Look at America first. At first, the default rate of subprime loans increased and the price of bonds related to subprime loans decreased, which led to the shortage of liquidity in the money market and the continuous issuance process of new bonds replacing old ones was interrupted. The current pricing and capital deduction principles lead to an increase in leverage ratio, and financial institutions can only achieve deleveraging by compressing their balance sheets. In this process, the credit crunch intensified, and some financial institutions went bankrupt because of insolvency. The spread of the financial crisis caused the real economy to fall into recession. In order to stabilize the market, the government injected liquidity into the money market, acquired toxic assets and took over financial institutions on the verge of bankruptcy; At the same time, the government vigorously implemented expansionary fiscal and monetary policies-quantitative easing and zero interest rate to stimulate economic growth.
Look at the Greek sovereign debt crisis. In June 2009, the Greek Finance Minister announced that the fiscal deficit in 2009 accounted for 13.7% of GDP, instead of the original forecast of 6%. There was panic in the market, and the CDS price of Greek government bonds rose sharply. In the first quarter of 20 10, the ratio of Greek national debt to GDP was 1 15%. 20 10 in April, the Greek government announced that it would not be able to refinance the 20 billion euro national debt due before May. Fearing that the Greek government would default on the national debt totaling 300-400 billion dollars, investors began to sell Greek national debt on a large scale. It is difficult for the Greek government to repay the old debts by issuing new debts, and the Greek sovereign debt crisis finally broke out. Greek banks, which mainly rely on Greek government bonds for mortgage financing, can't get funds from other places, so they can only rely on cheap loans from the European Central Bank, and the liquidity shortage in the money market suddenly intensifies. The contagion effect of Greece's sovereign debt crisis appears: Spain, Ireland, Portugal and Italy suffer from credit crisis at the same time, and the GDP of the affected countries accounts for about 37% of the GDP of the euro zone; European capital flight, insufficient liquidity in the money market, rising interest rates and depreciation of the euro. In this case, the European Union, the European Central Bank and the IMF urgently introduced 750 billion euros of rescue measures. The European Central Bank buys Greek government bonds sold by private investors in the government bond market to prevent their prices from falling and yields from rising. The "junk" bonds on the balance sheet of the European Central Bank are increasing. At the same time, the European Central Bank increased short-term loans to banks and relaxed the mortgage conditions of loans to alleviate the liquidity shortage in the money market. While stabilizing financial markets, unlike the United States, EU countries have not adopted expansionary fiscal policies. Countries such as Greece have begun to implement fiscal austerity policies, and countries with good financial conditions such as Germany are also preparing to implement fiscal austerity. After the global financial crisis, the EU immediately adopted a very loose monetary policy. However, in this European sovereign debt crisis, it seems that the European Central Bank does not intend to follow the example of the United States, nor has it revised its 2% inflation target.
Greece's sovereign debt crisis stems from a high fiscal deficit, but this is not a new problem. Under the high welfare system, the Greeks were able to maintain a lifestyle of high consumption and high enjoyment, coupled with poor tax collection and management, which led to serious tax evasion and made the financial situation worse. When Greece and other countries joined the European Union, due to the free flow of capital and the fixed exchange rate, a large amount of funds flowed in and public and private debts increased. There is not only a huge fiscal deficit, but also a huge current account deficit. Greece's labor market is rigid, and the gap between labor productivity and Germany is widening, but it is impossible to narrow the gap through the free flow of labor; The provisions of Maastricht Treaty on fiscal deficit have not been strictly observed, and the EU has not formed an effective supervision mechanism due to integration and sovereignty contradictions. Affected by the global financial and economic recession, the Greek problem has worsened; False accounts, serious financial difficulties were temporarily covered up, and the opportunity to take early measures was lost.
Usually, when a country's fiscal deficit increases due to the slowdown of economic growth, it can be solved in three ways: first, by reducing interest rates and other expansionary monetary policies to stimulate economic growth, increase taxes and reduce the deficit; Second, through currency depreciation, stimulate exports and economic growth, increase taxes and reduce deficits; The third is to implement a tight fiscal policy, but we should pay attention to its negative impact on growth. However, Greece does not have its own currency and an independent monetary policy. It can neither implement expansionary monetary policy nor devalue. There is only one way to tighten fiscal policy, and that is to cut wages and benefits drastically. This is politically difficult and unpredictable. Germany's delay in helping has also aggravated the market's concerns about Greece's prospects and contributed to the outbreak of the crisis.
