benefits of have more information, and investors to influence investment income of all variables have some degree of information asymmetry problem. The information is incomplete affects the financial behavior of participants to balance the prices of financial assets balance, the two don't balance caused the financial activities of the "adverse selection" and "moral hazard" problem. Information asymmetry affect the rationality of the financial activity, make the financial market perfect sex reduced. "Adverse selection" reduce the financial market optimize the allocation of resources efficiency, "moral hazard" weakened financial market fund flow ability. When meeting the big financial disasters, such as Mexico, the Asian financial crisis, these countries to the financial asset price drop to less than its value of the following basic level. Foreign direct investment in often when invading, which a lot of buy cheap assets, many important domestic companies by foreign company control. This is the contemporary world multinational capital flow to rapid growth after the financial crisis of a new feature.
2. Financial institution in the credit market issue loans is concerned about the loan when interest rates are high or low risk and size, but financial institutions of high and low interest rates for itself can also affect the loan risk. Interest rates adverse selection effect can make potential asset investment borrowers have differentiation. Now that the borrower has the different reimbursement ability, financial institutions must clear which are most likely to repay borrowers. Financial institutions to the borrower cannot fully understand the relevant information, so in the identification, interest rates become a kind of testing mechanism or signal. But the loan interest rate raised the quality of the borrower may be crowded go, and leaving the high risk borrowers. Those who engage in high-risk investment project of individuals and companies are willing to pay the highest interest rate. If market interest rates for credit demand increased or reduced money supply is larger, the rise of the low credit risk borrowers may no longer borrowing, and high credit risk borrowers still willing to borrow money. The risk of adverse selection is so increase, the lender will no longer provide loans or provide fewer loans. The loan will lead to a reduction of overall economic activity level investment and reduction. In 2008 the United States after the financial crisis to avoid the eu to become one of the worst-hit areas of the crisis, the recession than the first financial crisis the United States is more serious. 2009 quarter, the eu GDP fell 2.5%, the largest decline as the eu quarter. By contrast, the 2009 recession of only 1.6% in the first quarter, and the euro zone in the fourth quarter of 2008 digital flat. Severe recession to international direct investment situation produced great negative impact, the European Union foreign investment appears some notable gradual characteristic and the strategic change.
From 2004 to 2007, the European Union foreign direct investment in a climbing a steps, from 142.3 billion euros to grow to 484.2 billion euros, with an average annual growth rate of close to 50%. (See Chart 1) however, by the financial crisis, in 2008 the eu foreign investment scale greatly decreased, 27 Allies in this year of foreign direct investment scale down to 354.4 billion euros, more than 2007 down 27%. At the same time, global foreign direct investment scale also appear to drop considerably, from 2007 euros in 2008 declined to 788.5 billion euros, lead to the European Union foreign direct investment proportion of the total amount of investment of the world up not down, by 43% in 2007 to 45% in 2008.
Chart 1. The Globe, European Union and UK Direct Investment 2004-2008 (In Hundreds Million of Euros)
3. Enterprise excessive use of debt financing is a financial market operation unstable a potentially important reasons. Once the market liquidity to the expected changes, illiquid assets will greatly depreciation, enable investors to high debt management enterprise suspicion, and then the chain of fracture flow debt, by lending to maintain business unsustainable, can produce general financial panic. American economist Kenneth Arrow in fixed general equilibrium theory that the economic decisions of the environment information is not completely, the increase of information, can only means of the uncertainty of a certain degree of reduced. Kenneth Arrow analysis the imperfect market and economic behavior person information asymmetry problem, as long as there is no economic stability, will have to obtain information through reducing uncertainty may be, increasing uncertainty environment, the value of information is obvious. Because of uncertainty have economic costs, so reduce the uncertainty is a kind of economic benefits, the value of information is reflected in this one of earnings. Financial market information asymmetry phenomenon appearances, lead to the adverse selection and moral hazard problem, this leads to the effective operation of the market. When in the financial market adverse selection and moral hazard to the accumulation of the market can't effectively in between investors and issuers financing, financial crisis they generate. Solve financial market incomplete information to the problem including: government strengthen management of to increase the transparency of the financial market of information release, etc. The bank is specially is engaged in information collection of financial institutions, convenience in the economic and social productive investment. Financial crisis in some bank failures reduced through the bank financial intermediary activities, and to invest and total economic activity reduced levels drop, so that the total social information sharp decline and uncertainty increases rapidly, crisis deepened.
4. Non-financial department balance sheet a deterioration in the financial crisis is also formed one of the important factors. Asset market prices plunged in the financial markets can aggravate the adverse selection and moral hazard, causing financial crisis. On the stock market the stock price measurement is the net value of the company, the stock market drop it means the company net worth of decline. The company is similar with collateral net effect, the stock market price drop caused the fall in the net value of the lender is not willing to provide loans. In addition, the stock market drop caused by company a net reduction, stimulate the borrower engaged in the investment risk. Because once investment out of the question, the borrower lost is smaller, it will lead to a moral risk increases. Moral risk magnification without enthusiasm that lenders make loans. This is why the market fell, the company a net reduction in loans and economic activity levels drop reduced another reason.
