What Is the Savings and Loan Crisis?
Because house prices in the United States have been rising year after year, a person who borrows money in the subprime credit market can use the opportunity of rising house prices to fill his credit. Repayment. There was a credit crisis. It has little impact on China's economy, but it will have a certain impact on the global economy. The first is the stock market. As the domestic banks pass the danger of subprime loans to foreign investment banks, such as major Asian banks, they invest When people lose confidence in the market, the stocks in their hands will be thrown out, causing the stock market to decline, which will cause turbulence in global stock markets.
Credit crisis
- The credit system is divided into two levels, one is preferential credit and the other is
- A major Chinese financial official said,
- The US Federal Reserve announced on the 7th that it will increase the amount of short-term loan auctions in March and begin a series of bond repurchase transactions to increase market liquidity and ease the credit crisis. The Federal Reserve announced that the two loan auctions scheduled for March 10 and 24 will provide a total of 100 billion US dollars, or 50 billion US dollars each, which is higher than the 30 billion US dollars announced at the end of February.
- Credit crisis
- The loan auction mechanism was established by the Federal Reserve in December last year, and its purpose is to provide funds to commercial banks facing insufficient liquidity. Although the Federal Reserve has repeatedly reduced the discount rate after the credit crisis, commercial banks are mostly reluctant to borrow directly from the Federal Reserve through discounts. They worry that doing so will raise investor concerns about their health. Since last December, the Federal Reserve has held six auctions, providing a total of 160 billion US dollars to commercial banks. The Fed also said on the same day that if the situation required it would increase the amount of loan auctions and expand the size of bond repurchases.
- In a recent interview with the BBC, George Soros, a well-known global investor, said that although the "most severe period" of the credit crisis may have passed, its impact on the real economy has not yet been revealed. Soros predicts that the slowdown in US economic growth will be "more severe and last longer" than widely expected, which will eventually lead to further weakness in the dollar. In addition, he warned that the "financial bubble" of the past 25 years may be coming to an end, and that the "super boom" period after World War II may also end.
- Soros pointed out that the British economy is worse off than the United States when dealing with the coming economic crisis. The reason for this judgment is that the size of the financial industry in the UK is large, and the house price increase in the UK has been the largest before. Soros believes that from the previous rise in house prices, the UK real estate bubble is more serious than the United States. A recent survey conducted by the British mortgage lender Halifax and the British National Building Cooperatives Association showed that in April for the first time, house prices in the UK have fallen since 2006 compared to the same period last year.
- Bank of England Governor Mervyn King has said that the UK economy may experience "one or two quarters" of negative growth, implying that the economy may fall into a technical recession. Soros said that because the main missions of the world's major central banks are to curb inflation, there is little room to cut interest rates to stimulate economic recovery. He said that under the dual threat of inflation and economic recession, the world economy will be more unstable for a period of time. If the British economy does not experience a full recession, the Bank of England "cannot change course", which he called "a Greek tragedy". He also said that UK interest rates will continue to be high, which is bad for the economy, but it is "unavoidable."