European bail-out and its consequences
In order to prevent the crisis from worsening and leading to disastrous consequences, on May 10, Europe launched an emergency rescue mechanism with a total amount of 750 billion euros, which is the largest rescue operation in Europe's history. Among them, 440 billion euros is a loan promised by the euro zone government. In order to implement the rescue, the euro zone government has set up a three-year European financial stability mechanism, which will issue bonds to help any euro zone country facing the sovereign debt crisis as a special purpose institution; 60 billion euros will be raised from the financial market by the European Commission in accordance with the Lisbon Treaty; The International Monetary Fund will also provide 250 billion euros.
In order to prevent the price of national debt from falling, by May 28th, the European Central Bank had purchased nearly 40 billion euros of euro zone bonds, including those of Greece, Spain, Portugal and Ireland, of which 25 billion was Greek sovereign debt. On average, the European Central Bank buys about 3 billion euros of bonds every trading day, of which 2 billion comes from Greece. However, there is no sign of improvement in Greece in the short term, and the European Central Bank is almost the only buyer of Greek sovereign bonds.
In the process of the European Central Bank buying Greek bonds at artificially high prices on a large scale, there were also infighting between Germany and France. The former president of the European Central Bank was Jean-Claude Trichet, a Frenchman. The Germans accused him of giving in to the great pressure of French President Nicolas Sarkozy and violating the European Central Bank's long-standing ban on buying the national debt of its member States. The governor of the German central bank suspects that French banks intend to take this opportunity to clean up 80 billion Greek non-performing assets on French banks' books.
Italian economist mario draghi, the current president of the European Central Bank, took office on June 24, 201/kloc-0. At the beginning of 20 15, in order to stimulate the economic growth of the euro zone, the quantitative easing policy was put forward.
In addition to buying problem bonds, the European Central Bank also operates in the open market through various measures, such as lowering the mortgage standard of ECB loans and increasing liquidity injection into the money market. The Federal Reserve announced that it would reopen the foreign exchange quota with other central banks to ensure that other central banks can get enough dollars.
It can be concluded that the Greek national debt will be repaid in the next two years, and it will not default, and the contagion effect will be temporarily controlled, and the situation will not continue to deteriorate. Although the price of European sovereign debt has stabilized, due to lack of confidence in the European economy, investors sold euros to buy dollars, which led to the continued depreciation of the euro. The European sovereign debt crisis is far from over.
Moreover, there is another question, how will the European Central Bank withdraw in the future? The bailout policy has cornered the European Central Bank. If it stops rescuing the market, will the bond prices of highly indebted countries fall to the bottom? The ECB itself may be in danger. Most of the funds of the European Central Bank, about 70 billion euros, are invested in the central banks of the euro zone countries. The rescue crisis will seriously affect or even completely exhaust the central bank's funds. At the end of each year, the Bundesbank usually transfers its profits to the federal government. However, in the next few years, profits may be reduced by being linked to Greek bonds, which will also adversely affect the confidence of the Bundesbank.
Eurozone debt problem and euro prospect.
It's not just Greece that has problems. The average budget deficit in the euro zone accounts for 6.9% of GDP. Except for Greece, the ratios of Ireland and Spain both exceed 10%. The Stability and Growth Pact of the European Union stipulates that the deficit of each member state shall not exceed 3% of its GDP, and the public debt shall not exceed 60% of its GDP. However, according to EU data, in 2009 and 20 10, only Sweden and Estonia among the 27 member countries met the standards.
If Greece and other European countries want to solve the debt problem, they should not only drastically reduce the fiscal deficit /GDP in the next few years, but also stop the growth of the national debt balance /GDP in the next few years, or reduce it to an acceptable level. The dynamic path of the ratio of national debt balance to GDP depends on the comparative relationship between economic growth rate and real interest rate of national debt. While the basic fiscal deficit must be reduced year by year, countries with fiscal deficits must also meet the conditions that the debt balance /GDP tends to a stable value. Provided that the economic growth rate is greater than the real exchange rate. The conditions for the ratio of national debt balance to /GDP to decrease steadily are: economic growth rate-interest rate (national debt yield)-inflation rate >; 0。
It is conceivable that European countries with heavy public debt burden will certainly seek new growth points, strive for higher economic growth, implement expansionary monetary policies, lower interest rates, allow higher inflation rates and implement tight fiscal policies, otherwise long-term interest rates will rise. Now it seems that Greece's debt balance /GDP is difficult to stabilize and gradually decrease. Greece's economic growth rate may be lower than the real interest rate of national debt for a long time, because Greece has not found a new growth point and inflation cannot rise in the short term, so it can only rely on the depreciation of the euro and fiscal austerity. If Greece cannot ensure a basic fiscal balance through structural reforms, it will be impossible for Greece's debt /GDP to gradually decrease. This problem also exists in many euro zone countries and OECD countries. 20 1 1 year, the national debt /GDP of euro zone member countries will be greater than 90%.
