The influence of subprime mortgage crisis on the world economy and related problems

The subprime mortgage crisis in the United States has dragged down the world economy hubei.com/hbrb/hbrbsglk/hbrb09/200809/t427222.shtml..

Tan Yaling and Liu Yuhui talk about the impact of the US subprime mortgage crisis on the world economy. et.com.cn/DRCnet.common.web/DocViewSummary.aspx? docid = 17 16577 & amp； chnid = 34 & ampleaf id = 100 & amp； gourl =/DRC net . common . web/docview . aspx

Analysis of the impact of the subprime mortgage crisis on the world economy (2) et.com.cn/drCNET.com.mon.web/docviewsummary.aspx? ChnID = 34 & amp； leaf id = 100 & amp； DocID = 17 16 120 & amp； gourl=/DRCNet。 Common.Web/DocView.aspx

The subprime mortgage crisis in the United States is a new financial crisis. Its internal mechanism is the lack of transparency and information asymmetry in financial products, and financial risks are gradually transferred and amplified to investors. These risks spread from the housing market to the credit market and capital market, from the financial field to the economic field, and from the United States to the global scope through investment channels and capital channels.

Most of the international economic circles believe that although the subprime mortgage crisis has had a certain impact on the world economy, it cannot be judged that it will trigger a global economic crisis. The IMF recently said that the turmoil in the international financial market is still "under control". However, a few people believe that the subprime mortgage crisis may lead to the reversal of the current world economic boom cycle. Soros believes that the subprime mortgage crisis is the most serious financial crisis in the past 60 years since World War II, and it is the end of the era of the US dollar as a world currency. Martin wolf, a critic of the Financial Times, regarded the subprime mortgage crisis as the crisis of the Anglo-Saxon financial system. Roubini, an American economist, believes that it is difficult for the Fed to cut interest rates continuously to prevent the US economy from falling into recession.

According to the available data, the author thinks that the possibility of world economic recession exists. Since the subprime mortgage crisis has not yet bottomed out, its uncertainty risk is more worthy of vigilance, and its impact on the global economy and finance cannot be underestimated.

Excess liquidity and subprime mortgage crisis

After four years of rapid growth, the world economy showed signs of adjustment in 2007, and the pressure of slowing economic growth and the threat of inflation appeared at the same time, which cast a shadow over the world economic prospects. The flood of liquidity has promoted the growth of the world economy and also helped to raise the asset prices in global commodity and financial markets. High prices make inflation spread all over the world; Excess liquidity has amplified the "confidence" of global investors and brought about the expansion of global credit. Fundamentally speaking, the root of the subprime mortgage crisis lies in the lag of monetary tightening policy and the global excess liquidity.

Time lag of monetary tightening policy

After "911incident", American economic growth slowed down. In order to stimulate economic growth, the Federal Reserve cut interest rates continuously by 13 times, and gradually decreased to 1%. Although this has stimulated economic growth, its side effects cannot be ignored. On the one hand, the low real interest rate makes domestic credit, especially real estate loans, expand and increase the supply of dollars; On the other hand, low interest rates devalue the dollar, laying a hidden danger for global liquidity flooding.

In fact, the real cause of the subprime mortgage crisis lies in the time lag effect of American monetary tightening policy. In view of the overheated housing prices, the Federal Reserve raised interest rates 17 times in a row, and the benchmark interest rate was raised from 1% to 5. 25%. With the continuous increase of interest rates in the United States, the cumulative effect of policies has gradually accumulated and precipitated, making customers with poor credit ratings begin to feel unbearable loan burden. In order to avoid the further increase of bad debts, lending institutions tighten monetary policy, which makes the financial situation of loan customers worse. The worsening bad debts were transmitted to global financial markets and investors through the securitization chain, which eventually triggered a sudden and large-scale outbreak of the subprime mortgage crisis.

