Crisis will take three steps under the United States moves.

<P> Editor's Note: </ P> <P> since the U.S. financial crisis dragged the world deeper into the mire since it has been multi-party solution, trying to embark on the road to recovery as soon as possible. .Why a global bidding war broke out the assets? Experts feature articles published in this edition, providing readers with a unique perspective to interpret the various U.S. actions in the crisis, clearly show the global assets of Taiwan bidding war .behind the scenes before. .</ P> <P> first price, the financial bi-stable - the U.S. go on the </ P> <P> why the "lost decade" </ P> <P> ● cancer of bad loans of financial institutions in Japan in the bubble burst .do not cut off after 10 years: in 1991 the bubble burst, the capital injection for financial institutions, the delay is not in place until 1997, the Japanese part of the large financial institutions have been closed down or bankrupt, before the Japanese government to seriously consider the balance sheets of financial institutions .restoration plan. .</ P> <P> ● drag force in 1999, major financial institutions, efforts are still insufficient funding: funding is still less than normal, the financial institution's lending capacity has not increased, non-performing loan ratio continued to rise. .Has been launched in 2002, "Financial regeneration plans," non-performing loan ratio of major banks began to decline. .</ P> <P> the central bank did not really understand the "monetarist" </ P> <P> ● Japan has not truly understand the "monetarist", "A Monetary History of the United States," and Ben Bernanke on the monetarist explanation: monetary policy should .At the same time to achieve two objectives, price stability and financial stability. .</ P> <P> ● asset deflation, price deflation serious than the consequences: from 1991 to 2009, the Japanese commercial land prices fell by 72%; the same period, prices fell only 3%. .Ten years of history in Japan, is asset deflation tightening the balance sheet of financial institutions, that the financial system is unstable. .Bank of Japan put in more inter-bank market liquidity, monetary expansion can not be achieved. .</ P> <P> assets and bank lending decreased ability to down a vicious cycle </ P> <P> ● On the one hand, the asset bubble burst in 1991, the Japanese non-performing loan ratio of commercial banks high above, lending capacity; other .On the one hand, because the decline in commercial bank lending capacity, the Japanese real estate prices continue to fall, resulting in non-performing loan ratio of commercial banks to rise further. .</ P> <P> ● until 2005, that Prime Minister Koizumi's "financial Regeneration Plan" implementation of the 3 years, the Japanese major commercial banks NPL ratio fell to less than 4% fall in asset prices in Japan and commercial bank lending .reduced ability to gradually end the vicious cycle. .Statistics show that by 2005, the rate of Japanese real estate prices fall significantly smaller than before 2005. .</ P> <P> United States: </ P> <P> ease monetary + repair their balance sheets </ P> <P> ● this round of the U.S. handling of the subprime crisis, drawing on 90 years of Japanese lessons of the last century .: </ P> <P> 1. a significant reduction in the federal funds rate, the implementation of quantitative easing → price stability objective; 2. repair the financial institutions, enterprises and residents in the balance sheet → financial stability objectives. .</ P> <P> ● Fed to rescue financial institutions a variety of ways to achieve the goal of financial stability and resume lending capacity of financial institutions. .Fed balance sheet assets of the project, has moved from September 2008 to 800 billion U.S. dollars extended to June of this year to 2.1 trillion dollars, the same time, the Fed also provided the United States financial institutions with a total value close to 8 trillion dollar debt guarantees .. .</ P> <P> at one time have a huge debt </ P> <P> ● Japan: asset bubble burst in 1991, the Japanese government's policy response to the objectives of financial stability is not, help is not in place. .But it is not considering financial stability objective (which requires a lot of printing currency and start the machine debt), the rapid expansion of Japan's fiscal deficit is not. .</ P> <P> ● United States: asset bubble burst, the U.S. government will pursue the goal of financial stability on the top, for a huge spending and tax cuts, it is time to generate a huge amount of debt. .The United States so there will be tremendous pressure in the next 2-3 years for these debt financing. .