(A) American "stagflation" and "Reagan Economics".
In the early 1980s, when Ronald Reagan was sworn in as the 49th president of the United States, the American economy was suffering from severe stagflation. From 65438 to 0980, the inflation rate in the United States was 13.5%, the unemployment rate was 7%, the economic growth rate was -0.2%, and the fiscal deficit was as high as $73.8 billion. Reagan pointed out: "We are in the worst economic recession in this country since the 1930s, and we must open up a road to reform and revitalize the economy." (Reagan, 199 1) To this end, the Reagan administration formulated the American "economic recovery plan" based on the supply school, monetarism and neoclassical comprehensive school, which is called "Reagan economics" in history.
Reagan Economics is mainly composed of four parts: (1) reducing federal government expenditure; (2) individual income tax and enterprise income tax relief; (3) to relax government control and reduce government intervention; (4) Anti-inflationary monetary policy. Among them, reducing the tax rate and reducing the burden on taxpayers is the core of Reagan's economics. Reagan believed that "low tax rate makes the national treasury surplus;" If the tax rate is high, the national treasury will be empty. " If we want to make our people rich and our country prosperous, we should start with tax cuts. Only by lowering the income tax rate and increasing people's income will they consume more, save more and invest more, and stimulate production. If we expand the scale of production, we can overcome the "stagnation"; With the increase of market supply, we can overcome "inflation" and achieve inflation-free economic growth. At the same time, "we not only hope to stimulate the economy by reducing taxes, but also hope to reduce government expenditure, reduce the size of the government and reduce state intervention in economic life" (Reagan, 199 1).
(2) America's fiscal deficit and high interest rates.
Based on "Reagan Economics", the economic policy of the Reagan administration has made great achievements. During Reagan's presidency, the American economy came out of "stagflation". From 1980 to 1988, the American economic growth rate rose to 3.3%, the unemployment rate dropped to 6%, and the average inflation rate dropped to 4%. However, the Reagan administration's plan to cut federal government spending has not been realized, because defense spending and social welfare spending are increasing. From 65438 to 0980, when Reagan entered the White House, the surplus of the private sector and the deficit of the government departments in the United States were still in general balance, and the balance of payments could still be basically maintained through the offset of the two, and its net savings could also provide financing support for the excessive expenditure of the government. After 1980, the savings and investment of the private sector in the United States continued to shrink, the government expenditure continued to expand, and the fiscal deficit was huge. From 65438 to 0980, the fiscal deficit of the United States was $79 billion, accounting for 2.9% of GDP. At the end of President Reagan's first term from 65438 to 0985, the US fiscal deficit was $212 billion, accounting for 5.2% of GDP.
The Reagan administration implemented tax cuts to stimulate economic growth, while the Federal Reserve suppressed inflation by implementing tight monetary policy and raising interest rates. 1in the summer of 979, Paul Volcker became the chairman of the board of directors of the Federal Reserve. At the beginning of his tenure, he raised interest rates three times in a row. At that time, the official interest rate of the United States reached double digits, which was significantly higher than that of most industrialized countries; The market interest rate is as high as 20%, which is 4 percentage points higher than that of most major developed countries.
(3) The US dollar continues to appreciate and the trade deficit is huge.
The huge fiscal deficit in the United States has started the process of "the rise of US dollar interest rate → the appreciation of US dollar → the expansion of US current account deficit". The Fed's high interest rate policy has increased the attractiveness of the dollar to foreign investors, and a large amount of overseas funds have flowed into the United States, resulting in a sustained and substantial appreciation of the dollar. From February 1979 to February 1985, the exchange rate of the US dollar against other 10 developed countries increased by 73%, and the exchange rate of the US dollar against these countries even exceeded that of Burundi.
The level before the collapse of Leiden Woods system.
The appreciation of the US dollar further widened the US trade deficit. 1980 US trade deficit1500 million US dollars, 1982 increased to 36 billion US dollars, 1983 increased to 67 billion US dollars,13 billion US dollars,10. The huge trade deficit has turned the United States from a creditor country with external net assets of 198 14 1 billion dollars in 0 year to a debtor country with11billion dollars in debt 1985. In four years, there has been a wealth transfer of up to $250 billion. By the end of 1986, the total foreign net debt of the United States reached $263.6 billion, making it the largest net debtor in the world at that time.