Global excess liquidity

The reason why the impact of this crisis is extremely serious is the global excess liquidity. The global economic imbalance, the depreciation of the dollar, the low interest rate policy and the widespread use of financial derivatives are the main reasons for the flood of global liquidity. For the subprime loan market, general lending institutions will adopt the principle of "sparing loans" out of caution. Initially, its loan customers had poor credit ratings. However, in the context of global oversupply of funds, lending institutions have obtained sufficient sources of funds through subprime securitization, and the continuous rise in housing prices has made lending institutions ignore risks and arbitrarily lower the loan review standards. The loan standard is lowered, the loan scale is excessively expanded, and then it is transmitted to investors all over the world who invest in American subprime securities through the securities market, and finally it becomes a potential global financial risk.

Domino effect in financial market

In order to stimulate the economy, the Federal Reserve relaxed financial control while cutting interest rates several times: on the one hand, it lowered credit standards and encouraged commercial banks to lend to borrowers with low credit ratings; On the other hand, financial institutions are allowed to invest in high-risk assets with low-cost loans, and investment banks are allowed to design complex and highly leveraged derivatives for customers to expand their profit sources, and hedge funds have emerged in large numbers. Derivatives market not only provides liquidity and spreads risks, but also binds various financial institutions with liquidity into a chain; Once there is a problem in one link of the chain, it will cause a chain reaction.

The American economy has entered a period of economic contraction.

With the outbreak of the subprime mortgage crisis, more dominoes began to fall. The market has also begun to go to the other extreme, and abundant funds seem to disappear overnight. The American economy is facing a series of problems such as inflation, shrinking real estate market and credit crunch. The crisis did not stop in the financial market, but affected the real economy through various channels.

The end of American economic growth model

The subprime mortgage crisis marks the end of the US national debt growth model of "dollar expansion, capital market expansion and twin deficits expansion" in the past 27 years. In the past five years, the factors driving the rise of real estate prices in the United States are neither the expansion of social wealth, the widening gap between the rich and the poor, double-digit inflation (such as Russia), nor the influx of immigrants (such as New Zealand), nor the rapid economic growth, urbanization of population and scarcity of land supply (such as China), but purely the "false demand" brought by financial innovation. Therefore, the outbreak of this crisis is tantamount to "cutting the bottom of the barrel" for the real estate demand in the United States.

On the surface, the recession caused by the subprime mortgage crisis is caused by low consumption and economic slowdown caused by credit contraction. But what is reflected behind the crisis is the end of the American debt/consumption model of "global financial institutions lend money to help low-and middle-income Americans buy houses". For a long time, based on twin deficits, the United States not only borrowed money to maintain its consumption, but also borrowed money to maintain its investment. The overall consumption of its wealth far exceeds the scope supported by its wealth creation ability. Although the subprime mortgage and related financial innovations have brought the American prosperity model of debt growth to the extreme, it also indicates that the 27-year prosperity model based on the external expansion of US dollar credit and the internal expansion of the US capital market, driven by huge fiscal deficit, trade deficit and attracting international capital inflows since the Reagan era, is likely to be unsustainable.

The American economy has fallen into recession.

It seems certain that the subprime mortgage crisis caused the American economy to fall into recession. The only uncertainty is the extent of the recession.

At the beginning of 2008, the Federal Reserve cut interest rates by 65,438+0.25 basis points in just eight days. On March 18, the Federal Reserve cut interest rates by 75 basis points again, reducing the federal funds rate to 2.25%. However, this provision can only slow down the turmoil in the global financial market in the short term, and it is difficult to reverse the economic downturn in the United States in the long term. This continuous and substantial interest rate cut is rare in history, which shows that the American economy has indeed had serious problems.