In the summer of 2008 the U.S. subprime mortgage crisis, the main index overall economic recession. And, by the subprime crisis caused by the global financial system is still in the spread of the crisis, especially through the global recession the growing risks, this a "once-in-a-lifetime" future trend of the crisis still has a lot of uncertainty. Since February 13, 2007 the new century financial company issued a profit warning to the fourth quarter of 2006, the us subprime mortgage loan risk began to emerge, the subprime crisis begin to surface. September 15, 2008 has a 158-year history of the lehman brothers bankruptcy protection announced "; On the same day, American Banks to about $44 billion purchase of Wall Street investment bank merrill lynch; American international group (AIG) credit rating fall. Former federal reserve chairman Alan greenspan said that the United States had "once-in-a-lifetime" of the financial crisis. So, what is causing the United States to the root of the crisis. And the government and how to prevent financial crisis?
2. Methodology
Financial crises is a complex, multiparty caused by the final results. Like the butterfly effect, financial crisis and economic crises consists of a series of people in the operation of the economy is not in conformity with the economic development of the economic behavior of the law by the major effect of the final. So, we need from the aspects of economic operation to analysis and looking for answers. The government, economic and financial crisis individual bank is the main participants, so this paper from the government, economic individuals and the parties of the bank economic behavior to find the reasons and analysis the subprime crisis of the root causes of:
1. The government's economic and financial and monetary policy is in accordance with the law of economic development;
2. The government and supervision organization have in the operation of the economy have appropriate regulatory and adjust the action; The government's ability to deal with policy and for the economy, the development direction of the financial guide;
3. The balance of economic development for economic influence;
4. People's economic behavior whether accord with the present economic bear ability;
5. Financial derivatives huge profits and the crisis of temptation; Subprime mortgage products can lead to financial crisis;
6. Investment Banks how to use financial products show the huge profits, causing the economic crisis;
7. People's economy and investment psychology of the influence of the economic development;
8. Financial and accounting systems conform to the requirements of rapid economic development;
9. The bank for economic development and the major effect of the financial crisis. The bank is the tie of the economic development, like vessels of all parts of the body to provide the blood, the Banks to the operation of the various parties face economic fund support, to make the economy can circulating up.
Through the above these research direction, we can all economic links from the details of the subprime crisis is to know how to develop to the financial crisis and how to hit the evolution of the countries of the world economic crisis. The financial crisis that is the root cause of the final purpose of this text, because we have only really know about the cause of the financial crisis, just may take measures to contain and control from the source of financial crisis happened again and the influence of the bigger. This way can make the social economic development is always in the normal development orbit, reduce the risk of economic operation.
2. The subprime crisis occurred as the result of analysis
The United States has long economic policy has led to sharp polarization between the rich and the poor, since August 15, 1971 the United States President Nixon announced the dollar and gold link up with, the world gradually entered the international financial monopoly capitalism since stage, capital global scheduling $to spam, since 1971, global basis is 10 times the money supply growth, soaring global prices, the average world inflation has increased, which has led to the polarization between the rich and the problem also worsen, the subprime crisis the deep roots, actual is the result of the polarization. It is because of a social grassroots people poor economic conditions, not even housing, loose subprime loan policy great lit the people buying enthusiasm, pushing the U.S. housing boom, blow big U.S. housing bubble. However, when the loan discount over time. Poor people can pay the mortgage, the huge financial chain from the roots began to fracture, and eventually led to the subprime mortgage crisis.
Of course, even if has a generous loans preferential policy, if poor people can calm about, the crisis may also can avoid, however these people at a time when the us economy in a good, the housing market started the higher up, the greater the environment, overestimate their solvency. Even has a part of the poor people in order to purchase loans is the prosperity of the ChaoFang earn money in the housing market. At the same time the Wall Street financial giants is the weakness of human show incisively and vividly: to pursue the wealth of greed, in the financial operation process of all kinds of fraud, it is led to the crisis spread and basic reason. The American writer Richard-than Turner in July 2008 published "greed, fraud and ignorance: the U.S. subprime mortgage crisis truth", only from the title will hit the nail on the head of the subprime crisis reveals that the root cause of the book depicted in the tamper with the credit, amplification income and behavior of great disturbed the credit market, in order to get more money and more interest from the ordinary people to financial institutions, this kind of fraud spread in every corner of the in the financial sector.
The American house prices on the rise in 2004 higher than normal rises 30%, the overall home prices is 15% more than the actual value. In view of this, since 2004 June, in the fed continuous 17 times under the influence of interest rates, the housing market started to gradually cooling. Moody's March 19, 2008 issued announcement said, used to measure the American commercial REAL estate prices moody/REAL commercial property price index fell 0.6% in January, the American house prices falling for has gradually turn the American house prices over the past few years of continuous rises. So far, the housing market is weak, the subprime crisis intensified, and gradually spread to and subprime related financial market each corner. Therefore we can say, the United States government interest rate policies that led to the subprime mortgage crisis fuse.
