Liu Ming: The stimulus policy is hard to say turning point, and the super bubble is still extending.

Editor's Note: On the afternoon of March 1 1 local time, US President Biden signed the COVID-19 epidemic relief bill with a total amount of $65,438 +0.9 trillion. Public opinion believes that when the economy begins to recover slowly, putting such a huge economic aid plan at one time may lead to serious inflation. Under the background of global economic downturn and COVID-19 epidemic, what are the lessons of adopting this stimulus policy? What are the possible economic and social consequences? How to correctly understand the internal logic leading to the economic crisis and how to respond positively? Liu Ming, deputy editor-in-chief of Outlook Weekly, recently wrote that "the stimulus policy is hard to say turning point, and the super bubble is still extending" may provide us with a warning to cross the maze from the three-dimensional perspective of the interaction between history and reality.

About 30 years ago, Yukio Noguchi wrote the book "Bubble Economics". The book expounds a series of problems in the bubble economy, such as the cause, expansion and bursting of the bubble; The influence of bubble economy; Economic depression after the bubble; Asset prices, real economy, macroeconomic policies and bubbles; How to prevent the bubble from happening again; Wait a minute. The book also reviews the tulip incident in the Netherlands, Lloyd's system and its collapse, the South China Sea bubble incident and the famous bubble incident or bubble economy period in the United States in the 1920s, and also gives a deep thought to the history of Japan's own bubble economy. The book was published by Japan Economic News Agency 1992, and the Chinese version was published by Life, Reading and New Knowledge Sanlian Bookstore in March 2005.

Yukio Noguchi studied at the University of Tokyo in Japan and Yale University in the United States, and obtained a doctorate in economics. Work experience involves Japan's Ministry of Finance, as well as Tokyo University, Stanford University and Waseda University. 20 10- 1, Oriental Publishing House published his book "Reflection on Japan", and analyzed the latest round of once-in-a-century economic crisis. Unfortunately, Noguchi's works do not seem to attract much attention from academic circles and policy makers.

The problem is, whether you pay attention to it or not, the bubble economy phenomenon has always been there, as if it were going round and round. I don't know if the author ever thought that after the bursting of the bubble economy discussed in his book, it was actually a "lost twenty years" when Japan still couldn't see the bright end of the tunnel. Of course, America's bubble economy and its collapse followed. This is called "Qin people are at a loss to mourn for themselves, and later people mourn for them;" Later generations mourn without learning lessons, and let future generations mourn for future generations. "

Bubble economy is a comprehensive concept and a relative concept in time and region, and its locality and systematicness are mixed. From commodity bubble economy, industrial bubble economy, institutional bubble economy, national bubble economy to global bubble economy, bubble economy presents a complex ecology with multiple styles, multiple causes and multiple effects.

Today, it is worth noting that the accelerated development of globalization has made the impact of the collapse of the bubble economy more worldwide. The "subprime mortgage" crisis, which began in the United States in 2007, quickly fermented within one year and evolved into the most serious international financial crisis since the Great Depression. Of course, the accumulation and bursting of super bubbles are often logically related to multi-level and a series of secondary bubbles in grand historical scenes. These crises, big or small, can be summarized into several modes worthy of deep reflection, which will help us understand the bubble economy.

Bubble economy may originate from specific economic activities.

For example, there is a merger bubble in the United States. M&A is the normal state of economic activities. Through large-scale mergers and acquisitions, the United States has cultivated advantageous industries such as automobiles, steel, electronics, petroleum, computers, networks and electronic information, and greatly improved the competitiveness of American enterprises. Through the large-scale mergers and acquisitions at the end of 19 and the beginning of the 20th century, international giants such as DuPont, General Electric, Kodak Film, American Tobacco Company and American Steel Company stepped onto the historical stage. Through mergers and acquisitions in the 1920s, IBM and General Motors, which are still the top companies in the world, accelerated their development. M&A in the late 1960s and 1970s was the so-called joint M&A, which resulted in many cross-industry joint large enterprises, with the purpose of seeking diversification of production and operation and reducing operational risks.

Mergers and acquisitions have enhanced earnings expectations and pushed up share prices. However, the problems covered up by mergers and acquisitions finally surfaced. Since the late 1970s, many super-large joint ventures have embarked on the road of spin-off. The end of the wave of mergers and acquisitions is also accompanied by the stock market crash. In 1980s, some so-called "enterprise snipers" appeared, whose M&A aims to sell all or part of M&A enterprises again, including so-called leveraged buyouts, and their motives are often to pursue short-term profiteering, which is more likely to curb the risk of bubble bursting. Short-term stock price rises, and the profit is rich. However, due to a large amount of funds floating outside the production field and engaging in high-risk "parcel transfer game", the final result of mergers and acquisitions is often financial difficulties and bankruptcy reorganization again, resulting in heavy economic and social losses.

Bubble economy may also originate from the development model of specific countries and international capital flows.

