Chapter 715 Enterprise Forum

A certain five-star hotel in Beijing is holding an enterprise development forum.

Although it is called the Enterprise Development Forum, it is jointly sponsored by the National Development and Reform Commission and the Ministry of Commerce. In addition to the leaders of major enterprises, some well-known economists and some policy makers participated in the forum.

The topic of this forum discussion is how to deal with the global financial crisis.

Although China's financial system was not yet in line with international standards, China's economy was still very dependent on foreign trade at that time. The biggest impact of the financial crisis on China was not financial risks, but the loss of export trade.

Foreigners have no money to spend, which will naturally affect China's foreign exports. Therefore, many export-oriented enterprises have come to this forum, hoping to obtain policy support.

As soon as Li Weidong walked into the venue, he saw several acquaintances, all of whom were well-known private entrepreneurs in China.

Chairman Li, sit here! The acquaintances had already started to greet Li Weidong.

Li Weidong walked forward with a smile, and said, Mr. Zhang, I haven't seen you for a while. You look thinner. You must be working out recently, right?

I'm not fit and thin, I'm worried and thin! President Zhang on the opposite side sighed, and then said: The US economy is not good, and our orders for the next quarter will drop by 50% at once. If there is no such 50% export orders, I don’t even know how to get through the next year!”

Another person next to him said: Mr. Zhang, your situation is considered good. Our factory has not received any overseas orders since May, and now it is all supported by domestic orders. If there are no domestic orders , we have to go bankrupt!

Chairman Li, how is the situation of your Puppy Group? A large part of your profits come from exports, right? the third person asked.

Everyone is similar, and the economic environment is such that our life is not easy. Li Weidong paused, and then said: However, our main business is small household appliances, kitchen appliances, and beauty equipment, which are more affected than big ones. Appliances are lower. Female consumers always have easier money.”

Mr. Zhang said: The leaders of the ministries and commissions will be there in a while, and they may explain the upcoming policies. In addition, there are well-known economists, and I heard that there are members of think tanks. They will make predictions on the next international economic situation. , we have to listen carefully, if the economy continues to decline next year, I have to reduce the scale of production as soon as possible.

Yes, I also want to make a raw material procurement plan for next year.

If the international economic situation is still not good next year, I dare not purchase too many raw materials. Another person said.

Li Weidong said: You guys chat first, I'm sorry.

Mr. Zhang looked at his watch and said, The forum is about to start, you should hurry up and find a place to sit, otherwise there will be no good seats when there will be more people.

Aren't there still many vacancies in front? Li Weidong said and pointed to the rostrum.

The seats under the rostrum are for the leaders of ministries and commissions, as well as the economists of think tanks. How can it be our turn to do business! Those economists sit in the front, and it is convenient for them to speak on stage later. Mr. Zhang said replied.

Li Weidong smiled slightly, lowered his voice and said, Mr. Zhang, I am here to participate in the forum today as an economist!

...

Li Weidong and three other economists sat on the rostrum together.

The stage is full of well-known economists. What is Li Weidong doing?

I never heard that Li Weidong has received any important degree in economics!

People like us are usually so busy, even if we have a degree, it is probably a diploma.

Many people who didn't know Li Weidong began to whisper about it.

You don't know, right? Li Weidong accurately predicted the Asian financial crisis back then. He really understands economics.

There are gossip that before the outbreak of the US subprime mortgage crisis, Li Weidong also warned some domestic financial institutions.

The two people who spoke had obviously heard rumors about Li Weidong.

At this time, the host introduced: Today we have invited four guests to discuss issues related to the US subprime mortgage crisis. First of all, welcome to Professor Huang Dongsheng from Renmin University!

The applause sounded, and Professor Huang Dongsheng stood up and bowed to everyone.

The host then introduced: Welcome the special commentator of Economic Weekly, Professor Sun Haifeng from the National Economic Research Institute!

The applause sounded again. Everyone knows that the National Economic Research Institute is an important economic think tank, so this Professor Sun Haifeng is also a member of the think tank.

Next, I welcome Cai Guorong, the deputy dean of the Faculty of Economics and Business Administration of the University of Hong Kong! Finally, I welcome Li Weidong, the chairman of the Puppy Group!

After introducing these four guests, the host cut to today's topic.

I only heard the resident say: The financial crisis caused by the subprime mortgage crisis in the United States is still intensifying. Not long ago, Lehman Brothers, the fourth largest investment bank in the United States, has filed for bankruptcy. Recently, it has been reported that Freddie Mac and Fannie Mae will also Bankruptcy. Once Freddie Mac and Fannie Mae go bankrupt, it will be a fatal blow to the US real estate industry.