The depreciation of the euro is temporary, the balance of payments in Europe is obviously better than that in the United States, and the euro will not continue to depreciate. The euro zone will not disintegrate, because the political cost is too high, and Europe's economic capacity should be able to solve the current problems. The key lies in Germany's attitude. In an economy like the European Union, if there is no fiscal transfer payment, the stronger Germany is and the weaker other countries are, the more problematic the euro will be. This is a paradox. Therefore, if Germany clears its own door and only solves its own problems, it will do harm to the euro and Germany itself.
The crisis will lead to the disintegration of the euro zone and the disappearance of the euro. However, the crisis may also lead to the deepening of the integration process of the euro zone. There is not only a unified currency, but also a unified or nearly unified finance, similar to the financial relationship between the United States and the States. Previously, the EU and the Eurozone expanded too fast, and many institutional mechanisms were not perfect. Can the withdrawal or delisting mechanism be introduced in the future to avoid falling into a situation where there is no way out? In the future, we should further break down the barriers of labor mobility and other factors to promote the convergence of labor productivity.
A strong European economy and a strong euro are in China's interest, because the depreciation of the euro can provide conditions for the diversification of China's foreign exchange reserves, which was limited by the high price of the euro in the past.
The United States remains the biggest threat to world financial stability.
The real threat in the medium and long term is the twin deficits of developed countries and the accumulation of national debt and foreign debt. Who will buy the huge global public debt, especially US Treasury bonds? Japan's debt accounts for 200% of GDP, but Japan's savings rate is very high, which is basically purchased by its own residents, and national wealth can basically precipitate. The bonds in the euro zone are also bought by Europe itself. Who will buy US Treasury bonds? The world is entering the stage of borrowing new debts to repay old debts and the central bank printing money. New debt can only be bought by countries with excess savings. Once no one buys new bonds, it will lead to national bankruptcy, bond default and printing money, and the result will inevitably be inflation. There is no inflation, on the one hand, because China and other countries continue to buy American and European bonds, reducing the pressure of printing money, on the other hand, the business of commercial banks has not returned to normal.
In the future, the United States will remain the biggest threat to world financial stability. Europe as a whole has only a national debt problem, and the foreign debt problem is not serious. For example, Germany's international investment position is positive, and the balance of payments in the euro zone is basically balanced. In this respect, Europe is stronger than the United States. While the United States has a huge fiscal deficit and huge foreign debt, it can maintain financial stability in the case of twin deficits, largely because of the status of the US dollar as an international reserve currency. With the deterioration of twin deficits, the status of the dollar will eventually weaken. More than 50% of US Treasury bonds depend on foreign investors. In 20 15 years, the ratio of US national debt to GDP will be greater than 100%, and there is no prospect of improvement in the long run. Therefore, in the medium and long term, the possibility of balance of payments crisis and financial crisis in the United States cannot be ruled out.
Japan, China and Germany have strong financial resources to buy US Treasury bonds. However, the Greek crisis and the general deterioration of the financial situation around the world have reduced the ability of Japan and Germany to buy US Treasury bonds. Who will pay the bill? In this situation, the United States used the line-of-sight shift strategy to shift this pressure to force the RMB to appreciate. First, the United States 130 members jointly requested RMB exchange rate appreciation. Krugman, the Nobel laureate in economics, repeatedly put forward the views of RMB appreciation and "willing to fight trade with China", claiming that RMB appreciation could solve the trade deficit of the United States. In the Sino-US strategic dialogue just concluded in May 20 10, although the United States made concessions in exchange for the opening of the market. However, due to political needs, the topic of RMB appreciation will definitely be raised again. What are the real interests of China? How deep will China fall into the dollar trap in the future? It is worth pondering.