</ P> <P> Summary: </ P> <P> despite rate cuts and has taken a significant quantitative easing monetary policy, but because there is no concern about the currency theory of "financial stability" objectives (ie fixed assets and liabilities of financial institutions .table, to avoid the financial system instability, loss of lending capacity). .1992-2004, the Japanese economy faces long-term asset prices fall and lending capacity of commercial banks in a vicious circle, which leads to the real economy are not always sufficient to support financial institutions, Japan's economic recovery difficult. .</ P> <P> quantitative easing in the supply of significant rate cuts and liquidity, based on the United States is very successful in seizing the "financial stability" target, the balance sheets of financial institutions to repair, remove the bad cancer. .Thus, the U.S. credit intermediation capacity of financial institutions has been in recovery rather than deterioration of the road in the United States has been supporting asset prices and therefore, has little room for further declines. .The United States is to pay the price once and toting huge debts. .</ P> <P> because unlike Japan, the U.S. economic recovery will be much faster. .</ P> <P> mad issuing the second step - this road is hard and pass </ P> <P> fiscal deficit substantially upgrade </ P> <P> ● financial institutions due to the need for capital increase, the need for .to aid the manufacturing recession, you need to implement tax cuts, the U.S. government spending than income, the policy must be taken to balance the budget deficit. .</ P> <P> ● 2009 fiscal year, the U.S. budget deficit is expected 1.84 trillion U.S. dollars, the value is 6.4 times the annual average over the past 3. .Fiscal year 2010, the U.S. fiscal deficit will remain at 1 trillion dollars. .</ P> <P> financing of the United States face enormous pressure to </ P> <P> ● Entering the 21st century, the United States the amount of bonds issued each year are generally slightly higher than the net budget deficit that year. .6 years in 2002-2007, the United States each year the amount of net issuance of government bonds has averaged only 500 billion U.S. dollars, the outbreak of the financial crisis of 2008, net issuance volume rose to 1.5 trillion U.S. dollars. .</ P> <P> ● expects fiscal 2009 net issuance amount of U.S. Treasuries -2.5 2.0 trillion trillion U.S. dollars, annual average for the past 6 more than 4 times; to the 2010 fiscal year, net issuance will amount up to 1.5 .trillion. .</ P> <P> Fed two "trick" in an attempt to borrow </ P> <P> trick one: direct purchase of government bonds declared the intention of lowering long-term bond interest rates. .</ P> <P> 2009 年 3 18, the Fed announced plans to buy 300 billion U.S. dollars with U.S. Treasury bonds, that is the way through the monetization of the debt interest rates to suppress long-term bonds. .</ P> <P> face but the market did not give the Federal Reserve, the 10-year U.S. Treasury interest rates only in the March 18 day of sharp decline, after soaring more than 120 basis points, the Fed intends to suppress the plan did not succeed long-term interest rates. .</ P> <P> trick two: Once the claims of economic recovery, monetary policy will exit. .</ P> <P> This is to reduce the current depreciation of the dollar market is expected to suppress long-term bond interest rates. .Since April 2009, including more than Federal Reserve Chairman Ben Bernanke, the U.S. economy, including the senior management of several claims: Once the U.S. economy recovery, loose monetary policy and active fiscal policy will be appropriate when to quit. .</ P> <P> In my opinion, the above declaration is mainly intended to let the market believe that the Fed is concerned about the U.S. dollar, the dollar will not depreciate, and thus suppress the long-term U.S. bond rates. .But Bernanke's speech and not credible. .In order to weather the crisis because the United States must be large tax cuts, there must be a lot of the budget deficit. .Bernanke clearly know the Federal Reserve as the world's central banks are printing money privileges, therefore, the Fed is bound to print currency. .