The second wave of financial crisis to the right

Pessimism of old and new self-stacking causes the market to panic unduly.

The so-called new pessimism, mainly due to the recent economic situation in Eastern Europe is in an emergency, while the Western European banks face the risk of spiking upward, people worried about the resulting deterioration of the European situation will be further pinned down the global economy.

The so-called old pessimism, that is, the countries announced in the fourth quarter of last year, economic data shows that the real economy not only because of the large countries in the frequent introduction of stimulus plan boost, but in the recession deeper into the quagmire.

During the crisis, pessimism than optimism Forever more easily spread, but also easier to find the market. One last Friday and this week, U.S. stocks for two consecutive trading days since the crisis hit a new low, a lot of people broke through the psychological line of defense, the second wave of financial crisis, the various discussions are increasingly warming. At this point, we face what is a world? Second wave really coming? The darkness before dawn will continue for how long? An interview with reporters of Chinese and foreign experts believe that, in spite of the current situation is very grim, but can be characterized as "the second wave of financial crisis" is still doubt.

How to interpret market panic

Immediately after concussion last week, the New York Stock Exchange fell to 6-year low this week, the first trading day in the absence of any significant negative news, the U.S. stocks continued to plunge across the board, the Dow Jones index and the Standard & Poor's index to 7114.78 points and 743.33 points closing point reached since 1997, the 12-year low in the manufacturing, energy, science and technology led plate. To take the plunge in U.S. stocks trend, the Asia-Pacific Tuesday all the major stock market decline, from 1 to 3.24 percent range; Major European stock markets also start early disadvantage, as of press time, the British Financial Times index, Germany and France DAX30 index CAC40 index fell 0.67%, 1.6% and 0.54%.

"The situation did deteriorate, the lowest the stock market accurately reflects the current financial and economic environment." MNI (Market News International) editor of the Asian region, said John Carter, told this reporter. "But the market may have overreacted, and the old and the new self-stacking pessimism causes the market to panic over." So-called new pessimism, mainly due to the recent economic situation in Eastern Europe is in an emergency, while the Western European banks face the risk of spiking upward, people worried about the resulting the deterioration of the European situation will be further pinned down the global economy. John Carter believes that an urgent need because of domestic liquidity, coupled with a lack of confidence in the U.S. economy, the European investors may choose to put their capital from U.S. stocks; the so-called old pessimism, that is, the countries announced in the fourth quarter of last year, economic data shows that the real economy not only because of the large countries in the frequent introduction of stimulus plan boost, but in the recession deeper into the quagmire; In addition, Citigroup, Bank of America and American International Group and other major financial institutions in the United States is also the bad news, investors for the Government's ability to the introduction of an effective rescue plan doubts. Bank of China (3.17, -0.06, -1.86%) in global financial markets, senior analyst Fangming think, even if the Government took over the financial institutions in a way to ensure that it will not bankrupt, it still can not resolve the bad debts of financial assets for investors question concerns the increase in bad debts and reduced profits will result in financial institutions, the rate of decline in earnings per share. The same is true of the real economy, the three major U.S. automobile industry is facing another crisis of survival, Microsoft, Intel and other corporate performance have fallen sharply, and in this context, the stock market decline is not hard to understand, it should not simply be reduced to short-term performance linked directly with the crisis in progress . "On the financial crisis, first and foremost, there is no sign of the emergence of new incidents, followed by no more than the so-called 'first wave' is more serious consequences, in which case it would be now defined as' crisis in the second wave of 'some far-fetched." Fangming express.

How the crisis continues to worsen

Set aside the "second wave" is defined, the continued deterioration of the financial crisis is even grow in magnitude, This is an indisputable fact. Eastern European economies from the worries, the Government rescue financial institutions facing the uncertainty as well as the bottomless pit of the input, the global economy are to prevent the continued deterioration of the situation to a good development. "If the U.S. economy has yet to bottom the middle of the year, then more credit default risk will be surfaced." John Carter said, "Before this, we can only wait and see."

