First of all, what is a financial crisis and what causes it?

Financial crisis, also known as financial crisis, refers to all or most of a country or several countries and regions. Sharp, short-lived and super-cyclical deterioration in financial indicators (such as short-term interest rates, monetary assets, securities, real estate, land (prices), number of business bankruptcies and number of financial institution failures).

It is characterized by people’s expectations that the economy will be more pessimistic in the future. The currency value of the entire region has depreciated significantly, the total economic volume and economic scale have suffered greater losses, and economic growth has been hit. It is often accompanied by the collapse of a large number of companies, increased unemployment, general economic depression in society, and sometimes even social unrest or turmoil at the national political level.

Before this U.S. economic crisis, the real estate market in the U.S. was driven by false prosperity and excessive speculation in real estate transactions.

The phenomenon can be described with an analogy that is easy for us to understand:

It is said that stocks make money. We all invest in stocks and it is not enough. We still want to borrow money to make money, so we mortgage our stocks to obtain financing and continue to buy stocks. And some banks will not even let you We will provide you with financing without any mortgage.

In this way, risks will accumulate in large quantities.

Once one day, the crazy stock trading craze shows signs of subside, stocks It also fell, and many people left the market because they could not repay their loans. Many people also had their mortgaged properties taken away by banks because they could not repay their loans. There were also many banks that did not retain enough collateral. When lenders are unable to repay their debts, they have to admit compensation. The chain reaction will be personal bankruptcy, credit institution bankruptcy, economic depression, and inflation.

The U.S. government wants to curb overly vigorous investment, compress the scale of credit, and In order to control the rising prices, we have adopted a tightening monetary policy, including raising interest rates. Others include increasing bank deposit reserves, issuing bills to absorb funds in the money market, etc.

The managers of the United States are a group of politicians. They really cannot praise their ability to manage the country's economy. They are not aware of the patients in their country at all. The policy of rapid and continuous interest rate increases is actually The trigger of this crisis, this measure made it impossible to repay a large number of loans, triggering a chain reaction of bad debts, causing many financial companies in the United States to fall in a domino-like pattern.

Because all financial institutions in the world will not just leave the money there, they will only lend out part of the money, not all of it. It is impossible to lend out all of them even if they want to. In addition, it needs to be "dispersed" "Investment", so they always invest in each other among financial institutions in various countries. U.S. government bonds, corporate bonds, stocks, and real estate are all investment targets of financial institutions in various countries. Once a crisis occurs in the United States, all foreign investors will also suffer losses. , so it swept the world.

Let’s talk about prices

In the early days of the financial crisis, all prices fell. That was the initial appearance, and everyone was panicking to cash out.

For example, people are reluctant to buy milk, so milk dealers will sell it at a low price, or even pour the remaining milk into the sewer, killing the cows and selling them for meat.

In the current economic crisis, there is a phenomenon in the early stage. It is said that there is a high degree of inflation in the economic crisis, but now everything is falling in price. In fact, this is a necessary process. Now everyone is cashing out, selling commodities and securities for cash, so as not to be passive due to lack of cash in the future.

After the cash-out was completed, the crisis entered its most serious stage. After funds were withdrawn, factories were closed, workers lost their jobs, and consumption power declined... This vicious cycle caused a depression in the overall economy. The people were naturally affected. It has a huge impact. There is a shortage of goods, soaring prices, and people everywhere who have no food to eat.

One last question is very interesting. Someone asked me: "Are there any beneficiaries of this financial crisis?"

Haha, this question is very relevant, I would like to say it by the way~

The biggest beneficiary of this financial crisis is the United States!

Let’s take a look at the benefits brought about by the crisis:

1. The U.S. government is now in charge of President George W. Bush of the Communist Party of China. He is about to step down and is about to take office. About the Democratic Party's Obama.

When Bush came to power, the Clinton administration left a fiscal surplus of 146.8 billion U.S. dollars. However, George W. Bush turned the fiscal revenue and expenditure into a deficit of 400 billion U.S. dollars in just two years. It will remain in deficit every year until next year, the last year of his term. For the fiscal year, the deficit is estimated to be as high as $490 billion. This is setting a trap for Obama, a newbie in politics. The bet is that once Obama comes to power, he will not be able to do this term. Either he will be ousted by the Communist Party and the party in the next term, or he will even be finished midway. In addition, if the current bailout of the United States is effective, it may benefit the Communist Party and the party's presidential candidates and reverse the electoral situation in one fell swoop.

2. The economic strength of the United States is mainly reflected in its developed financial industry. Wall Street is the world's financial center, and the U.S. dollar is the world's economic benchmark and the world's unified trade settlement currency. The US industry is showing signs of decline and needs to revitalize its industry, which requires a lower exchange rate level to facilitate export competition. In the United States, due to excessive investment in recent years, the government has passively continued to raise interest rates. High interest rates are not conducive to the depreciation of the US dollar. It should be noted here that the United States is not afraid of the depreciation of the US dollar, but hopes that it will depreciate moderately. And how can we lower the exchange rate? Direct interest rate cut? It is inconsistent with the macro environment to control over-investment. Will we force the yen and the renminbi to appreciate again? Not sure. The euro will not listen to him. What to do? George W. Bush came up with an even more extraordinary trick: raising interest rates. Interest rates were raised 17 times in two years, from 1% to 5.25%, pushing mortgage lenders, real estate credit companies, and banks to the edge of the cliff, creating a financial crisis. The financial industry of the United States is the most developed in the world. Wall Street affects the whole world. If a financial crisis breaks out in the United States, the exchange rate will naturally fall. However, the United States is not worried about its own life because the whole world is in order to use it. If the U.S. dollars in your hands don't become like waste paper, you have to help the United States pass the customs. Even if the world doesn't help much, it can still get through it if the United States uses its own deficit policy and prints money to bail out the market.

3. Have you watched the American TV series Prison Break? "Companies" control the government and the politics and economy of other countries because the "corporate partners" can make huge profits from it. So, the amount of profits that the world's richest American financial giants can make through an economic crisis is probably an astronomical figure that we cannot guess. Who dares to say that the American financial giants are not secretly happy with George W. Bush?