At present, an objective forecast is that the economic growth rate of the United States will be only 2% in 2008, far lower than the forecast of 3. 1% at the end of 2007. A series of economic data released recently also show that the subprime mortgage crisis is still worsening and spilling over to all aspects of the American economy, impacting the overall trend of the American economy. With the cooling of the property market, the deterioration of the subprime mortgage crisis and the slowdown of economic growth, the unemployment rate in the United States has also risen sharply recently, which has become the most direct sign that the American economy is not optimistic. From June 5438 to February 2007, the unemployment rate in the United States rose to 5%, a two-year high. The newly employed population is only 6.5438+0.8 million, the lowest level since August 2003. The US Department of Labor recently announced that the unemployment rate in February was 4.8%, which remained high. Judging from the historical experience of two economic recessions in the early 1990s and the beginning of this century, before the recession, the unemployment rate increased significantly. Since the bottom in March 2007, the current unemployment rate in the United States has increased by 60%; Judging from the past 50 years, such a high increase in one year is usually a sign of economic recession. According to the March report released by institute for supply management (ISM), the manufacturing activity index of the United States dropped to 48.3 in February after a slight increase of 5438+ 10 in June, the lowest level since April 2003, accompanied by other unfavorable conditions. A similar situation predicted the coming of American economic recession at 200 1.

The most worrying thing is that the worst of the American economy may not yet come. According to the time of American subprime mortgage, the peak of default repayment should be from the second half of this year to the first half of next year, so the subprime mortgage losses exposed now may only be a small part of the total losses of the world financial system, and the subprime mortgage crisis has not yet bottomed out.

The global economy is facing the threat of stagflation.

The most fundamental impact of the subprime mortgage crisis on the global economy is that it will change the global policy target structure, bring about the mismatch of economic cycles in various countries, and make the occasional "high-quality game equilibrium" unsustainable. Without in-depth monetary policy coordination and cooperation, fragmented monetary policy regulation will bring about "inferior game equilibrium" of global economic stagflation.

American trade imports shrink

One of the channels through which the subprime mortgage crisis leads to the global crisis is international trade. American economic downturn and weak market will affect the global economy through international trade channels. America is the most important import market in the world. The recession of the American economy will reduce the import demand of the United States, which will lead to the slowdown of exports of other countries, which in turn will affect the GDP growth of these countries. This has a particularly significant impact on countries or regions that rely on net exports to drive economic growth, such as Germany, Canada, Mexico, emerging market countries in East Asia, and oil exporting countries. In addition, the sharp depreciation of the dollar will damage the international competitiveness of other countries' exports, especially those countries and regions that have homogeneous competition with American exports, such as the European Union and Japan.

Capital "turbulence"

The subprime mortgage crisis will increase the volatility and uncertainty of global capital flows. In the short term, in order to make up for losses and ease the pressure of capital adequacy ratio, American financial institutions withdraw their investments from the global market; At the same time, sovereign wealth funds in developing countries have also increased their investment in American financial institutions, and international short-term capital has flowed into the United States from other countries.

In the medium term, in order to regain profits, the Federal Reserve will continue to cut interest rates, and the US economy will continue to be weak, which will lead to international short-term capital arbitrage from the United States to emerging market countries, thus helping to raise asset prices in emerging market countries.

In the long run, once the dust of the subprime mortgage crisis settles, the US economy will bottom out, the Federal Reserve will re-enter the interest rate hike cycle, the value of the dollar will turn around and rise, and international short-term capital will return to the United States from emerging market countries. This last situation needs special attention, because the financial crisis in developing countries often occurs after the US dollar raises interest rates and the US dollar appreciates.

The slowdown of world economic growth is a foregone conclusion.

Judging from the statistical data obtained at present and the forecast reports of research institutions, although there is still doubt whether the world economy will fall into recession, the slowdown of world economic growth in 2008 is a foregone conclusion.

In 2007, the growth of major industrial countries slowed down, and the world economy maintained rapid growth because the major emerging market economies continued to maintain strong growth, which largely offset the adverse effects of the economic slowdown in the United States. Whether the world economy will fall into recession in 2008 mainly depends on the performance of emerging market economies.

Financial risks in emerging markets have increased.