Regarding the trade deficit of the United States, the Reagan Administration's Council of Economic Advisers believes that the trade deficit is the inevitable result of excessive investment and is caused by a huge budget deficit. Martin feldstein, a famous economist, was then the chairman of Reagan's Council of Economic Advisers. He repeatedly explained to Reagan that only reducing the trade deficit, not reducing the budget deficit, was not conducive to the national balance of payments and the operation of the national economy. However, the Reagan administration never put the issue of reducing the budget deficit on the agenda (,Xing Tianfeng, Xiong, 1996).
At the beginning of 1985, the upward trend of the US dollar swept the whole international currency market, and the exchange rate of the US dollar has reached a very high price. Prosperity is bound to decline. From February 1985, the dollar began to fall. As the US dollar is the main international reserve currency and trade-denominated currency, in a sense, the depreciation process of the US dollar is also the appreciation process of non-US dollar currencies. Therefore, since February 1985, the non-US dollar currencies of major countries in the world have appreciated to varying degrees, and the bilateral exchange rate of the Japanese yen against the US dollar has also begun to strengthen, and has since entered a channel of sustained appreciation. The subsequent Plaza Agreement only accelerated the appreciation of the yen.
(D) The rise of trade protectionism in the United States.
Affected by the widening trade deficit and export recession, the trade friction between the United States and Japan has been escalating. At the beginning of 1985, the US Congress passed the US-Japan Trade Resolution and the Emergency Trade and Export Promotion Act, proposing that all countries that export more than 65% of their imports from the United States will impose a 25% surcharge on all their imports. Japan bears the brunt. 1In September 1985, President Reagan invoked Article 30 1 of the Trade Law for the first time, authorizing trade retaliation against Japan.
⑤ International Economic Coordination and James Baker.
"International economic coordination" refers to seeking the best policy combination through the coordination of fiscal policy and monetary policy, especially exchange rate policy, without ensuring the maximum welfare of participating countries, so as to improve the welfare level of participating countries. Before 1973, under the Bretton Woods system, major western countries implemented a fixed exchange rate system with their currencies pegged to the US dollar, and the International Monetary Fund was responsible for coordinating bilateral exchange rate issues. After the disintegration of the Bretton Woods system, from 65438 to 0976, under the Jamaican system, the economic coordination of major western countries, especially the multilateral exchange rate policy coordination, was mainly carried out in the form of the G-7 summit or the G-7 finance ministers' meeting.
1975 The first G-7 summit held in Rambouillet, France, marked the beginning of international economic coordination in the form of a big country meeting. However, this meeting mainly emphasized the importance of internal affairs management of countries, but did not discuss the issue of international economic coordination. 1978 Bonn conference, Germany, first proposed the joint action of seven governments to implement expansionary fiscal policies and currencies. This meeting is the real beginning of international economic cooperation. From 65438 to 0982, the Versailles Conference in France established the meeting system of finance ministers and central bank governors of the United States, Britain, Germany, France and Japan. 1986, Canada and Italy joined the meeting of finance ministers of the seven countries. Among them, the "four-party meeting" is a typical example of exchange rate policy coordination; 1987 "Louvre meeting" increased relevant macroeconomic indicators including interest rate, economic growth rate and unemployment rate, and became a typical example of interest rate policy coordination. 1985 At the beginning, James Baker became the finance minister of the second Reagan administration. He is a tough and pragmatic politician who advocates practical trade policies to solve the balance of payments problem in the United States. In order to reduce beauty
He called for a meeting of finance ministers of the five countries and proposed "new measures for international economic coordination" to take joint action on multilateral exchange rate issues.
(6) Japan 1985.
1985 is a year of special significance in Japanese history, especially in the process of the formation and collapse of Japan's bubble economy. This year, a series of major events that may affect Japanese history and change Japan's destiny took place in Japan. The Plaza Accord and the appreciation of the yen are only part of it.
1. Japan's economic and financial liberalization and internationalization have accelerated. After World War II, Japan's economy and finance were strongly "closed" and "regulated". In 1970s, Japan began the process of economic and financial liberalization and internationalization. In 1980s, Japan's economic and financial liberalization and internationalization were further accelerated. The Japanese government gradually relaxed interest rate restrictions, revised the foreign exchange and foreign trade management laws, opened the Japanese financial market, and actively expanded the overseas business of Japanese banks. 1985, the Japanese government issued the announcement "The Present Situation and Prospects of Japanese Yen Financial Liberalization and Internationalization", which opened the prelude to Japan's overall economic and financial liberalization and internationalization.