1. Loose credit conditions and soaring housing bubble
Alan greenspan is known as "the world's greatest central bank governors," he was during the chairman of the federal reserve created a brilliant record, the American economy in his lead there for ten years of continuous growth. In the face of the Asian financial crisis, technology stocks bubble burst and "September 11" terrorist attacks and so on a series of major crisis, greenspan loose monetary policy that have made the economy to quickly get out of a difficulty, but, in his retirement after two years, economic, but send out the question: greenspan perhaps to the subprime crisis of responsibility for certain.
Housing loans approved by the examination is very strict procedures. Mortgage loan providers requirements should have plenty of borrowers income and have a lot of savings to pay down. But, since the 90 s, which, access to housing loans become extremely easy. In order to deal with 2000 years before and after the Internet bubble burst, in January 2001 to June 2003, bush in greenspan support implementation of the tax cuts to the rich benefit, in order to promote economic growth and employment, the fed cut rates for 13 times, the federal funds rate by 6.5% to 1% of the minimum level of history, and in 1% of the level for a long years. Low interest rates caused a loose credit, also has stimulated the public loan investment boom, more and more of the life of people instability through bank loans to join the ranks of the person that buy a house, "in the economic situation is excellent, house prices rising up environment, people think even unable to sell their house, also could not suffer." It is for America's housing market prospects too widely expected, which stimulated the housing market, the price of the house in 1996 to 2006 soar about 85%, the subprime crisis for the seeds. Greenspan in December 12, 2007 edition of the Wall Street journal published articles, the first admit that during his tenure of low interest rates and policy could feed the real estate bubble.
Chart 2. Federal Funds Rates
Chart 3. US House Price
2. Wall Street financial derivatives of the abuse
The United States financial derivatives in recent years development soon, the growing complexity, normal sense, provide mortgage Banks are usually the mortgage loans as a fine assets hold expires and make corresponding month profits, and spreads between the bank capital costs, do this in obtain profits at the same time, also have higher levels of security, but this financial product a start is not suitable for Wall Street's operation, the mortgage securitization and produce the first one Global collateralized debt obligations before, this kind of product and didn't get the favour of Wall Street, the emergence of the CDO that risk of product of asset securitization more meticulous division, investment benefit from higher rates, but also greatly aroused the enthusiasm of Wall Street. Under the slogan of financial innovation, Wall Street aggressively involved in subprime area, and quickly push the high its size. In 2004, global CDO circulation of $157 billion, by 2006, the scale to us $552 billion.
Chart 4. Global CDO Market
In order to pursue the interests, Wall Street investment Banks will be the original financial products division, packaging, combination developed many financial products, according to the different risk level, sold to different risk preference of financial institution or individual, in this process, the first financial products be amplified for several times higher than their own value more than ten times or the financial derivatives, greatly the long trading chain. In essence, this financial derivatives and did not reduce the risk of the investment, it is only will risk transfer, and, as the financial derivatives the continuous development, the risk in the infinite scattered at the same time, it becomes more and more hidden, more and more difficult to detect. And then later, buyers see the kinds of financial products, in addition to the investment bank figures beyond, can't judge the quality of the assets.
Chart 5. US Mortgage Bond Market
Because of the financial derivatives CDO contains the enormous profit, the United States almost all financial institutions are involved in commercial Banks, insurance institutions and so on, are a CDO, holding bonds, whether American or overseas, more and more investors began to this financial product near crazy pursuit. The United States of the real estate bubble, and through this financial derivatives risk will spread to the world, this also is the subprime crisis why can spread to the global range of reasons.
Financial derivatives is a double-edged sword, it really has the active trading, the function of spreading risk, but if not add regulatory control of abuse, with its leverage effect lifted the ability of financial waves will be revealed. Once the crisis, financial derivatives of this kind of leverage effect and risk of dispersion, will greatly expand the breadth and depth of the crisis. In the past ten years, financial derivatives have been Wall Street investment Banks excessive development.
Chart Traditional and Sub-prime Mortgage Models
3. On Wall Street the financial policies of the radical and luck
The liquidity surplus capital pouring into the U.S. housing market, in order to seek more economic interests, but also in order not to let these growing capital influence subprime mortgage market development, Wall Street to the frenzied lending as a solution, the great variety of month, even the appearance of nothing down, subprime mortgage loans greatly stimulated market. In this context, the mortgage process becomes more and more simple, some mortgage basis with borrowers by yourself completely false income as the basis, even some mortgage loan was greater than the actual total house. So far, lending standards became exist in name only, the 2006 American home mortgage loans and even an average of only 6% of the head ratio. When the housing bust, subprime borrowers are no money to repay debt, the crisis was at an extremely high speed spread.