In response to the financial crisis, the U.S. government recently proposed a financial rescue bill, which will invest 700 billion U.S. dollars to purchase financial derivatives related to U.S. subprime loans. At present, the financial rescue bill is stuck in the U.S. House of Representatives. Do experts think that this bill can be passed in the end? If you think you can pass, please raise your right hand; if you think you can't, please raise your left hand.

All four of them raised their right hands in unison.

The host continued: It seems that the opinions of the four experts are relatively unified. Since the four experts all think that the bill can be passed, when will it be passed, the four experts are invited to make analysis and forecast. From Professor Huang let's start!

Professor Huang Dongsheng cleared his throat, and said, In my opinion, the sooner this financial rescue bill is passed, the better, but the problem is that 700 billion US dollars is not a small sum, how will this money be spent? It is a difficult problem, and I think it will take consultations between the U.S. Treasury Department and the Federal Reserve to determine the time.

Professor Huang is a thief. He didn't predict the exact time. After all, who can say for sure about this kind of thing! How embarrassing it would be if the prediction was wrong.

What do you think of Professor Sun? The host asked again.

I agree with Professor Huang's point of view, but I would like to add a few words. Although this financial rescue bill was proposed by the U.S. government, the specific amount and the specific content of the plan have not yet been finalized. The Democratic Party is concerned about this bill. There are still different opinions. Professor Sun replied.

It is also a chicken thief's answer, without giving an exact time.

Dean Cai, what's your opinion? The host continued to ask.

Whether this bill can be passed will affect the votes in the U.S. presidential election. I think there are two possible points in time. One is before the U.S. election in November, and the other is after the U.S. election in November. At the latest It should be no later than mid-December, Cai Guorong replied.

Chairman Li, what do you think? The host was the last one to ask Li Weidong.

My prediction is bolder than Dean Cai's. I think the Democratic Party will delay this bill until the end of the general election. It is estimated that it will be implemented in late November, and the amount of the bill will increase to more than 800 billion U.S. dollars. Li Weidong replied.

The first question is just a warm-up, and the next is the real discussion topic. The host then asked: The four experts believe that the U.S. financial rescue bill can get the U.S. economy out of the current predicament and recover. To a normal level? If you think you can, please raise your right hand, if you think you can’t, please raise your left hand.”

This time, Li Weidong decisively raised his left hand, while the other three economists raised their right hands.

It seems that our experts disagree. Then I will ask Chairman Li directly, why do you think the US government's financial rescue bill cannot restore the US economy to normal levels? the host asked.

Li Weidong took the microphone and answered: The financial rescue plan proposed by the U.S. government this time is mainly to purchase derivative financial products of non-performing mortgage loans. The purpose is to stabilize the financial system and rebuild the credit of financial institutions in the form of state guarantees. , to restore liquidity to credit markets.

Therefore, this plan can only stabilize the market, but cannot stimulate the economy, and the confidence lost by American consumers due to the subprime mortgage crisis will not be restored. I think the U.S. economy wants to return to normal levels, but these hundreds of billions of dollars are far from enough, and more economic stimulus plans are needed.

Professor Huang was the next to speak, he took the microphone and said: I am not so pessimistic. The US$700 billion is already a very huge financial stimulus plan. What is more important is that this time the US government came forward to purchase the financial derivatives of subprime loans. products, guaranteed by the government’s credibility, I believe that the US financial market will soon restore confidence and liquidity!”

What Professor Huang said was exactly the judgment of most economists at that time, and everyone was generally optimistic about this financial rescue plan. Not only Chinese economists think so, but American economists also think so.

One is because the amount of 700 billion US dollars is huge, which is unprecedented. If such a large amount of money is dropped, it will definitely arouse a strong market reaction.

The second is because the U.S. government directly took action this time. The U.S. government’s purchase of subprime mortgage financial derivatives means that the U.S. government is willing to cover the bottom line for subprime mortgages. The academic circle is naturally optimistic about the effect of the financial rescue plan.

Dean Cai next to him also took the microphone, and continued: Let me add to Professor Huang, this kind of financial stimulus plan involving hundreds of billions of dollars cannot be launched casually. First and most importantly, it is There is sufficient financial support. Based on the current financial situation of the United States, it is already necessary to borrow the 700 billion yuan, and it is unlikely that there will be more economic stimulus plans in the future.”

Dean Cai glared at Li Weidong as he spoke, as if talking about the more economic stimulus plan you mentioned would be impossible to get out of danger.

Li Weidong replied: Funds have never been a problem. The United States can completely use quantitative easing to solve it. At that time, let alone 700 billion US dollars, it will be 7 trillion US dollars, and it will not be a problem.

Speaking of quantitative easing, the other three economists frowned involuntarily.

Professor Huang was the first to say: This is unlikely! Quantitative easing is a powerful medicine for the economy. With the size of the US economy, if quantitative easing is implemented, it will have an incalculable impact on the world economy. .There is no need for the United States to use such high-risk economic means.”

