What does finance mean? Why did China have a financial crisis?

It is the general name of currency circulation, credit activities and related economic activities. Finance in a broad sense refers to all economic activities related to the issuance, storage, exchange, settlement and financing of credit currency, even including the sale of gold and silver. Narrow sense of finance refers to the financing of credit currency.

The contents of finance can be summarized as the issuance and withdrawal of money, the absorption and payment of deposits, the issuance and recovery of loans, the trading of gold, silver and foreign exchange, the issuance and transfer of securities, insurance, trust and domestic and foreign currency settlement. Institutions engaged in financial activities mainly include banks, trust and investment companies, insurance companies, securities companies, investment funds, credit cooperatives, finance companies, financial asset management companies, postal savings institutions, financial leasing companies, securities, gold and silver, foreign exchange exchanges, etc.

Finance is an economic category formed after the emergence of credit currency, and it and credit are two different concepts: (1) Finance refers to the financing of monetary funds (narrow sense finance), people not only borrow money to finance funds, but also issue stocks to finance funds. (2) Credit refers to the borrowing of all currencies, and finance (in a narrow sense) refers to the financing of credit currency. The reason why people want to create a new concept other than "credit" to refer to the financing of credit currency is to summarize a new economic phenomenon; The two economic processes of credit and currency circulation have been closely combined. Bank credit can create and reduce money, which is the most obvious financial feature. Bank credit is considered as the core of finance.

This crisis:

The initial cause of global financial turmoil is the subprime mortgage crisis. The financial crisis in the United States and even the whole world was caused by some Wall Street investors behind the scenes. These people are the first to benefit from government assistance. This is why the first rescue operation in the United States failed, and it was only through the intervention of the Bush administration.

The most fundamental cause of the subprime mortgage problem and its payment crisis is the decline in the solvency of subprime borrowers caused by the decline in US housing prices. Unsustainable global imbalance is the deeper reason for the current round of falling house prices and economic downturn. The proportion of global current account balance to GDP has been increasing continuously since 200 1, while the American household savings rate has been decreasing. When the debt of American residents is too high to support the housing bubble, the housing market adjustment is inevitable, which leads to a sharp increase in the default rate of subprime and prime floating rate mortgages, and more and more mortgage borrowers are unable to repay their loans. Once these mortgages are collected, they will eventually cause credit losses.

The subprime mortgage crisis intensified, leading to the bankruptcy or takeover of major financial institutions on Wall Street, and the moderns on Wall Street finally came to an end. The rescue scale of American government is the largest since 1929, and it mainly adopts four ways: 1 direct capital injection; 2. Repurchase and guarantee secondary products; 3 Fed injects liquidity into the market; 4 provide dollar liquidity to the world through currency swap. However, the rescue measures may improve the market panic in the short term, but it is difficult to change the cycle of the US economic downturn.

1. The causes are: American subprime mortgage crisis, the causes and outbreak time of subprime mortgage, and the impact you can refer to:

/view/ 1256938.htm

2. Impact:

1)。 The impact on the United States is as follows: A The unemployment rate has risen sharply, as can be seen from the bankrupt companies there. B Some people who can't pay their loans will be auctioned off to pay their debts, resulting in homelessness. C. If the consumption power is reduced, the national economy will be hit hard, people's income will be reduced, and the quality of life will be relatively reduced. The decline in the credit of country D to the US dollar and the decline in investor confidence will also affect the growth of the US economy.

2)。 The impact on China is as follows:

Influence1◆◆◆

China's exports are affected by the decrease in US consumption.

In terms of export, it can be predicted that the external macro-economic environment of China will be more severe due to the financial turmoil sweeping the Wall Street. According to the import and export data of the General Administration of Customs, the growth rate of China's foreign trade export slowed down obviously in the first eight months of this year. As the United States is the largest export market for China's goods, the growth rate of China's foreign trade exports, which surged once in June and July, will be tested again. Zhang Bin said that the decline in external demand means that foreign consumers' demand for high value-added products and low value-added products will decrease at the same time. In this environment, exporters may not have the motivation to innovate technology, but are forced to maintain market share by lowering product prices, which may lead to further deterioration of the terms of trade of China's export enterprises.

Influence 2 ◆◆◆

Increase the cost of domestic imports

On the import side, the impact of the financial turmoil is closely related to the exchange rate of the US dollar. At present, almost all commodities in the international market are priced in dollars, and the strength of the dollar determines the price trend of commodities. From the observable data, the prices of crude oil, iron ore and other commodities have shown a downward trend due to the recent reversal of the US dollar, which is good news for China, which needs a large number of resource products. However, the bankruptcy of Lehman Brothers, the unexpected acquisition of Merrill Lynch, the "Fannie and Freddie" announced by the US government a week ago, and the repeated turmoil in the US financial market have seriously affected the trend of the US dollar exchange rate and the confidence of holders.

Although the US economy is strong in the medium and long term and the exchange rate of the US dollar is high, the policy of weakening the US dollar in the short term seems to have been recognized by the market. In this way, the prices of crude oil, iron ore and other resource products will be pushed up again, and the cost of importing commodities denominated in US dollars in China will also increase greatly.

Influence 3 ◆◆◆

Seriously hit the confidence of the domestic financial market.

The bankruptcy of Lehman Brothers is a continuation of the subprime mortgage crisis in the United States, which has brought considerable losses and impacts to financial institutions. The five major investment banks on Wall Street have strong investment and research teams, with assets exceeding hundreds of billions of dollars and extremely rich information resources. Such large investment banks have also closed down, indicating the seriousness of this crisis. "Different financial institutions have suffered different degrees of losses, the only difference is the amount of losses, such as Lehman Brothers, Fannie Mae and Freddie Mac, which were taken over by the US government, and Bear Stearns, which was acquired by JPMorgan Chase in March. However, it is better to consider the impact on financial market confidence than to estimate the direct losses of investors.

Influence 4◆◆◆

Bring direct losses to domestic financial institutions

The direct impact of Lehman Brothers bankruptcy on domestic financial institutions includes two aspects: on the one hand, China's financial institutions and investors hold more subordinated bonds, resulting in actual losses; On the other hand, the financial crisis leads to the recession in the United States, which will be transmitted to China.

The financial turmoil on Wall Street will also slow down China's economic growth to a great extent. After the Olympic Games, China's economic growth slowed down, and the financial turmoil in the United States will only make this problem worse. The financial turmoil caused the US stock index to plummet, while the China administration bought a lot of Wall Street stocks, and banks and fund companies in China also bought a lot of American funds. In addition, the loan difficulties caused by the financial crisis will directly affect China's trade exports.

In fact, the current macroeconomic downturn in China is partly due to domestic economic factors and partly due to American and external factors. When we talk about imported inflation, in fact, the economic recession is also imported in a sense, because the United States is the largest economy in the world, and its demand for goods and investment in other countries will be very large. Therefore, once there is a problem in the American economy, it may lead to economic decline or recession in the world or in many major countries.