The second outbreak of the financial crisis Ten Reasons

Although not yet the end of last financial crisis, but we might begin to prepare for the next crisis.

I expressed regret for his pessimism, but indeed the case.

Why you ask? Here are my 10 reasons.

1 We also summarize the lessons of the last financial crisis. U.S. real estate bubble really is Fannie Mae (Fannie Mae), Freddie (Freddie Mac), "Community Reinvestment Act" (Community Reinvestment Act), the House Financial Services Committee Chairman Xi Bani Frank (Barney Frank), Former U.S. President Bill Clinton (Bill Clinton) and "liberal" and cause it? Today there are more and more people say this. I have to ask, if so, why Spain has had a huge property bubble? That turned out to be a minority party member Frank U.S. Congress created it? If so, how he do it? Ireland, United Kingdom, Australia, a huge real estate bubble is how the case? Frank is all that?Eastern Europe and the rest of the world of bubbles? I just want to laugh out loud, yet tens of millions of people are now convinced of this statement. The reason why this argument be respected, its purpose is to cover up the truth, so that the real culprit can escape. 


This approach is very effective.

2. No one was punished. Lehman Brothers (Lehman Brothers) CEO Fuld (Dick Fuld) and Countrywide Financial chief executive Mozi Luo (Angelo Mozilo) and other executives, and many others in the "grounded" before hundreds of millions of dollars already cash to "a safe landing." Greed and cunning lenders mortgage lenders easy access to millions of dollars in ill-gotten gains. However, these were not only not a prison sentence, not even be held criminally responsible. They emerged unscathed, with impunity. In general, between 2000 and 2008, the more you do not follow the rules, enjoy the treatment the better. So no doubt, under the gang will do it.

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3. There are still incentives trap. Non-financial sector ─ ─ whether it is a respected political rights 威乔治威尔 (George Will) or the general American public, at this point is still not completely out to understand. Wall Street and the American public of the rules of the game rules are different. A Wall Street investment bank operating a dry cleaning shop owner and is not facing the same "risk / reward" model. Our minds all those traditional American free-market enterprise image aside go. Now the situation is completely different. Wall Street people, the rules of the game is a coin toss when they face up to win, they would no longer throw up negative again. Because of restricted stock, options, bonus system, securitization, "2-20" hedge fund fee structure, insider stock sales "too big to fail" financial institutions and limited liability, etc., to pay these people the purpose is to make when their reckless adventure, and in the situation is not good, their loss of little or no loss.

4 referee "black whistle blowing." We are regulated by law should have a free enterprise system can only question is: players have to bribe the referee. Imagine if this scene took place in the United States Football League (NFL) will happen. Banks and other industries will be huge amounts of money generously to the U.S. Congress, the President and by the number of assistants, consultants and flatter those who formed the "Washington group." They spend money freely, through campaign contributions, or $ 500,000 to retired politicians, public speaking and allowed to post on the board hanging featherbed, and spend huge sums of money to hire lobbyists. Now that you know, when in government, if you are nice to work after retirement you can also get a salary of $ 500,000 lobbying. The bribes totaled how much? U.S. research institutions responsive political center (Center for Responsive Politics), said the U.S. financial industry on lobbying last year alone spent $ 474 million.

5. The stock market soaring again. S & P 500 index from March 2009 low rise double.Is not this good news? Ah, yes, to some extent yes. Indeed, the rise in index is mainly caused by the depreciation of the dollar (depreciation of the dollar, stocks rise; and vice versa). Do not forget, in the 1930s and 1970s bear market, there have been massive rally, as the Japanese stock market in the 1990s, the performance of the same.However, if the boom is mainly reflected in the highest risk, the lowest value of the stock, then the market risk will rise. This is more likely to disappoint investors, and not give them surprises. In addition, the stock is not cheap. S & P Index constituent stocks of the dividend yield is only 2%. To Tobin's Q (Tobin's q, stock prices and calculating the ratio of replacement cost of assets) to measure the long-term indicator, the stock valuation of about 70% higher than average. In addition, the baby boomers reach old age they still hold large stocks. As they near retirement, they will sell the shares.

6 derivatives time bomb danger than ever before, and time is of the past. Just before Lehman Brothers collapsed, that we are talking about the culmination of the last bubble when Wall Street's books on the value of financial derivatives risk of a staggering 183 trillion dollars. This is 13 times the total U.S. economy. If people think this sounds crazy, it does so. Since then, we have cause for alarm in the four years the so-called reform, and return to financial prudence. 


Well, now that number is how much? $ 248 trillion. I am not joking. Ha, what a wonderful time!
7 in power or the same old characters. Whenever I hear the Republicans roared toward Obama, calling him a "liberal", "socialists" or "communists", I want to laugh. Are you kidding? Obama is Bush's successor. Compared to Bush, he is more like Bush. Who to see in the management of the country's economy: Bernanke, Geithner, Summers, Goldman Sachs, JP Morgan Chase. At least from 1987 when he was Fed Chairman Volcker (Paul Volcker) to step down has been in power has been a group of people.Change? What "change" it? (Before the little small change on Wall Street are too big. In 2010, Wall Street investors for their own created a new, more obedient Congress.)

8. Bernanke did not understand his responsibilities. In its first press conference, the Fed chairman appeared absolutely unexpected: he risk of small-cap Russell 2000 Index (Russell 2000 Index of risky small-cap stocks) rise, for example, that "quantitative easing" policy to the effect. In legal terms, the Fed has two responsibilities: to ensure low inflation and low unemployment. It is now clear that the Fed have another task: pulling up Wall Street. This is crazy. If you do have good results, I would be surprised.

9 high leverage to the point of madness. Still looking for "credit bubble" it? We are living in them. Everyone knows that the federal debt piling up and understand that Congress may not raise the debt ceiling. But this is just part of the story. In the first quarter, total debt 5,130 U.S. companies billion, the borrowing rate is twice last fall, when the company's debt has soared. Income savers eager to buy almost any one bond. No wonder the high-yield bond yields fell sharply. "The company's cash on balance sheet" and the like, then you can stop here. U.S. non-financial enterprises as a whole deep mire of debt, debts of 7.3 trillion U.S. dollars. This is setting a record in the past five years this figure increased by 24%. But if you count family debt, government debt and financial sector debt, debt levels at least as high as $ 50 trillion. The higher the leverage, the greater the risk, which is the basic knowledge of economics.

10. The real economy is still depressed. The second round of quantitative easing in addition to reducing the exchange rate and no significant effect. Unemployment rate is far higher than official figures (for example, even the small font file with the Labor Department made note also acknowledge that each of the four middle-aged man did not have a full-time work is really amazing! ). Our current account deficit of up to $ 120 billion annually (since 1990 has not been a surplus). House prices are falling, the property market has not recovered. Real wage growth stagnant. Yes, productivity is rising. Ironically, this also inhibits the growth of employment opportunities.

You know the American philosopher Santayana (George Santayana) is how people forget the past and comment on it? But even more than those people still stupid. We are condemned to repeat it, not because we forget the past, but because we did not learn from the outset.