Li Weidong replied: Professor Huang, since the 9/11 incident, the United States has been fighting wars, and the US finances must not be able to afford the 700 billion US dollars. So I don't think there is any need to wait until later. The 700 billion US dollars used in the financial rescue bill this time The US dollar has to be solved by quantitative easing.

And if the 700 billion US dollars cannot solve the problem, there will be multiple quantitative easing in the future. If the 700 billion US dollars this time is QE1, then there will definitely be QE2, QE3, or even QE4. Quantitative easing will not end until the U.S. economy returns to normal.

...

People nowadays are no strangers to quantitative easing, and they all know that this is printing money. After all, many countries are using this trick during the epidemic, and they are even printing more than anyone else.

In 2008, quantitative easing was a new term.

It was the Japanese who first proposed the concept of quantitative easing. The Japanese economy stagnated after the Asian financial crisis. By the beginning of the 21st century, the economies of the four Asian tigers and Southeast Asian countries had begun to recover. The Japanese economy remained Nothing happened.

So the Koizumi government that was in power at the time resorted to quantitative easing. Print money and cut interest rates to release money to the market in anticipation of inflation to drive economic growth. Quantitative easing was proposed at this time.

Japan's quantitative easing policy lasted until Abe's first term in office. After Abe resigned, the quantitative easing policy ended. It was not until 2011 that Abe served as prime minister for the second time that he took out quantitative easing again. The core of the so-called Abenomics and Abe's three arrows is quantitative easing.

From an economic point of view, since the collapse of the Bretton Woods system, the United States has begun to implement quantitative easing.

Interest rates in the United States are very low, which is very beneficial to consumers and businesses. When consumers go to sell their houses, they see that the annual interest rate is only a little bit, and they can save another house with a 30-year loan.

Low interest rates make consumers more eager to take out loans, not only for buying cars and houses, but also for many basic daily necessities. As for those who are engaged in business operations, they will seek loans as much as possible.

But when ordinary people go to the bank for a loan, the bank has no money in hand.

This is of course also due to low interest rates. The interest rate is not only the loan interest rate, but also the deposit interest rate. The loan interest rate in the United States is low, and the deposit interest rate is also low, and the low deposit interest rate makes no one willing to deposit in the bank.

Most Americans live on loans. Even though they have several cars and live in large villas in the suburbs, they actually owe a lot of debt. Behind their glamorous appearance, they have no savings in their hands.

And the rich people in the United States will not choose to deposit their money in the bank because the bank interest rate is too low. The finance in the United States is so developed, and there are many financial products that can make money. Why bother to pay the bank's interest rate?

If the bank cannot absorb deposits, it will have no money to issue loans, and at this time the bank will go to the Federal Reserve to borrow money.

The Fed also has no money in its hands, but fortunately they have another means, which is to print money.

As a result, the Federal Reserve prints money and then lends the money to banks, which then release the money to the market in the form of loans. When the money reaches the market, it is either converted into public consumption or into corporate loans, which ultimately promotes the growth of the US economy.

The core of this model is printing money, which is essentially the same as quantitative easing.

The difference is that the money printing of this model is based on market demand, that is, the market first has this part of the loan demand, and the Federal Reserve meets this demand by printing money.

This kind of money printing due to demand is actually something that central banks like to see, because both loan consumption and loan production can promote economic growth. Therefore, the central banks of various countries are also doing such things. Generally, as long as there is demand in the market, they will definitely release the currency.

However, in response to the subprime mortgage crisis, the quantitative easing carried out by the United States is not based on market demand, but quantitative quantitative easing.

That is to say, regardless of whether the market has this demand, the Federal Reserve will take out this sum of money.

The financial rescue bill proposed by the Bush administration is mainly to purchase financial derivatives of subprime mortgages, with the purpose of stabilizing the financial market and releasing financial liquidity.

However, the Bush administration has been fighting wars, and the huge military expenditure has already emptied the US finances. Therefore, the money for the financial rescue bill can only be solved through quantitative easing. This is the first quantitative easing in the United States, so it is also called QE1.

The amount of this bill sent to the House of Representatives was 700 billion. Later, the Democratic Party requested an increase to 850 billion. In March after Trump came to power, the amount had increased to 1.25 trillion. When QE1 ended, the data released by the Federal Reserve was a total of 1.725 trillion.

That is to say, during the QE1 period, the Fed printed 1.725 trillion U.S. dollars, and this does not include the part issued by the U.S. daily loans.

QE1 increased from 700 billion to 1.725 trillion, a full trillion dollars more, but it did not save the US economy as economists predicted, because consumer confidence has not recovered.