After the 1960s, most developing countries developed their economies by borrowing foreign debts. 1973 the oil crisis led to a large surplus in oil-producing countries, which flowed into the credit market through commercial banks. In the second half of 1970s, credit was relaxed to real negative interest rate, and developing countries further set off a lending boom, among which Latin America accounted for the largest proportion. Fiscal deficits in these countries are rising, and debt funds are not used in effective production areas.

With the economic growth of developed industrial countries slowing down, consumption decreasing, interest rates rising sharply, the terms of trade of borrowing countries deteriorating rapidly, exports being blocked, and debt repayment ability dropping sharply. 1In August, 982, Mexico declared that it was insolvent, which broke the myth that "the country will not go bankrupt". After Mexico, Brazil, Venezuela, Argentina, Peru and Chile also announced the termination or postponement of foreign debt repayment. In the 1982- 1983 Latin American debt crisis that shocked the world, nearly 40 developing countries demanded debt restructuring. The International Monetary Fund (IMF) quickly provided assistance, and creditor banks also provided additional financing. According to the loan conditions of the International Monetary Fund, Latin American countries implemented austerity policies, which led to shrinking investment, rising unemployment rate and high inflation rate, and entered the so-called "lost decade".

After 1984, international capital further formed a net outflow from developing countries to developed countries. From 1994 to 12 to 1995, Mexico once again experienced a financial crisis in which the exchange rate and stock price plummeted. Other Latin American countries, such as Argentina, Brazil, Chile and other countries with similar economic structures and economic problems to Mexico, were also sold by foreign investors, which led to a sharp drop in Latin American stock markets and spread to European and global stock markets. So far, most countries in Latin America have lost the foundation of development because of the international debt crisis, and the "debt boom" that once existed has never appeared again.

Bubble economy may also stem from rigid and distorted monetary and exchange rate policies.

1990, Britain decided to join the European Exchange Rate System (ERM) established by western European countries and maintain the exchange rate of 1 to DM 2.95. 1992 After the signing of the Maastricht Treaty, Soros and other investors thought that some European currencies such as the pound and the Italian lira were obviously overvalued. Due to the long-term economic depression, Britain tried to lower interest rates to stimulate exports and boost its economy. Due to the restrictions of the European exchange rate system on exchange rate fluctuations, Britain asked the German central bank to reduce the interest rate of the mark at the same time, so as not to weaken the pound and force Britain to withdraw from the system. However, Germany, which has not been unified for a long time, is facing serious inflation. In order to maintain domestic economic stability, the Bundesbank rejected the request of Britain to cut interest rates. The market is heartless: the fall of the pound against the mark forced the British government to intervene in the market and ordered the Bank of England to buy a lot of pounds. 1September 992 15, the so-called "Black Wednesday", Soros and other speculators attacked "weak currencies" such as the pound and the Italian lira on a large scale, forcing the central banks of these countries to support their respective currencies. In this "sniper war", Soros alone spent about $654.38+0 billion to attack the pound. Soros sold huge pounds, bought strong marks, and operated stocks in Britain and Germany in reverse. The situation is getting out of control. When Germany refused to cut interest rates again, Britain was forced to raise interest rates to 15% twice a day, but the pound failed to stand at the lower limit of 2.778 against the mark and was forced to withdraw from the European exchange rate mechanism together with the lira.

Bubble economy often originated from some specific industries.

Because most of the real estate industry is an important pillar of a country's economic growth, it is closely related to national life and wealth accumulation. Coupled with many upstream and downstream industries and high correlation with other industries, including the financial and insurance industry as the core of a country's economy, it often becomes such a "high-risk industry".

Experience shows that the real estate bubble is a very common economic bubble. After the war, Japan took off rapidly, and became the second largest economic power in the world after the United States in the 1980s, but finally defeated the real estate bubble. At that time, the post-war export economy accumulated wealth for Japan, and a lot of funds were "nowhere to go", and finally they were actively or passively concentrated in the real estate industry. In addition, Japan's financial industry began to try to liberalize in the 1970s, which promoted the further relaxation of financing conditions for real estate investors, and a business model that we repeatedly saw in the subsequent real estate bubble appeared: continuously lowering interest rates, abusing leverage, large-scale violations by financial institutions, the expansion of real estate mortgage loans, a large number of enterprises investing in the real estate industry, ineffective government supervision, and land and tax policies. A large number of rural people moved to cities, and the myth of "real estate is immortal" was widely accepted by investors. The prices of commercial land and residential land soared, claiming that "you can buy America by selling Tokyo", and both the stock market and the property market soared.

Realistically speaking, after realizing the bubble risk, the Japanese government has repeatedly carried out macro-control, but the effect is minimal. 1In August 1990, the Bank of Japan raised the discount rate from 4.25% to 6.0% at one time, which backfired. Instead of achieving the purpose of regulation, the stock market crashed. Scandals about illegal operations of big banks and big securities companies were exposed. 199 1 year, Japan's real estate bubble burst and spread rapidly from Tokyo to all parts of Japan, and then began a long economic recession. Like Latin American countries, Japan has also experienced the so-called "lost decade". In fact, the Asian financial crisis has once again dealt a heavy blow to Japan, which has not yet emerged from the shadows. The "lost decade" became the so-called "lost twenty years".

