(Zhongjing comments on Beijing) Among the sovereign debts of all countries in the world, the debt crisis of Greek countries is particularly noticeable. This ancient civilization with a land area of only10.3 million square kilometers and a population of less than 1. 1 0 million has recently been heavily in debt and its government reputation has been negatively lowered by internationally renowned rating agencies. The more serious problem is that as a member of the euro zone, if Greece's huge debt problem is not effectively solved, it will inevitably restrict the EU economy, which is already struggling to recover, and may lead to the disintegration and disintegration of the EU.
First, the basic status of the Greek debt crisis
Since the international financial crisis, the debt problem of Greek countries has jumped into people's eyes from time to time, and its severity is almost beyond everyone's imagination. According to the data, the fiscal deficit of Greece was only 7.7% of GDP in 2008, but in 2009, this figure has soared to 12.7%. The huge fiscal deficit is accompanied by its external liabilities. In 2008, Greece's debt balance was 99% of GDP. In 2009, this figure rose to 1 13.4%. At present, Greece's absolute debt is 280 billion euros, but its gross national product is only 240 billion euros. From the data, Greece is actually bankrupt.
Since most of the debts owed by the Greek government belong to the private sector, the country can still obtain external funds by borrowing new debts to repay old debts. According to the budget plan of the Greek government, in 20 10, the country will issue 53 billion euros of national debt to raise funds. Compared with 60 billion euros in 2009, although the financing scale has decreased, it still directly pushed up the debt snowball. According to the forecast of the Greek Ministry of Finance, by the end of 20 10, Greece's debt balance will rise to 120.8% of GDP, or 294.9 billion euros, and Greece will become the economy with the heaviest debt burden in the euro zone this year.
The international community generally regards 60% of a country's debt as a "warning line", and according to the provisions of the Stability and Growth Pact of the European Union, the fiscal deficit of member countries cannot exceed 3% of GDP in that year, and the public debt cannot exceed 600% of GDP in that year. Obviously, no matter what standards are used, the Greek debt problem has reached a precarious level. What is terrible is that the increasing debt burden directly affects and interferes with the food, clothing, housing and transportation of the Greek people. According to the Eurobarometer, 90% of Greeks believe that economic debt has affected their lives, and 89% of Greeks believe that the situation will continue to deteriorate. In order to express their dissatisfaction, Greek voters rose up in June 2009 and overthrew the debt-ridden old government in one fell swoop.
However, Fitch, Standard & Poor's and other international rating agencies did not make an exception to Greece because of the renewal of the Greek regime. On the basis of downgrading Greece's sovereign rating to "A- 1" in early 2009, Standard & Poor's recently downgraded Greece's long-term credit rating from "A-" to "BBB+", followed by Fitch International and Moody's Investors Service. The former downgraded the Greek sovereign debt rating to BBB+. The latter also downgraded Greece's debt rating from A 2 to A 1 and maintained a negative outlook. Especially after the financial crisis, the European Central Bank lowered the threshold of loan collateral from normal A- to BBB-, so that even if Greece's rating is lowered to the current level, Greek banks can still use Greek government bonds as collateral to participate in the ECB's liquidity supply plan. However, if the European Central Bank raises the collateral threshold to A- again with the further economic recovery, or Greece's sovereign rating is lowered again, the financing ability of Greek banks will be severely hit.
Second, the main reasons for the Greek debt crisis
Since 200 1 joined the euro zone, the Greek economy has made rapid progress with the help of the big EU, especially in the five years before the financial crisis, the Greek economy maintained an average annual growth rate of more than 7%. However, the financial crisis not only severely impacted Greece's export-oriented leading industries, but also made it difficult for Greece to seek interest margin through borrowing.
Among the EU economies, Greece is an economically underdeveloped country. Due to the weak economic foundation, especially the backward industrial manufacturing industry, Greece mainly relies on shipping, tourism and remittances to obtain foreign exchange income, and during the financial crisis, these industries were the hardest hit.