2. With the acceleration of Japanese economic internationalization, the process of Japanese political internationalization is also accelerating. Since the 1980s, the Japanese government has been hoping to actively participate in the coordination of international economic policies. Expand international influence, improve international status, and realize the ideal of moving from an "economic power" to a "political power". From 65438 to 0983, Nakasone Yasuhiro put forward the Japanese strategy of "thinking war of great powers" and regarded the relationship with the United States as the cornerstone of this strategy. It is for this reason that Japan has become the staunchest ally of the United States in the coordination of international economic policies such as "Plaza Meeting" and "Louvre Meeting".
Around 1985, Japan is brewing a more profound change, that is, Japan's economic growth model has changed from "external demand-led" to "domestic demand-led". Since the early 1980s, the international community has increasingly called on Japan to open its domestic market and change its export-oriented economic growth model. American public opinion even accused the Japanese government of closing the market and exporting unemployment. These public opinions have given the Japanese government a strong shock. 1985, Japan's "White Paper on Economy" pointed out that the export-oriented economic growth model is no longer sustainable, and Japan must expand domestic demand to ease its relations with the international community. That is to say, Japan in 1985 faced three very important strategic changes at the same time: (1) the change from "controlled economy" to "open economy"; (2) the transformation from an "economic power" to a "political power"; (3) The transformation from "external demand economy" to "internal demand economy". Obviously, such a major and profound change is concentrated in the same year, which itself narrows the room for manoeuvre of macroeconomic policies. When internal equilibrium and external equilibrium, domestic economic goals and foreign economic goals, domestic policy coordination and international policy coordination are intertwined, it increases the difficulty of macroeconomic policy selection and adjustment.
(7) The accumulation of Japan's trade surplus.
1985, while the United States became the world's largest debtor, Japan became the world's largest creditor. In sharp contrast to America's huge trade deficit, Japan's trade surplus is accumulating. Since 1964, Japan has had a trade surplus, which has been expanding year by year, thus causing a long-term trade conflict between Japan and the United States. After 1980, the trade balance between the United States and Japan further widened, the trade contradiction between the two countries intensified and the trade friction escalated. In 1980, Japan's trade surplus with the United States was $7.662 billion, and in 1985 it was $4.665438+500 billion, a five-fold increase in five years.
(8) "Nakasone Doctrine".
From 65438 to 0982, Nakasone Yasuhiro became Japanese Prime Minister. 1983, he proposed Japan as a "great power"
Thinking "strategy, from then on, Japan entered the era of" Nakasone Doctrine ",that is, by actively participating in international economic coordination, enhancing its international status and improving its international image, thus realizing Japan's ideal of being a political power.
As early as 1964, when Japan joined the western "club of developed countries" (Organization for Economic Cooperation and Development), the Japanese government put forward that "only by striving to become a political power commensurate with its economic strength and directly participating in solving major international problems can Japan maintain and develop its status as an economic power more effectively and truly become a world power". 1983 and 1984 Nakasone repeatedly stressed at the G-7 summit that Japan will strengthen macroeconomic management, achieve stable growth centered on domestic demand, safeguard the free trade system of the world economy, and promote world economic development by strengthening economic policy coordination. And expand world trade by stabilizing foreign exchange prices. At that time, international public opinion believed that "these speeches all expounded Japan's position from the perspective of global strategy, and the thinking of big countries jumped out of it."
2. What is the cause of Japan 1990 crisis? What role does the Nikkei put option play in it?
First of all, the decision-making mistakes of the government and policy departments are directly related to the bubble economy. The high pressure of the United States forced the yen to appreciate rapidly, coupled with a sharp interest rate cut, which induced the emergence of financial asset bubbles. When the stock market bubble expanded rapidly, the Bank of Japan kept a wait-and-see attitude. It was not until May 1989 that the ultra-low interest rate was raised for two years and three months, which delayed the opportunity to make an overheated economy soft landing. After that, the Bank of Japan raised interest rates five times in a row. By August of 1990, the rediscount rate of 2.5% was raised to 6.0%. At the same time, strict austerity policies such as total land financing control and land tax reform were introduced, which finally punctured the bubble.
