subject: Xie: 2009 Is Not Easy [print this page] Most people are looking forward to the end of 2008 quickly. Occurred in early snow, many people feel this is not an auspicious year. In fact, in addition to the spectacular Beijing Olympics and the election of Obama, nothing is right. Why in 2008 had so many problems? In 2009, we can expect?
2008 lousy 2008, the two countries a lot of unfortunate things happened. U.S. housing market collapse, to the speculative position in the financial system suffered enormous losses. Subsequent sharp drop in global trade, making China's economic situation even more severe.
2008 almost everything wrong. The world of globalization and information technology in the industry, market and country at all levels together. As the foam can be spread to many corners of the world, it can last a long time. International Monetary Fund, the World Bank a number of prominent economists that the global economy resilient in the past decade, because in each impact, it could rebound quickly. The reason is that the bubble in a closely linked global economy, there is considerable space for expansion. Chinese tea, in Mumbai real estate, Saudi Arabia's oil, Brazilian soy and Christie's auction of modern paintings, many assets are booming, and the central bank injected funds continuously. When the bubble burst, all at the same time the prices fall. Its speed, scope, so that governments, businesses and academics are confused.
2008 year is the end of 20-year super-cycle. Since the fall of the Berlin Wall, the former Soviet bloc countries, demand plummeted, all ex-program countries are trying to export to stimulate economic growth. This leads to excessive natural resources and global labor supply. Meanwhile, the revolution in information technology have improved business efficiency, so that trade in goods and services more convenient. These factors in the good news is that labor productivity is improved, the global economy is not inflationary in the premise of the expansion. The downside is the demand for adjustment is not complete, can not absorb the increased output. According to economic theory, when a factor of production grew faster than other factors, the relative price to fall. Elements of excessive supply of labor. This confirms the correctness of the theory. In all major economies, the share of wage income continued to decline. Meanwhile, workers are also consumers. When their share of income in the economy declining, demand and supply will not balance. From business and government investment needs can only be a temporary balance of supply and demand. Ultimately, the consumer must be synchronized with the increase in aggregate demand.
Greenspan balanced on the wrong decisions in the bubble. He constantly inject liquidity to stimulate demand. Through this way, constantly creating asset bubbles (stock market first, followed by real estate and credit markets) to create demand. Relative decline in income for workers to borrow money to spend because they believe the added value of housing can protect more spending. The loan officer thought so, even thought that even if their income is insufficient to satisfy the debt, rising asset prices could prove their solvency. Debt derivatives to further cloud the loan officer's eyes, they do not know whom to lend to only rely on "model" to assess their risk exposure.
Bubble, mainly in the Anglo - Saxon countries (Australia, Britain and the United States) showed the most prominent. More liberalized their financial markets, you can "Greenspan" liquidity faster and more effectively to foam. It is also these countries have large trade deficits of the reasons?? Their debt financing needs to maintain the global economy continues to run. Current Soviet bloc's demand for energy recovery, and lead to inflation, the bubble has burst. I had discussed in 2006, oil and real estate bubble shift in relations. The former can attract enough money to destroy the latter. When the real estate bubble burst, the decline in the demand also makes oil bubble burst.
Madoff fraud as the end of 2008, easy to do. Madoff fraud in human history the greatest Ponzi scheme. Ponzi scheme, it seems reasonable to some of the logic of higher returns promised to investors, but in fact borrowed money from new investors back to the old investors. As long as there are enough new investors, Ponzi schemes can be carried out continuously.