As one of the top 15 tourist destination countries in the world, Greece's tourism industry accounts for 18% of its GDP. But Greek tourists mainly come from Europe and America, especially Americans. Therefore, it is not difficult to imagine the impact on Greek tourism when people in Europe and America lose their jobs or their income drops sharply due to the financial crisis. According to the data provided by the Greek Vineyard Federation, compared with 2008, the number of American tourists visiting Greece decreased by 24.2% in 2009, while the number of tourists from EU member countries entering Greece also decreased by 19.3%, and the tourism income of the two places decreased by 16.2% and 14% respectively. Coincidentally, the Greek shipping industry, which accounts for 20% of the world and 50% of the European Union, has also entered a depression. According to the data, during the financial crisis, more than 400 bulk carriers in Greece were seized due to bank credit tightening, accounting for 10% of the total number of Greek maritime ships. Correspondingly, in 2009, the annual income of Greek shipping industry decreased by 27.6%, and the contribution rate of shipping industry to economy decreased from 7% to only 1.2%. The shrinkage of pillar industries directly led to a sharp decline in Greece's fiscal revenue.
The severe challenge is that after the fiscal revenue could not support the expenditure needed to stimulate the economy during the financial crisis, the Greek government had to borrow a lot from abroad, which led to the expansion of its original debt hole. It has been observed that the deterioration of the Greek debt crisis is actually directly related to the increase of its short-term sovereign debt. Because the short-term interest rate is much lower than the long-term interest rate, the short-term bonds issued by Greece in the process of rescuing the market are increasing. The data show that among the newly issued bonds in Greece in 2009, bonds with maturities of less than five years accounted for 7 1%, bonds with maturities of less than three years accounted for 27% and bonds with maturities of less than 1 year accounted for 12.3%. Therefore, the debt repayment pressure of Greece in the next 1 to 5 years is extremely heavy.
It is worth reflecting that even before the outbreak of the financial crisis, the Greek government took borrowing foreign debts as an important channel to increase foreign exchange income. After joining the euro zone, Greece borrowed money from the European Central Bank at an interest rate as low as 1%, and then used the borrowed money to buy government bonds with interest rates as high as 5% to earn spreads. This kind of financial operation may be effective during the economic boom, but it is difficult to sustain once the economy is depressed. On the one hand, the liquidity crunch leads to the shortage of funds in the euro zone and the increase in loan interest rates. On the other hand, the financial crisis has led to a decline in the yield of government bonds and a narrowing of debt spreads. The data shows that the Greek fiscal deficit is as high as 5% only by borrowing foreign debts to buy government bonds.
Third, the basic means and strength to save Greece.
As an emerging market country under the euro zone, Greece does not have its own independent currency, so it is naturally impossible to dilute the debt pressure through currency depreciation. Greece, as an underdeveloped country, does not have the powerful force to issue world currency like the United States, and of course it cannot reduce the debt burden by issuing currency. Therefore, the Greek debt crisis can only be solved by non-monetization methods.
It is gratifying that the Greek government is still full of confidence in solving the debt crisis. A few days ago, the Greek government announced its budget plan for the next three years, promising to reduce the fiscal deficit in fiscal year 20 10 from the current 12.7% to at least 9. 1% and to 2.8 by the end of 20 12. However, this plan can only be finalized after a five-month comprehensive evaluation by the European Commission.
It may be the most effective and pragmatic way to gradually offset the debt burden with the effect of economic growth. According to Standard Chartered Bank's calculation, in the case that Greece's GDP has grown at an average annual rate of 7% in the past five years and the nominal interest expense has remained at nearly 5.5%, the debt-to-GDP ratio may slowly decline. If the basic surplus can reach 1.5% of GDP, the debt-to-GDP ratio will decrease at an accelerated rate of 1 times. However, the future economic development of Greece does not seem to support this analysis. According to the forecast of the Greek Ministry of Finance, the domestic economic growth in Greece will be about 0.2% in 20 10, and only 1.5% in 201year. Such an economic growth trend obviously cannot unload the heavy debt burden.