Chart 7. US Mortgage Monthly Average Interest Rate 2006
Wall Street financial too radical, it also led directly to the generation of dilemma. In the interests of magnified indefinitely front, Wall Street is crazy. In the chase for CDO, Wall Street increasing asset equity ratios, the flipside is, all the leverage ratio of investment Banks also gradually become more and more big. By the end of 2003, merrill lynch's asset is its owner's equity of 17.9 times, and by the middle of 2007, the assets of merrill lynch has reached its owner's equity of 27.8. Most affected by the crisis of lehman brothers, while the leverage ratio as high as 31.7 times. To benefit maximization pursue also make the company leaders lost my mind, lehman brothers is an epitome of Wall Street. In 2007, bear stearns, merrill lynch in succession to prepare for impairment, lehman chief executive forset del still firmly: "our price target is $200." When the subprime crisis gradually appear after, forset DE still thought that the copy of the time has to, bought and subprime related financial products, the direct accelerated the bankruptcy of lehman finally.
Chart 8. US Investment Bank Asset liability Ratio
Chart 9. Five US Investment Banks Leverage Ratio
Undeniable, Wall Street could not unaware of the subprime mortgage market in recent years despite the risk, but to maximize the benefits the pursuit of Wall Street, there is widespread a fluky psychology, it is the leading cause of Lord Walton Street is one of the reasons for SheJiChenSha financial giants. Until June 2008, forset del still declared lehman brothers capital and liquidity condition in an unprecedented strong level.
Chart US Investment Bank Industry Leverage Ratio
4. Regulators oversight and policy mistakes
The subprime crisis produce of the deep reason lies in the system of financial regulation defects, the us financial regulators to subprime and all kinds of derivatives issue size and quantity not control and supervision of the lax and market potential financial risk of neglect, all is the lack of regulation performance. Less regulation, has always been a green card, recommended the way of management, and it is he served as chairman of the federal reserve this time, the U.S. central bank cut mortgage standards, lead to a part of the credit, or poor living conditions of the lender to low cost through the borrowed money to buy houses; American regulators to market supervising the rating agencies, also has caused the rating agencies on subprime-related products rating of subjectivity, later in the big range subprime-related products of lower rating, the enormous attack investor confidence, deepen the investor panic, eventually lead to global panic.
Since the 1990 s the United States regulators to relax the regulation of Banks and securities firms after, Banks and securities firms can legally to a lot of the loss of the investment subject is not included in the "balance sheet" in order to achieve the purpose of confused investors. In this context, the regulatory agencies shall be formulated from the reality of new more the detailed rules to fight against the harmful financial market behavior. But unfortunately, regulators oversight on certain level to the market for this kind of indulgent harmful behavior, and for the crisis has no effect.
The SEC in recent years of a "naked shorting" measures, is also causes the crisis the rapid expansion of a direct cause. The lehman debacle signs appear just in "the naked shorting" influence, fast completed a fatal blow. Hedge funds in just less than two months, will lehman stock from 20 dollars all the way down to 2 cents. This kind of investor confidence of the great hit and lead to more stock holders holding out of the bonds.
Regulators oversight and policy errors of the indirect contributed to the subprime crisis of large outbreaks. The United States government last year have to adjust measures to increase supervision, 19 September 2008 the United States securities and exchange commission announced that temporarily banned again for including commercial Banks, insurance companies, the 799 financial only short selling operation.
5. Credit rating agencies negligence
After the outbreak of the subprime crisis, moody's and standard &poor's and fitch ratings and other major rating agencies become the most direct criticism of the object. The rating agencies is considered too high up the subprime product rating, and greatly promoted the development of the subprime mortgage market, these agencies income mainly comes from securities vendor, but for their investors to market, is responsible for the loopholes in the rating system has caused wide public concern.
The development of the financial derivatives, be helpful for improving the efficiency of using the capital, but the pricing and the transaction depends on the accurate market evaluation. When the market rating agencies this ring problems, trust crisis also then then begin to....... Global investors it is out of the three major credit rating agencies of trust, can rest assured wantonly buy subprime related products, but it is these agencies of the United States Treasury evaluation with the same level of the 3 level A securities, but in the overnight become investor hand of garbage. At the same time, the credit rating agencies to subprime related products to rating, also has caused the market panic, accelerate the spread of the crisis. Since the 2000 large subprime mortgage bonds issued since the rating agencies have been giving top credit rating, in 2008 after July and big jump range low almost all of subordinated bond rating. Only the July 10 a day, moody jumped low over 400 such securities rating, the great hit investor confidence has become the subprime crisis in worldwide panic investors direct fuse.
Chart 11. TABX Index (CDO Price Index)
After the outbreak of the subprime crisis, the U.S. government to begin to strengthen the supervision of the rating agencies, the commission also in August 16, 2008 announced investigating major credit rating agencies in the subprime mortgage crisis in the cause of the slow performance.
6. The United States government in crisis, inadequate understanding, poor treatment
On April 2, 2007, the second largest subprime mortgage agencies-the new century financial company apply to the court for bankruptcy protection, it is the housing market cooling since the big mortgage institutions with subprime loans failure in, but did not cause the United States the government's attention, the fed still simply assumed that this is only a single organization operation problem, not a crisis. Until July 2007 bear stearns hedge fund risk belongs outbreak, global markets wobbled, the fed to react, to inject liquidity into the financial system to increase market confidence, and always think the situation is controllable.