The hardest thing to build in the market is confidence. When you have confidence in the market, even if you have no money, you will invest in the market with usury loans. When you have no confidence in the market, even if you have a lot of money, you will not invest a penny.

Therefore, those international scoring agencies often publish various so-called confidence indexes. Laymen don't understand what these indexes are for, but insiders know that they are a barometer of future economic prosperity indexes.

This is also the magic of economics. No matter how sophisticated the research on economic theory is, it can't restrict people's behavior.

Many economists will have this feeling. My research is already perfect. Why is it completely different from my research when the market is operating?

Therefore, most economists only make after-the-fact analysis, using the market behavior that has occurred to confirm economic theories.

This is the case with QE1, and it did not work as well as economists believed, so the US government launched the second round of quantitative easing, also known as QE2.

The content of QE2 is to stimulate economic recovery by purchasing long-term treasury bonds and injecting funds into the market, that is, by increasing the supply of base money.

As a result, the European debt crisis broke out at this time, which completely offset the effect of QE2.

The Federal Reserve had no choice but to continue quantitative easing, launching QE3 and QE4 one after another, and the entire process of quantitative easing continued until ***'s second term.

The Fed has printed about 5 trillion U.S. dollars in the four times of QE, and the amount of funds leveraged by these 5 trillion U.S. dollars is even more difficult to estimate. Adding so much money to the market is bound to cause inflation.

Fortunately, the size of the U.S. economy is large enough. Even if inflation occurs, it is impossible to show it immediately, and the market needs a period of time to react.

In order to prevent inflation, after the end of QE, the US government began to formulate a plan to shrink the balance sheet.

Shrinking the balance sheet refers to shrinking the balance sheet, including the reduction of assets and liabilities. Simply put, it is to recover part of the overprinted money to avoid inflation or economic overheating.

The originator of shrinking watch is also Japanese. In the early 1990s, Japan's real estate bubble burst, and Japan adopted a policy of shrinking its balance sheet.

But it is a pity that the policy of shrinking the balance sheet in the United States has just begun, and President Xi Jinping's term of office is coming. The new President Wang Wang is against shrinking the balance sheet.

Wang Wang overturned many policies of the Communist Party, such as medical insurance policies, such as withdrawing from the TPP, and he also wanted to stop shrinking the balance sheet. Wang Wang believed that shrinking the balance sheet would not benefit the economic growth of the United States.

But stopping the balance sheet reduction requires the approval of the Federal Reserve, and the Fed is inclined to continue to shrink the balance sheet to prevent severe inflation in the United States.

So Knowing Wang found another way and introduced a tax reduction policy. The corporate tax has been reduced from 35% to 15%, the personal income tax has been simplified from 7 levels to 3 levels, and the threshold has been greatly increased. He even wants to cancel the inheritance tax.

Taxes are reduced, and the reduced money will naturally stay in the market. So from an economic point of view, tax cuts are equivalent to putting money into the market.

The shrinking of the balance sheet is to recover funds in the market. The shrinking of the balance sheet and tax cuts are completely opposite monetary policies.

Therefore, when the balance sheet reduction and tax reduction are carried out at the same time, it is equivalent to filling the pool with water and releasing water out of the pool at the same time. Shrinking the table has become useless.

To put it simply, the money printed by the four rounds of QE has not been recovered, but has remained in the market. This is tantamount to planting a time bomb for the future inflation of the United States.

Then came the epidemic, the United States wanted to send money to the people, but whether the US finances had money, so the market began to predict that the Fed would start the fifth round of QE.

As a result, the Federal Reserve came up with a more ruthless one. What do I want for the fifth round of QE? It is directly unlimited QE, and there is no need to make plans. How easy it is!

During the two years of the epidemic, the Fed has been doing QE. It is estimated that only the Fed itself knows how much money they have printed in the past two years. And the aftermath of years of printing money, that is, inflation has finally arrived.

The disruption of the supply chain caused by the epidemic is the fuse of inflation. In the face of inflation, the U.S. government is very clear that it is time to shrink its balance sheet again.

However, the ruling authorities are a bit hesitant about this. After the US economy suffered from the epidemic, it has not fully recovered. Once the balance sheet is reduced, it will definitely be detrimental to economic growth.

The United States is deciding when to start shrinking its balance sheet, and the conflict between Russia and Ukraine broke out. Inflation, which was originally relatively stable, exploded rapidly, and it was also a global inflation.

The next thing is what is happening now. The Federal Reserve began to raise interest rates continuously, and funds began to flow back to the United States. The euro depreciated rapidly and was already on par with the US dollar. The yen fell even more fiercely, and the Korean won also fell to the level of the subprime mortgage crisis. .

The United States once again took advantage of the hegemony of the US dollar to cut the leeks of Europe and Japan, just like the Plaza Accord more than 30 years ago, but this time there is a new crop of leeks, called South Korea!