Secondly, the impact of financial derivatives from the international market has brought great destructive power to the Japanese securities market. 1984, Japan implemented a series of financial liberalization measures, relaxed government control, opened the free flow of foreign capital and domestic capital, and opened the door for the invasion of speculative capital. Foreign banks and securities companies use a brand-new investment technology, such as stock index futures, to arbitrage with spot indexes, which has played a fundamental role in the collapse of the big bull market.
The Nikkei Put Option invented by Goldman Sachs finally killed the Japanese stock market. As a warrant, Nikkei put option is easy to buy and sell, which is convenient for ordinary investors to trade, so the bearish power is greatly increased. At the same time, the Japanese are addicted to the dream of rising stock prices, thinking about how the stock price will fall. Therefore, Japanese insurance companies and pension funds can't help but gamble with Goldman Sachs and sign a huge gambling contract. The transaction of derivatives accelerated the bursting of the bubble.
Finally, banks and investors have weak risk awareness. From 1990 to 199 1, there have been frequent scandals in Japanese securities companies and banks. For example, securities companies such as Nomura and Nikko cover up losses for large customers, and fraudulent incidents such as Fuji and Donghai Bank withdraw deposits under false names have seriously affected the credibility of financial institutions and shaken the confidence of investors. Facing the big bull market, the speculative purpose of chasing capital appreciation makes investors invest in the stock market enthusiastically, with excessive confidence and weak risk awareness.
3. What are the precursors of Japan 1990 crisis? What are the possible reasons and lessons?
(1) Signs before the crisis:
The "Plaza Accord" of 1985 has become a major turning point in Japan's stock market, which was driven by economic development and profit to improve its valuation. Worried about the tightening effect of the appreciation of the yen on the economy, the Bank of Japan adopted the expansion policy of low interest rate, which led to a significant increase in the domestic money supply in Japan, and the proportion of M2 in GDP increased year by year. With the rapid growth of wealth, investors put a lot of money into the real estate market and the stock market, which gave birth to a magnificent bull market and laid the groundwork for the future bubble burst.
At this stage, Japan's real GDP only increased by 17. 19%, but the exchange rate appreciated by 72. 17%.
It has increased by 456%, and the market valuation level has increased from about 20 times to about 70 times.
(2) Lessons learned:
A) macro-policy mistakes
1985 after the meeting of finance ministers of the seven countries in September, Japan catered to the needs of the United States blindly, indulged monetary policy to stimulate domestic demand and reduced the high trade surplus. In addition, since rebuilding finance, reducing fiscal deficit and reducing the issuance of national debt became the primary tasks of Japan in the 1980s, the tools to stimulate the economy have completely depended on the reduction of the rediscount rate of the central bank.
B) the negative impact of financial liberalization
With the advancement of financial liberalization in Japan, enterprises began to actively use the securities market to raise funds, and the operating environment of small and medium-sized financial institutions deteriorated. The immaturity of the foreign exchange market and the development of derivatives have brought shocks to the capital market. International investment banks and domestic financial institutions excessively pursue interests and neglect risk monitoring and management.
4. During the Japan 1990 crisis, what were the attitudes of American and Japanese governments and financial institutions, and what measures did they take?
1990 On February 27th, Japan's Ministry of Finance introduced measures to restrict real estate loans. Because the market is worried that government restrictions will hurt land prices, the stock market fell even more-bursting the asset bubble.
The Bank of Japan did not realize that the bubble burst, but thought that the stock market and land price would remain high and the Japanese economy would remain overheated. So in August of 1990, the policy interest rate rose sharply from 5.25% to 6.0%.
199 1 In July, the Bank of Japan lowered its policy interest rate from 6% to 5.5%, and in February 12 of the same year, the Ministry of Finance announced the lifting of restrictions on real estate loans, but these measures did not prevent the stock market from falling and land prices from falling.
1In February 1992, the Japanese government officially announced that the economy would fall into recession. In March of that year, the Nikkei index fell below the 20000 mark, and in August it fell below the 15000 mark. In the following years, the government increased fiscal expenditure on a large scale to stimulate the economy and promote the stabilization of the stock market. At the same time, the central bank also lowered the policy interest rate in stages, which fell to 0.5% in September of 1995.