Until the room beautiful (Fannie Mae) and the real estate beauty (Freddie Mac) crisis, lehman bankruptcy and merrill lynch was acquisitions incident, the United States government to fully aware of the seriousness of the subprime crisis, and comes on stage in succession plans and measures to deal with the rescue. On September 7, 2008, the us government announced the take over "two room", the United States Treasury secretary Henry paulson helplessly say, fannie mae and Freddie MAC, size is too big, and the U.S. financial system is too closely intertwined, a bankruptcy will lead to domestic and even the global financial market turmoil greatly. So far, the U.S. government large-scale save the city began to move.
But, and took over the "two rooms" salvation action has caused a debate. Opponents say the United States has been pursuing general of free market principles, the government direct intervention destroyed the U.S. financial liberalization regulatory order. In addition, the government's help city move was also opponents understand to, with all the taxpayers' money to save for greedy and into bankruptcy crisis financial speculators. In this debate and accused the pressure, the United States government gave up lehman. As lehman's fall, the crisis is becoming more and more do not control, and when the U.S. government realized the severity of the crisis, has 158 years of history is bankrupt lehman brothers, merrill lynch and bank takeover, financial markets were already in severe concussion in. On October 3, 2008 before the United States congress passed a total of $700 billion financial rescue plan to give the government broad powers to buy the financial institution non-performing assets, and prevent financial crisis deepened. Since the crisis arises to focus on outbreak, the United States government rescue action is really some couldn't keep up with the rhythm. This crisis to insufficient knowledge of and intervention measures lag also contain crisis and the enlargement of the scope of influence.
7. The financial media function is lost cause economic activity stalled
In August, 2007, has highly leveraged financial institutions that hold a lot of breach of the news of the us subprime mortgage products by disclosure, and triggered a tsunami and evolution of the financial market for the global financial crisis. At the turn of the year, investors have consistently require Banks to provide more capital cushion, this makes the already stricken Banks more life difficult. But in the end, the bank to consolidate its balance sheet of effort mean nothing, accompanied by September 2008 lehman's bankruptcy, as the global economy core financial system collapse.
Out of the solvency concerns, all Banks to stop lending. Corporate bonds, commercial paper, and many other financial products and issue is greatly reduced. Credit financing based on economic activity began standing still. In a few short weeks, global trade rapidly shrinking and the fast, levels of deep enough to let us on the global economy and financial integration convinced. We see that the global manufacturing output from October 2008 began to present a straight line descend situation, especially the United States manufacturing output has been continues to decline.
In August 2008 after months between, the crisis in the financial sector only stay. At that time the non-financial sectors balance sheet and cash flow is maintained a normal state. But from the start in the autumn of 2008, gradually from the financial crisis to other fields spread field. Stock markets around the world since the end of October 2007 to climb after high began by falling, in lehman bankruptcy before a year time, stock markets around the world were evaporation's value of 16 trillion dollars. But lehman collapse in only 10 weeks, the global stock markets fall exceed 50%, its loss up to us $35 trillion, and after a more than doubled. In addition, global prices for assets to the family fortune shrink over tens of thousands of dollars (only the United States lost $4 trillion). Add not a listed company and unincorporated enterprise losses, the global capital market loss should more than $40 trillion. The digital equivalent to 2008 two-thirds of global GDP.
Chart 12. Globe Stock Market Sharp Decrease After Banking Crisis
Because enterprise loan, a mortgage and its derivatives need equity funds support, so 40 trillion dollars in damage to the global financial crisis has had a significant impact. In fact, the products are used as securities financing collateral, a country's savings to be transformed into investment in the economy.
In the past few decades, by the financial media failure and hindering the economic development of a country common case, one of the most representative should belong to the 1990 s Japan's financial crisis. Although academics on the share price of economic activity whether there is a direct influence debate remain, but we are usually more inclined to think that share price and real economic activity and not related, will share price fluctuations as a "book" profit or loss. However, the evaporation of the paper profits to the tightening of global economic activity is very clear role. As is known to all, the family wealth on the personal consumption expenditure exist influence, but share price for the private capital investment in a similar important influence. With the stock price instead of assets value as parameters, the results show that the company share price since 1920 and factory orders number present a high correlation. And the correlation has been extended to today, even in recent private capital investment of violent fluctuation is so. Research shows that, since 1991, each share price changes can make the actual capital spending 10% but 3% change. This analysis tells us, the recent global economic activity with share price decline inevitable decline has a direct or indirect contact.
To fully understood economic activities and share price mutually relates, the interaction of the complex causes and mechanism is very difficult. Of course, if the share price can be fully reflect the economic variables of the fluctuation of words, so asset prices become endogenous variable, is not so important. However, the actual situation is not so. Influence of stock price is a major factor of human nature, people the vagaries of emotions in a largely the ups and downs of the stock market. The stock market is not only the future economic cycle of predictions, also will decide the future of economic situation.
In most of the business cycle, share price by people all of its earnings expectations and the effect of economic activities. But when the economy is in inflection point, the share price will show a very strong independence. This also is many economic cycle analysts will share price as a leading indicators reasons.