</ P> <P> by the Federal Reserve note-issuing unlimited market constraints </ P> <P> ● market, the Fed will soon see the first "trick" the Fed to buy Treasury bonds issued in U.S. dollar equivalent of printing presses. .Global commodity supply is always limited, and the printing machines produced by the U.S. on the line is infinite, why holdings of U.S. debt? To repay the U.S. Treasury bonds, U.S. dollar payment can only print. .The face of U.S. junk currency, the only workaround is to vote with their feet: to buy commodities, reducing the configuration of U.S. Treasury bonds. .</ P> <P> ● united against the U.S. dollar as the market "voting with their feet", pushing up commodity prices, inflation is expected therefore strengthened. .Therefore, the 10-year U.S. Treasury interest rates after the March 18th consecutive rise. .</ P> <P> money lenders are not stupid: look at the global money supply curve </ P> <P> ● In 1972, before the collapse of the Bretton Woods system, the value of the gold-linked notes, paper money supply by gold bound notes .would not be devalued; entered after 1972, the supply of paper money into the Pentium era, free printing. .</ P> <P> ● money lenders are not stupid. .Unless the U.S. economy to return to the path of strong growth for the U.S. government to increase budget revenues. .Otherwise, the United States had no choice, today the debt to be held tomorrow is likely to depend on the return way of printing money. .So, the U.S. economy strong recovery What can? </ P> <P> impact of globalization can not see the United States "V" shaped recovery signs </ P> <P> impact one: alternative labor force in developing countries. .Billions of farmers in developing countries become industrial workers, their annual income as long as 3,000 U.S. dollars; and American workers want a $ 3,000 monthly income. .Therefore, in the long run the real income of American workers will be reduced. .</ P> <P> Impact II: developing the production chain to climb. .As knowledge and the global spread of science and technology, developing countries quickly learn and mature technology to imitate the United States to replace the United States for production. .The long term the U.S. unemployment rate will rise. .</ P> <P> how the United States had access to finance: Triffin puzzle solutions </ P> <P> ● As long as foreign capital pouring into the United States is willing to make a balance sheet of U.S. assets, not Triffin dilemma .problems. .</ P> <P> output of U.S. trade and budget deficits and the dollar reserves to pay → means to meet the international needs of </ P> <P> steady flow of foreign capital inflows into U.S. → willing to maintain market confidence in the dollar </ P> <P .> ● Over the past ten years, although the U.S. twin deficits serious problem is solved Triffin. .</ P> <P> Summary: </ P> <P> Fed monetization of debt and trying to cheat the way to suppress an oral long-term debt interest rates to achieve the financing, can be expected, this behavior will continue to encounter market, "with .foot voting ", the market will be less with U.S. Treasury bonds, buy commodities to counter the huge U.S. debt financing and printing the currency, disposable credit-for-assets (debt transfer information), while the continuous rise in commodities will make the United States for 10 years .Treasury bond interest rate after a brief decline, produce more substantial gains. .</ P> <P> because the "debt transfer capital", a long time, the continuous depreciation of the U.S. with low-interest debt financing in favor of investment in developing countries to acquire higher-yielding assets and equity model has been difficult to sustain, coupled with globalization .the impact of the United States, we believe that the U.S. economy will recover at a low level, therefore, more sustainable future market behavior, repeated occurrence. .</ P> <P> help the economy at the cost of the U.S. must face a huge budget deficit, the United States had no choice. .However, if the United States intends to borrow only way to finance, the game in the market, the U.S. long bond rates will rise to the point of damage to economic recovery. .Therefore, the United States needs to weigh debt, financing the U.S. needs reform. .</ P> <P> The third step is to sell assets - inevitable </ P> <P> come down, selling assets </ P> <P> ● a vivid metaphor: a family financial decline of the people, .regain the balance of payments are 3 ways: saving, borrowing, sale of household assets. .Savings can not solve problems; borrowing is difficult because no reliable solvency to borrow money; the rest is sold family assets. .