Controlling national income, that is, cutting public sector wages and pensions, is a good way for Greece to pay its debts. Yes, the current unemployment rate in Greece is as high as 10%, and the high unemployment rate will continue to 20 1 1, which adds weight to the government's reduction of welfare expenditure. At the same time, Ireland and Latvia, EU member states, reduced their fiscal deficits by drastically cutting wages and benefits in the public sector. However, it should be noted that unlike Ireland and Latvia, Greece has a strong trade union organization and a series of people's riots. Once Greece tries to cut spending sharply, it will inevitably lead to serious social unrest. This is also the key factor why the new Greek government has not dared to explicitly promise to cut public welfare expenditure.
In the case that "increasing income" and "reducing expenditure" are unlikely to work, the only "life-saving straw" left for Greece to alleviate the debt crisis is to continue to issue public bonds. Fortunately, the first batch of Greek bonds with an amount of 8 billion euros (five-year) was oversubscribed by 25 billion euros this year, of which foreign investors subscribed for about 80%. Seeing the successful sale of the first bond since its sovereign credit rating was downgraded, the Greek government is also actively promoting the next bond issuance plan of at least 5 billion euros (10).
But obviously, it seems unrealistic to rely on Greece's own strength to solve its heavy debt crisis. This raises the question of whether the EU will inject capital into Greece on a large scale to help it. At present, although EU elites such as Britain, France and Germany are opposed to EU aid to Greece, according to the author, its main purpose is to increase the urgency for Greece to solve its own problems through a tough stance. For the EU, the problems of any one country will affect other member countries, especially in the context of using a unified currency. Therefore, it is the general trend for the EU to lend a helping hand to Greece in the future. However, in order to prevent Greece's irresponsible debt behavior, the EU may also impose corresponding sanctions on Greece.
In addition to the European Union, the International Monetary Fund (IMF) recently announced that it is ready to help Greece in any necessary way. However, some European governments do not advocate that Greece accept IMF help. On the one hand, if Greece accepts IMF assistance, it will have to accept budget verification or be forced to increase taxes, which will easily interfere with Greece's sovereignty and the prestige of the European Union. On the other hand, international assistance such as IMF is likely to reduce the confidence of the euro in the international financial market, thus diluting the attractiveness of the European market. Weighing the pros and cons, the EU almost speaks with one voice in dealing with the Greek debt crisis: Europe will solve its own problems.
Fourth, the domino effect of the debt crisis.
In a closed economic environment, it is impossible for a country's debt problem to form a diffusion effect, but when sovereign debt occurs in the basic ecology of economic globalization and financial market integration, its influence may radiate to all levels of the financial ecology of the euro zone, including creditor countries.
For Greece, the debt crisis has mercilessly raised its financing cost, which may further weaken its future financing ability. The data shows that a few days ago, the premium of Greek 10-year government bonds relative to the European benchmark interest rate and German government bond interest rate has reached 3.7%, which is the largest since the establishment of the euro zone. If the Greek debt problem cannot be effectively solved in a short time, its national debt yield will increase and the debt service cost of the Greek government will increase in the future.
Investors' pessimism about the future trend of the euro and the upward pressure on prices in the region is another typical transmission effect of the Greek debt crisis. Concerns about the possible deterioration of Greek sovereign debt can easily lead to people's concerns about the prospects of economic recovery in the euro zone, which in turn leads to the return of safe-haven funds to financial assets with high safety margins such as the US dollar. The data shows that as of February 20 10, the exchange rate of the euro against the US dollar has fallen to the lowest level in the past nine months. Affected by this, the consumer price index of the euro zone 16 countries increased by 1.0% compared with the same period of last year. While feeling the pressure of currency, the EU has more strongly felt the burden of rising prices.
While the euro depreciates and the dollar appreciates, Greek sovereign debt also causes investors to snap up CDS (credit default swaps), which in turn leads to a decline in global stock markets. According to the data of Bloomberg, the cost of CDS in Greece reached a record high of 370 basis points in 20 10, which was 14% higher than that in last year. At the same time, due to the withdrawal of funds, European and American stock markets fell to varying degrees, including Dow Jones index, Nikkei 225 index, FTSE 100 index in Britain, DAX index in Germany and CAC40 index in France.