3. After the financial crisis the trend of the development of the global economy
1: the global economy will wander at the bottom for two to three years time.
All major economies from the performance to see, the global economy is "explore bottom", and even some of the country's economy has grown a recovery "green shoots". So some optimists began talking about "crisis after age." Relevant personage not so optimistic, though global economic comprehensive falling process has basic over, but stop rapid fall appear even some warmer or rebound, does not mean that the crisis "at the source of the trouble" has lift, economy already went out of whack, new economic growth momentum has been formed. From the history class like big crisis experience, economy could wander at the bottom for long time, appear even repeated "explore bottom" phenomenon, such as the 1929 "depression" is for 13 years time, Japan in the 1990 s, the "bad loan crisis" take about seven years.
Although the global governments in order to deal with the crisis took strong macroeconomic regulation and control policy, and it has caused some effect, but we can't expect too much about this, because the reason with obvious warmed "policy warmed" nature, can consistently still need to hit a question mark, only appear "fundamental warmed" is sustainable.
Obtain employment is reflect economic fundamentals status of hard Numbers, the international Labour organization (ILO) predict that by the end of 2009, global unemployment will rise to 210 million, the unemployment rate rose to 6.5% ~ 7.1%. In June, the United States unemployment reached 9.5%. Visible, global employment situation still very serious. Meanwhile, global trade and foreign direct investment is not optimistic, and the world bank, the world trade organization, and the international monetary fund and the oecd separately predict 2009 global trade will decline by 6.1%, 9%, 11%, 13.2%. Unctad to predict 2009 global foreign direct throw information will also be greatly decreased, which fell 60% in developed countries, developing countries fell by 25%, transition economies fell 40%.
Chart 13. US Unemployment rate
And, to solve the crisis of "the trouble," such as the huge economic bubble, more than $60 trillion of financial "toxic assets", mass debt, international economic imbalances, international monetary system crisis and lack of global governance, not the result of jihadism. As long as these "at the source of the trouble" in still, out of the crisis is not so easy, the global economy at the bottom around two to three years should be more conservative estimate.
2: there will be a long time "the weak dollar".
Since the new century, the dollar present a accelerate depreciation of the trend, since 2001, the us dollar to euro has fallen more than 30%. In the global economic crisis after an outbreak of all countries and the United States hedge funds for the short-term needs to deal with the crisis, the dollar some "last gasps". But it's only temporary. At present, the U.S. economy's biggest problem is its huge liabilities exceed the their own economic bear ability, that is, if the United States does not rely on dollar hegemony and military diplomatic hegemony, light on its own economic growth earnings would have been impossible to pay off the existing normal huge amounts of debt. By January 2008 all U.S. gold, Special Drawing Rights and foreign exchange assets of $72 billion, is far enough to balance $13 trillion overseas assets, debts. On March 17, 2009, on the ten-year United States long-term national debt interest rates once climbed to 3.01%. Therefore, and for the us the lowest cost, the best way is to effect debt issuance dollars, this way can make the world share America's debt burden.
In fact, the United States is also to do so, the fed has in March 2009 to buy $300 billion in U.S. long-term national debt. And, in order to deal with the crisis, the United States government deficit will innovation high, according to estimates that in 2009, the U.S. deficit of more than 1.8 trillion dollars. For the us dollar also issued the best way to solve the fiscal deficit. At the same time, the issue dollars, the United States can have seigniorage, improve the export competitiveness multiple benefits.
However, the spam is hard to avoid the side effects of the huge $. On one hand, the dollar hair, the more dollars the depreciation; On the other hand, the dollar hair, the more American national prestige is lost. For the us release can only lead to the effects of short-term dollar, will also bring long-term consequences-" the weak dollar "and even" the dollar crisis ".
3: global inflation hard to avoid.
A few years ago in the global inflation is still, let people unexpectedly, the global economic crisis is not in the past, a new round of the global inflation has already begun. Although at present the world each major economies price index many negative, present a state of deflation, but this is only a temporary phenomenon. In the asset price bubbles stimulating, inflation this only "trapped animals" as long as out of the cage, will be in a people casual swoop to come over.
Are made this judgment, the most important for two reasons:
One is in order to deal with the crisis, stimulate economic growth, the world's major economies were adopted looser monetary policy, DaYin money, to relax credit. This no doubt for a new round of inflation created the conditions, because inflation is the essence of the currency issue too much, more than the corresponding elaborating. The federal reserve has promised to release and $12 trillion to save the financial system, the United States accounts for about 83% of GDP. This a large sum of money supply in time if not quit, will trigger a vicious inflation. Dollars spam, will lead to the euro spam, to further speed up the pace of global inflation coming.
2 all nations to take a lower interest rate economic stimulus policy, some countries even will interest rates fell to 1% below. In early June 2009, London Libor (interbank loan interest rates) dollars three-month rate lowest level makes history 0.62938%, this crisis and the most in October 2008, the rate was 4.75% level. Low interest rate policy makes liquidity flood, and for a new round of global inflation laid a foundation.