</ P> <P> ● selling assets to reduce debt: the decline of the United States now is like a family financial situation of the people, want to borrow to balance the books, but no reliable solvency. .The game in the market, are forced to raise interest rates to borrow only enough money to stage. .In order to suppress interest rates, protection of economic recovery, the United States can not just rely on debt financing, sale of assets must be a way to increase borrowing to make up the gap. .Unlike the United States dollar assets can be printed out of thin air, so trustworthy. .</ P> <P> U.S. financing the sale of assets </ P> <P> ● Since the crisis, in order to resolve missing funds, the U.S. had conducted a round of family property sold, the Middle East oil countries, Japan and China have been shot. .</ P> <P> ● U.S. assets than government bonds trusted. .U.S. sale of assets, both successful financing, countries that also provide investment capital firm. .</ P> <P> to find a balance: the sale of assets, VS debt </ P> <P> ● United States will "finance the sale of assets" and "debt financing" to find a balance in two ways. .If the United States blindly sell ancestral property, the sale of assets, in essence, is to cut the U.S. National balance sheet asset side, undermine U.S. national power, the United States would not accept. .Moreover, the dollar is the world's currency, the Fed is the world's central banks, there is abuse of the natural power of the currency in India, could not use. .</ P> <P> ● the results of the U.S. pursuit of balance: the balance sheet in order to protect the assets of the U.S. side, the United States will try to take loans rather than financing the sale of assets the way until the game in the market, the market will be long-term U.S. government bonds .interest rates pushed up to the point where the U.S. can not tolerate (market push higher commodity prices, long-term U.S. Treasury interest rates have to follow up.) .</ P> <P> ● investment in derivatives to the conclusion: Based on the above analysis, we are optimistic about commodities, commodity prices have significant upside, it is the capital with countries such as China, Japan, Russia, India .constraints such as the Federal Reserve print money indiscriminately tools; the same time, we see high interest rates long-term U.S. bonds, U.S. 10 year Treasury interest rates next target location is 5%. .</ P> <P> commodity currencies hint: another way to buy U.S. assets </ P> <P> ● When the U.S. do not want to sell asset finance, only willing to use debt financing for funds with countries such as China, Japan, Russia .and other countries concerned, there is another choice: U.S. dollars for mine. .</ P> <P> ● last 4 months, commodity powers Australia, Canada and New Zealand's strong appreciation of the currency has actually reflects the "dollar-for-mine" trend. .Funding strategy with the country is in U.S. dollars to mine for resources, power into their own hands, and will continue to spam is spam sent to Australian dollars, Canadian hands, so that Australia, Canada took the dollar to buy U.S. assets .. .If China, Russia to buy U.S. assets will be treated as a political investment, it is difficult to buy. .</ P> <P> nature of the U.S. financial reform: Assets and reliable than the notes </ P> <P> ● If the United States is willing to sell asset finance, rather than relying on Issue Paper (U.S. bonds) financing, for example, sell deep in .underground coal, leading financial firms to sell shares, why should not the United States to raise funds to balance the budget? </ P> <P> ● think as much as possible of the United States to issue paper (bonds) in the way of financing, conveyed to the market .One reason: Asset reliable than the notes. .As the body carrying a huge debt financing pressure, the dollar will be weak the next few years, which will bring major developing countries in order to stabilize the currency exchange rate target, was forced to buy dollars, and put a lot of national currency, creating a proliferation of global notes. .</ P> <P> Summary: </ P> <P> of the United States think of as far as possible the issuance of paper (U.S. Treasuries) financing to, to convey a truth to the market: asset than paper money and reliable. .</ P> <P> debt notes held by a large China / Japan / India will be the biggest victim of the global flood of paper money, their only response is: abandon claims in favor of bidding for the assets and rights; the same time, U.S. long-term .high interest rates of bonds depends on the U.S. 10-year bonds next target bit rate is 5%. .</ P>.