In addition, the test of the living environment in the euro zone may become a deeper impact of the Greek sovereign debt crisis. The research report issued by Standard Bank of South Africa predicts that Greece may be forced to leave the euro zone because of its lack of independent monetary rights if its debt crisis is not satisfactorily resolved. Moreover, the financial crisis in Greece will spread to other countries in the euro zone, especially Germany, Greece's largest creditor, which will inevitably be implicated. According to the data, at present, Germany holds 200 billion euros of Greek debt. Although Germany still holds a large fiscal surplus, once Greece's finances deteriorate and it is insolvent, Germany will also be seriously affected. Once the financial situation of the core countries in the euro zone fluctuates, the stable operation foundation of the euro zone will be severely tested.
Verb (abbreviation of verb) pays attention to "Greek phenomenon"
Looking around the world, Greece is obviously not an isolated sample of the government debt crisis. Moody's recently warned that in the next few years, all 17 countries with AAA sovereign rating will face financial crisis.
The United States, which spent a lot of money in the financial crisis, cannot escape the result of the deterioration of fiscal ecology. According to the latest fiscal year report released by the White House, in the fiscal year of 20 10 starting from June 2009, the budget deficit of the US government will reach10.6 trillion US dollars, accounting for 10.6% of the GDP. This result not only exceeded the expectations of the US Congress, but also reached the highest level in history. Correspondingly, in order to make up the fiscal deficit, the United States issued a large number of government bonds, which made the total sovereign debt expand to 87.4% of GDP in 2009 and may rise to 97.5% in 20 10. Therefore, according to Moody's point of view, if the US government debt continues its current upward trend and eventually becomes irreversible, the United States will lose its AAA rating in 20 13.
Japan, which is still forced to adopt aggressive monetary and fiscal policies to get rid of deflation, will undoubtedly accept a more severe debt test. According to the data, Japan's fiscal deficit accounted for 10.5% of GDP in 2009, and with the launch of the subsequent economic stimulus plan, the fiscal deficit may reach 1 1%. Corresponding to the fiscal deficit, Japan's public debt will increase from 2 18% in 2009 to 227% in 20 10.
In the EU camp, there are also many Greeks "He is my brother". Overall, the fiscal deficit and debt situation of the whole EU countries are deteriorating. According to the estimation of the European Commission, the overall fiscal deficit of EU countries will reach 7.5% of GDP this year, and the public debt will reach 79.2% of GDP. The European Commission predicts that the proportion of deficit in GDP of the whole euro zone will continue to increase substantially in 201kloc-0/year. Among the EU member states, Portugal, Ireland and Spain, nicknamed "the pigs of Europe", are most likely to follow in the footsteps of Greece. At present, Standard & Poor's has downgraded Spain's sovereign credit rating from "stable" to "pessimistic". At the same time, Moody's also warned that Portugal, like Greece, faces greater risks and does not rule out the possibility of "chronic death" of its economy.
It should also be noted that even those EU member States with relatively good financial background seem to be facing the dilemma of poor financial situation. According to statistics, Britain's budget deficit in 20 10 is expected to exceed 12%, Germany will exceed 6% and France will exceed 7%. On this basis, Morgan Stanley believes that there may be a financial crisis in Britain this year, and Moody's said in a recent report that if France, Germany and other countries do not take measures as soon as possible, their sovereign credit will also face the risk of downgrade.
After careful analysis, it is found that from Iceland to Dubai, from Greece to Portugal, most countries that have or may have a debt crisis are emerging market economies. To this end, Standard & Poor's pointed out in the analysis report that due to the weak strength of emerging economies, high economic vulnerability and great difficulty in economic restructuring, natural sovereign credit defaults and sovereign credit ratings have been downgraded from time to time.
The increasing government debt has become one of the main challenges affecting the future fate of the world economy. In the medium and long term, due to the slow and difficult global economic recovery, the possibility of global sovereign debt risk accumulation or even outbreak in the future cannot be completely ruled out. The damage to the global economy may be no less than the international financial crisis, but the difference is that it is no longer the banking financial system that is hit, but those countries that can't afford to pay their debts!