Chart 14. London LIBOR Rate
4: global industrial structure will quickly restructuring.
International economic crisis from a side, reflect the current global industrial structure major problems exist, such as finance, real estate etc excessive virtual economy developed, manufacturing, and other entities to economic relative decline; IT high and new technology industry promoting economic growth in down the marginal effects, new energy and environmental protection in the emerging industry did not come up; Industry with high added value link excessive concentration in developed countries, low value-added manufacturing excessive concentration in part of the developing countries, caused the international trade, resources and environmental pollution distribution imbalance. On one hand, the existing crisis global industrial structure caused the direct impact, on the other hand, but also for future global adjustment of industrial structure, brought great opportunities.
In the crisis, the impact of global adjustment of industrial structure in the future will take on the following several trends: one is the entity economic weight will is rising and the virtual economy development of space will be relatively narrow, the modern manufacturing and new and high technology industries will to be appreciated. The reason is the global economic crisis that virtual economy was destroyed, the next time people will develop to virtual economy jittery. 2 it is the new energy, environmental protection and other emerging industry will become a new round of economic increase of the main motivation, will become a new technology revolution of the main breach. By the Obama government launched "green economic revival plan" influence, many countries now are starting to pay attention to the development of green economy, low carbon economy, giving priority to the development of new energy and environmental protection industry, etc. Three is emerging economic powers in the international economic stage will play a more and more important role. China, India, Brazil, Russia and other emerging economic powers, with land information source, energy, population and human capital and so on many kinds of advantages, and the economic globalization and the information to lead, will more and more become the main international industrial transfer for countries and emerging international industry center.
4. How to solve the financial crisis-governments shall improve financial system is set up long-term measures to strengthen financial supervision to ensure the normal operation of the financial system
1. The financial regulators must correct quickly take action is very important. Superintendent must take the supervision work to tolerate causes problems and responsibility. The federal deposit insurance corporation supervision of Banks work is very effective, because there is an important rules: if the bank bankruptcy make federal deposit insurance company suffer a loss, it must report to congress that their regulatory responsibilities have to perform, the accounting department will congress of the audit report, members of congress, and ordinary people have the right to request for the report, so that the responsibility of supervision questioned.
2. To speed up the financial industry accounting standards internationalization, making accounting information to accurately reflect the overall financial enterprise of assets and liabilities, liquidity, safety and efficiency. Financial enterprise is different from general industry and commerce business, financial enterprise is characteristic of high debt, and the public money from social economic entity, the business is directly related to the welfare of the whole society. Therefore, the finance system of accounting must insist on objective, rigorous, prudent and keep the principle, must be able to real and fully reflect the potential risk of business.
3. A sound financial legal system is the financial system of the effective operation of the necessary conditions. The law is not sound is the information not security, financial disorder the important root. Market economy is legal economy, all kinds of financial transactions shall be strictly to the law will be on the basis of violating laws and regulations of financial transaction activities according to laws clamping down on. Especially need to develop anti-fraud law ", the false financial statements, providing false information the benefit of traders will should be punished severely, to purify the market environment, straighten out the market order. In addition, developing countries of the bankruptcy legal degree not perfect, or bankruptcy can't carry out, the corresponding delay of a bankrupt enterprise handle in time. Through the bankruptcy of the enterprise accounting published financial statements, the property to redistribute, can be partially overcome information asymmetry problem. Only the bankruptcy of the enterprise to be able to get the solution of the problem properly, the financial system was able to healthy operation.
4. As soon as possible to establish and perfect the financial disclosure system. Financial enterprise funds and involves the use of thousands, and wide extent, has the very strong social and public, the financial risk of the enterprise must pay close attention to. Information disclosure system can provide market information, and to promote the supervision of financial institutions. Some countries in the implementation of the credit rating system regulation, all financial institutions must take credit rating, the credit rating agencies must be registered in supervision department, asset to the certain scale financial institutions must by two or more credit rating agencies to assess credit rating, be evaluated credit rating must notice. Credit rating system played a constraint financial institutions of excessive their act, because of the credit rating drop will make financial institutions lose customers. Set up the information disclosure system with low cost and safeguard the interests of the creditor function, and can be on the financial enterprise management and generate strong external supervision function, and impel the financial enterprise in the pursuit of profit maximization, meanwhile, liquidity, safety give sufficient attention.
5. The current world financial system in the operation of the problem of unequal information is very serious, preventing financial risks task is also very hard, and strengthen financial supervision, to reduce the risk of incomplete information, avoid incomplete information to financial markets of the healthy operation of interference are the important measures to prevent financial crisis. The effective operation of market economy without a lot of intermediary institutions organization and coordination, the steady development of the financial industry especially without intermediary agencies reduce incomplete information activities. Standard intermediary organizations such as accounting firm, credit rating agencies operation is an important task which is also guard against financial crisis and strengthen financial supervision important segment.