Under the subprime mortgage crisis, emerging markets may face greater financial risks. 1997 some practices of some Asian countries after the financial crisis may become the inducement of the next crisis. For example, the huge foreign exchange reserves of Asian countries have indeed enhanced their ability to resist the turmoil in financial markets, but at the same time, they have also brought the risk of large capital flows to countries. Investors from Asian countries are increasingly inclined to invest in relatively safe western developed countries. Reports from authoritative organizations such as the United Nations Economic and Social Commission for Asia and the Pacific and Lehman Brothers point out that the risk of capital outflow in developing countries such as Southeast Asia has recently appeared, and the possibility of another currency crisis has increased. According to the statistics of the World Bank, in 2005, the average proportion of internal savings and investment in GDP of East Asian economies (except China, Japan and China) fell below 30% and 25% respectively, which was the lowest level since 1990s. Stephen roach, chief economist of Morgan Stanley, also believes that high-risk mortgage loans, like the Internet in those days, may "puncture" the global asset bubble, and highly indebted emerging market economies such as Turkey may bear the brunt.

With the deepening of China's opening to the outside world, China's economic participation in the world economy and globalization is also deepening. Therefore, once the American economy falls into recession, China's economy will also have an impact. Mainly manifested in four aspects: First, the decline in US import demand will affect China's exports, which in turn will affect economic growth and employment; Second, once the dollar depreciates sharply, the international purchasing power of China's huge foreign exchange reserves will shrink; Third, the United States will enter a cycle of interest rate cuts, which will make it more difficult for China to use interest rate hikes to curb inflation; Fourth, the recession in the United States will increase the scale and frequency of international short-term capital flowing in and out of China, and aggravate domestic financial risks.

Global inflation

At present, whether in developed countries with high or low economic cycles or emerging market countries with sustained economic cycles; Inflation can be seen everywhere in the United States, the European Union, Japan, and even China, where the monetary policy is tight. It is not difficult to assert that the current inflation is largely due to the global inflation caused by the shift of the total supply curve.

Inflation in Asian countries and regions has reached the highest level in recent years. In 2007, the inflation level in Central Asia was close to 9%, in South Asia it reached 6%, and in Southeast Asia it was around 5%. In June 2007, the US CPI rose by 0.8% month-on-month and 4.3% year-on-year, the highest increase since September 2005. PPI rose by 3.2% in May 5438+065438+1October, reaching the highest level since August 1973, and rose by 0.4% in June this year, which greatly exceeded the market expectation. The appreciation of the euro and the rise of oil prices also make the price level in Europe often rise above the warning line of 2%. In the situation of rising oil prices, it seems that we should not be too optimistic about the decline of inflation level.

At the same time, the response policies after the subprime mortgage crisis also contributed to the development of global inflation. Due to the credit crunch caused by the subprime mortgage crisis, the Federal Reserve and the European Central Bank and other monetary authorities followed the example of the bursting of the network economy bubble and the rescue action after the "9. 1 1" incident and adopted the methods of injecting liquidity and cutting interest rates. For example, on February 20, 2007, 65438+2007, the European Central Bank took the strongest action, and it issued two rounds of loans of 348.6 billion euros to the market, setting a record for a single "blood transfusion". After the subprime mortgage crisis, the Federal Reserve cut interest rates continuously, by 200 basis points in the first two months of this year alone. On March 1 1, five central banks of major western economies, including the Federal Reserve, announced their decision to take joint measures to inject funds into the financial system. This is the second time that western central banks have joined forces to deal with the credit crunch in the past three months. Although this response has alleviated the sharp contraction of liquidity caused by the subprime mortgage crisis in a short time, it has contributed to the momentum of global inflation.

Stagflation-the hidden worry of global economy

The possibility of simultaneous economic recession and inflation has aroused people's concern that the global economy will fall into stagflation. This round of inflation is largely caused by the high commodity prices caused by the flood of liquidity. For many countries, it is mainly manifested as imported cost-driven inflation. As far as demand-driven inflation is concerned, the decline in effective demand caused by economic recession will lower the price level, thus making monetary policy weigh between curbing inflation and promoting growth; For cost-driven inflation, the decline in demand caused by recession may not play its due role, thus leading to stagflation.

In the next few years, with the global economy in recession, international commodity prices are likely to continue to rise, and the pressure of imported inflation will further rise. The exchange rate of the US dollar, an important factor in determining commodity prices, may still support higher prices. If global commodity prices remain high, the imported inflation pattern in many countries will continue, thus increasing the possibility of stagflation.