Fang believes that people need to fully understand the complexity of this crisis, and long, and in determining the prospects of a crisis should pay more attention to what can prevent the spread of the crisis. First of all, governments have already indicated that attitude, at all costs, absolutely will not let any major financial institutions collapse, that is similar to the events of Lehman Brothers will not repeat itself, this risk of sudden events are controllable; followed by , from the bank point of view, the Bank of China research team believed that the crisis developed to this stage, the major banks in Europe and the United States risks the risk of derivative products in particular are not a big imagination. The data show that the United States 175 trillion U.S. dollars of derivative products, 90% of the United States exist in the hands of five major commercial banks, 95% exist in the United States in the top 25 largest banks. As long as the United States Government's top five commercial banks in charge of assets, derivatives risk is controllable; Third, the real estate market, the U.S. Federal Reserve meeting loan-financed purchase trillion of assets, 200 billion U.S. dollars the U.S. government took over two rooms, Obama has recently come up with 75 billion U.S. dollars to solve the middle class housing mortgage foreclosure problem, as a factor in this crisis, triggered by the sub-loan basic controllable risk. Fang believes that if the above-mentioned several risks such as the Government wants in the controlled state, then the prospects for progress in crisis or need not be too pessimistic.

Government holding the bank can open a credit crunch knot

The spread of the crisis, the economy deteriorating, the credit crunch in Europe and America and other countries to become the most difficult to overcome the deadlock. In order to encourage banks to lend, the U.S. government has injected huge amounts of money to banks and to provide debt guarantees, but now the results are unsatisfactory. 23, the United States Government to disclose the new round of financial rescue plans to some of the specific measures. There are two main reasons, First, large banks started to stress tests to determine which banks need to inject an additional grant assistance; Second, stress tests did not pass on the banks, the government will buy "mandatory convertible shares" approach to bank capital injection. At the same time, had been receiving government assistance to banks, called for government-held preferred shares converted into ordinary shares. According to U.S. media reports, the U.S. government is working with Citigroup to discuss matters Convertible is expected to the final outcome of negotiations between the two sides may have to make the United States Government's proportion of Citigroup common stock to reach 40%, thereby becoming the controlling shareholder of Citigroup. Compared with financial stocks plunged after the "nationalization" of speculation, the Government holding can be regarded as a compromise approach, a more positive market reaction. In the three major stock indexes fell on the New York case, Citigroup stopped eight consecutive trading days of declines, stock prices rose nearly 10%.

Then, holding the Government can open the knot of the credit crunch? John Carter thinks that the Government will hold the bank preference shares into ordinary shares, you can not increase government investment in the banking book under the premise may have more capital, a solid financial structure of banks, which is to encourage banks to lend is a good thing ; but at the same time during which the risk will not be allowed to Small, if the banks continue to massive write-down of assets, it means that taxpayers will have to foot the bill. Judging from the current situation, it is also not be able to quickly find a panacea for the restoration of credit flows, Fangming worries still consider the lifting of bank lending are encouraging their direction. Government, in ensuring the real estate credit, agency bonds and derivatives trading risks controllable foot effort from top to bottom, after a period of time, bank-oriented industrial and commercial loans of the ice will gradually melt.

Eastern Europe emerging market crisis sounded the alarm

Trigger a crisis as the "second wave" of the main factors you hot, Eastern European countries, the economic deterioration in emerging markets in Europe and give country a wake-up call. John Carter believes that because of western European countries in Eastern Europe are an important export destination, and many large companies in Western Europe because of low labor costs and Eastern Europe, where large-scale plant, so the crisis in Eastern Europe will enable the European economy. As a chain reaction is highly dependent on exports in emerging markets outside the country will face a need for further tightening of the grim situation, and the resulting decline in commodity prices also fell resource export-oriented country. In this process, China should do to prevent the deterioration of external demand preparation, because the EU last year, China's largest trading partner, the European rapid slowdown in Chinese exports is likely to drag on. However, in certain Eastern European facing low foreign reserve and high fiscal deficit and high external debt and other issues at the same time, Fang-ming from the International Monetary Fund and the European Union consider the assistance or can help Eastern European countries through the crisis, and then ease in other economies may be So drag encountered.