6. Inhibit artificial monopoly, maintain the balance of the economy. The economic monopoly is the source of highly profitable. As the government will tell, guard against economic operation, appear monopoly is to prevent the economy from appear not balance the important means. The government in the economy should introduce more competition to prevent economic appear monopoly. Also should legislation to prevent the economy from the possible acted in collusion with conspiring to hoard ACTS of unfair competition, which caused by the artificial monopoly. Once the economy in a link appeared monopolistic conduct, or by low efficiency for, or is a monopoly position with the crazy grab and, since they dominated, in the crisis comes the lack of necessary buffer, so it's easy to cause a chain reaction, to produce strong economic damage. America's fannie mae and Freddie MAC is a typical example, if the industry had more competitors, at least give economic provide adequate buffer, prevent or postpone the happening of the crisis.
Monopoly enterprise with its monopoly position, it is easy to make it in a can't bankrupt status, and thus causes a kind of situation: the economic boom times earn high profit shareholders, the crisis is used when the taxpayer money to save. This is often facing economic problem of moral hazard. That is, when you put some economic risks in the market over all an economy to undertake, if the economy itself can't take such risks, and then there is the moral risk, the risk was eventually to by the government and taxpayers to bear. In that case, the government will need to undertake the and supervision this risk, otherwise risk mechanism eroded.
Free competition could lead to overpopulation, but free competition produces overproduction was not enough to form the economic crisis, because any economies have volatility, the width of fluctuation in healthy economy can withstand the budget, but when monopoly greatly increased economic surplus, and that might more than economic itself bear ability, an economic crisis.
7. Control credit transactions, regulatory credit transactions. (1) strictly control the release of the mortgage. Whether southeast Asia financial crisis or the U.S. subprime mortgage crisis, all contains excessive development of real estate industry factors, among which, mortgage the release of the loan to be to cause real estate industry development important factors too. The bank in order to pursue the profits, first lend loans to producers, when consumer not free, and lending to consumers. Bank mortgage loans for the release of the production of a thorn consumption certain positive role, at the same time, also enlarged the real estate for production and consumption. This approach ultimately for economic buried the a ticking time bomb, the specific performance in two aspects: on the one hand, one can make the capital industry excessive development, on the other hand for speculators provide a buys from sell, false trade show the bank funds window, through the window, speculators almost the risk easily passed on to the Banks themselves. (2) serious regulatory futures trading and its capital source. Futures trading is speculative trading the worst-hit areas, restrain enterprise of speculative impulse supervision enterprise speculation is also maintain a stable economy a important aspects. The most important is the government should strengthen the construction of enterprise financial system, prevent enterprise speculative impulse, especially lending funds or misappropriation of funds for speculative impulse, protecting the safety of the operation.
8. Establish the crisis coping mechanism. After the occurrence of the financial crisis, the government usually salvation crisis measures mainly has the tax cuts, the government is contributive save city, etc, these practices very vulnerable to contribute to the few investors with all taxpayer of criticism, and sacrificed other government expenditures or expand financial deficit for cost, improve the taxpayer burden, reduce the government's credit, affected its action ability, serious and even will drag down the government, Iceland government bankruptcy is an extreme example. The government should change this kind of practice, set up a mechanism to deal with crises.
Conclusion
From the financial crisis origin see, history five times greater financial crisis are cheap cost of capital and financial regulations opening, lead to the investment climate dasheng, stimulate stock markets and real estate prices rocketing. At the same time, finally all have government intervention. When the private sector can't through the market mechanism to solve the financial crisis, the government come forward leading including capital injection, set up a asset management companies and bank capital, is the last of the recycling solution. Moreover, the crisis has always been a "dangerous" and "opportunity" hybrid. Research found that before the financial crisis from four times to see, in government put forward after mass save scheme, average stock market rose 27% in the three months, six months rose 55%, after a year rose 148%. In addition, in addition to the United States banking crisis-will outside, the other three times of crisis, the bank kind the stock performance are all rise, in 3 months, 6 months, and 1 year three date, the highest rise as high as 448%, the lowest of 7%.
Just for differences, the government in saving the timing of the financial crisis and concrete measures the difference is very big. When the great depression the fed tightening policy, and then later protection measures for the international trade completely stalled. Japan's banking crisis after the outbreak, the Japanese government wavering attitude, cause financial crisis take about 10 years.
So when the attitude of the government to deal with the more clear, or strain the faster, the more narrow market shocks, mass., at the same time, the burden of the cost to society will also be small. The great depression did when 留学生金融硕士论文governments. And in 2008, the subprime crisis, countries to save the financial system, to avoid the financial system and the economies of the countries to collapse.
The financial crisis is a form of economic crisis, the basic reason is that the economic behavior and excessive speculation credit transactions of out of control. The government should not will economic crisis to the markets to assume the risk, and should be the active supervision financial risk, and collect taxes or speculative windfall profits tax establish crisis response fund, inhibit excessive speculation, uphold economic stability, explore the long-term mechanism of crisis response. Therefore, complete market economy or a free economy not conducive to the healthy development of economy, but through the government should adjust the control and the market itself the way of the combination of the adjustment to control the development of the economy.