The "national bankruptcy" caused by the bubble economy not only appeared in small and developing economies, but also began to increasingly threaten large and developed economies.

Fortunately or unfortunately, Japan's real estate bubble has not become a "swan song". The direct trigger of the international financial crisis in 2008 was also the real estate bubble-the real estate boom with American subprime mortgage and related "financial innovation" as its core content. Low-cost (or even zero-cost) and easy-to-obtain loose credit pushed up the real estate price, and the appreciation of real estate made the credit perform well, which in turn promoted the further relaxation of lending standards. "Financial innovation" makes the use of leverage more common and the leverage ratio further increases. In this strange circle of self-argument and self-circulation, the real estate bubble continued and accelerated until the capital chain broke and the bubble burst.

It is particularly worth mentioning that in the continuous evolution of the bubble economy, "sovereign debt" and "national bankruptcy" have become the most striking economic hot words in the new century. During the evolution of the international financial crisis in 2008, Dubai, the second largest emirate in the United Arab Emirates, announced that its largest "state-owned enterprise"-"Dubai World" delayed repayment of its debts of 59 billion US dollars. The financial crisis in Iceland led to Iceland becoming a country called "national bankruptcy". The sovereign debt crisis broke out in these two places without the support of the real economy, which triggered the spread of market panic. The Dubai model has long relied on foreign investment and real estate. The Icelandic model is to engage in financial speculation out of thin air in "fishing places". Since then, the development of Greece, Ireland, Portugal, Italy, Spain, Britain and other situations has formed a round of "European debt crisis" that continues to ferment. The major economies in the world are facing the risk of "national bankruptcy", and even the topic of "American bankruptcy" has begun to be frequently mentioned.

Of course, the bubble economy in the United States has its inherent inevitability and its own development track. In fact, behind the real estate bubble is a super bubble that has accumulated for a long time. Long before the real estate bubble, a series of other kinds of economic bubbles have emerged one after another. After the real estate bubble burst, American economic stimulus policies, especially the $2.2 trillion coronavirus aid, relief and economic security bill passed by Trump administration in 2020, and the $65,438 +0.9 trillion stimulus bill just passed by Biden administration, are still helping the super bubble to continue to expand.

Historical investigation shows that the development of bubble economy has long gone beyond the scope of national economy, and the global bubble economy has made bubble economics enter a broader field, which requires greater global awareness and international vision.

At present, the control of the epidemic situation in the United States has obviously improved, the optimism of economic reopening has continued, and the economic prospects have also tended to be positive accordingly: according to the calculations of international organizations such as OECD, the growth rate of GDP in the United States is expected to jump from 3.2% to over 6%, and the last growth rate in the United States broke through 61984; In February, the number of employed people increased by 379,000, exceeding expectations, and the unemployment rate dropped to 6.2%. Us treasury secretary yellen said that the us economy is expected to resume full employment in 2022; American consumption expenditure has changed from 202 1 to 1, which is 2.4% higher than that in 2020. The total consumption and retail sales in the United States have also increased by 7.4% year-on-year. The US stock market rebounded after a strong shock, with Dow Jones and S&P both hitting intraday and closing highs.

On the other hand, on the eve of the passage of the $65,438 +0.9 trillion stimulus bill, the yield of US bonds soared, reflecting the market's concern about the intensification of inflation and the shift of monetary and fiscal policies. After the passage of the bill, the yield of US debt fell first and then rose. The yield of 10-year treasury bonds reached about 1.64% on March 2, reaching the highest level since February 2020. At the beginning of 20021,the yield of 10-year US bonds was only 0.92%. Accordingly, the breakeven inflation rate in 10, which measures the market inflation expectation, rose to 2.30% in the morning of 12, the first time since the beginning of 20 14, and the breakeven inflation rate in 5 years rose to the highest point since 2008. The yield of national debt, rising inflation and the possibility of monetary policy shift are still the biggest risk factors threatening the stability or rapid recovery of the US economy.

Perhaps the problem of inflation has not come yet, but the long-term stagnation mentioned by Summers is still a much more complicated problem that the American economy will have to face. There is a joke in traditional economics: As long as you can talk about the relationship between supply and demand, parrots will become economists. "Refueling" or "braking"? Such a relationship seems to be a problem comparable to this basic position in modern economics.

In this regard, overall, the global economic recovery is still very fragile. Major economies may need further "refueling", at least more care, far from being able to "brake" urgently.

The European Central Bank will keep the benchmark interest rate and quantitative easing policy unchanged, while promising to accelerate the pace of bond purchases in the coming months to curb the rise in bond yields. President Lagarde said that the decision to accelerate the purchase of bonds was unanimously supported by the Monetary Policy Committee; The central bank will not be blinded by the temporary inflation jump and will not take measures to control the yield curve. The emergency asset purchase plan with a total scale of 1.85 trillion euros provides Europe with the flexibility to increase its debt purchase. The choice of Europe is based on the developed economies' basically consistent judgment on the current economic situation, which is also in line with market expectations.