Andy Xie, a good time is already past

 Greenspan Xie fault assessment: a good time is already past 
Xie Sohu blog
war in the subprime mortgage crisis to the already highly Greenspan retired suffering.
people have criticized Greenspan in office to pursue a low interest rate policy and financial supervision and dereliction of duty for the current financial crisis sowed the seeds. Nobel laureate in economics Joseph Stiglitz and even died before he could harm still in the healing through the catalyst hot real estate market, allowing interest rates to 6.5% from the end of 2000 fell 1% in mid-2003, monetary policy too loose, and later took too long to return to a tight policy. This gave birth to too many mortgage loans, resulting in a housing bubble, combined with dereliction of duty of financial supervision, co-brewing to the financial crisis in a wide damage.
the face of these accusations, unfair, Greenspan believes. He recently argued, when the Federal Reserve cut interest rates to promote economic development and prevention of possible deflation.
at the earliest anti-Sige Greenspan's loose monetary policy economist Andy Xie seems feeble excuse Greenspan, Bernanke as Greenspan's successor, How to fix the U.S. financial system conflicts on the issue, Paulson proposed a blueprint for financial regulation is only one empty pie, financial institutions will face more stringent regulation.
Greenspan blamed < br> number of mortgage loans and real estate bubble, as the credit crisis. But Greenspan does not endorse, he said, before I have no power by Paul, and now blamed for unwarranted reasons. you as a reflection of the earliest Green Greenspan's monetary policy, economists, how to treat Greenspan to their defense?
Andy Xie: his argument is problematic. to the real estate bubble, he considered not only the United States, other countries have , which is to say, people can get sick, the United States can get; In addition, he believes the bubble is unstoppable, it must be by special causes. These claims are wrong. is too loose because the U.S. currency only other currencies are forced to relax, causing the foam around the world. While U.S. monetary policy is based on local, but other national monetary policy are subject to American influence, this is the background of globalization of capital flows caused. So, in fact real estate bubble and the central bank's policy-relevant, but the core of central bank policy is the U.S. central bank's policy. the Federal Reserve during Alan Greenspan's loose monetary policy to the real estate bubble provides the guns and ammunition, the U.S. is the chief culprit of global real estate bubble.
The second is the issue of financial supervision. Greenspan's tenure, to the significantly lower mortgage lending standards, when many economists think it may be a problem, also delivered a number of related articles. But Greenspan believes that these high-risk subprime mortgage products, though, but he let more people have the opportunity to buy a house, he felt that a risk worth taking. evidence that this is completely wrong, for those who can not afford a house, bought a house through the sub-prime , because the bubble burst led to the bankruptcy, the situation is even worse. When we say that when the regulation in question, Greenspan did not adjust the regulatory standards. It is the loose monetary policy and regulatory negligence, caused the housing bubble development.
can say is his failure to judge, it seems difficult to blame too.
Andy Xie: the possibility of deflation in the United States was very small, because the United States a large number of foreign trade deficit, interest rates will drop money down, will not form crunch, unlike Japan, Japan's trade surplus was a large number, this is a very important distinction. In fact, Greenspan, he knows, he cut the main purpose is to stimulate the real estate, real estate to offset the technology bubble through caused by the collapse of some of the pain. But in fact, a bubble burst, it should have its own adjustment process, there is no free lunch, Greenspan by stimulating the real estate to offset the painful adjustment process, in fact, by instead of creating a bubble bursting of another bubble, but the pain pushed backwards, he did not answer after the collapse of a bubble is that there are painful. and that such pain may be caused by the greater.
: Greenspan on the real estate bubble has made some warning that he is wary of the real estate bubble still exists.
Andy Xie: Greenspan said at the time to stimulate the real estate, then real estate prices, he and that is impossible to form a national real estate bubble, because real estate is a local industry and market. But in the case of financial innovation, money loose in the environment, we regard the money to vote in the real estate industry time, which formed a national phenomenon. a lot of people, including my own articles that are relevant to analysis. The core problem is that Greenspan, who is no other way to economic support to live, so he came up a bubble, leaving the future to resolve the problem, I think he was thinking this way.
Pan whether the U.S. economy to have much impact?
Andy Xie: Wall Street is very important, Greenspan had worked on Wall Street. Wall Street wants this business to make money, there is a lot of interest behind the driver.
a thriving appearance. how do you evaluate his impact on the global economy?
Andy Xie: At that time the economy have brought great benefits, but for the United States, and ultimately is a great harm. now the subprime mortgage crisis will spread to many countries, there is a long time to go.
end, and other U.S. economic recession comes, the real pain is not the financial markets, but the labor market. The unemployment rate increased significantly, people will appreciate the specific to pain, we will Greenspan's policy of a true reflection. After the collapse of the last tech bubble, the Fed did not let the economy, after the adjustment process, but has created another new bubble, so, after The adjustment will be more painful, the United States four to five years may also need time to adjust.
of recovery.
Andy Xie: Chinese philosophy, when all countries have a bubble, central banks can not determine is not a bubble, then let it go, the central bank can do is after the collapse of the bubble, by reducing interest rates to reduce economic losses caused by collapse of the bubble. This is a wrong idea. First, the so-called interest rate cuts reduce losses, but to create a new bubble. the future will be even greater, since there is a painful collapse of the bubble This pain must be accepted. Second, that the central bank can not determine is not a bubble, to prevent the bubble bigger, or the prevention of bubbles appear. This is very wrong.
is already reflected the impact of the bubble burst?
Andy Xie: The current unemployment rate to 5.1% in just the past, when the lowest is 4.4%, has been increased, but from the 7%, 8% as well from it, probably end of next year will rise to 7%.
Obviously inflation. how do you explain this phenomenon?
Andy Xie: Because of internationalization and globalization, technology and bring down inflation to go such a trend, then loose monetary policy will not cause inflation to rise rapidly. will cause rise in house prices, appeared to be very prosperous, but the consequences of this policy is the formation of large trade deficit, because he was too high to stimulate the domestic consumption demand.
Greenspan is a relatively rational?
Andy Xie: he seemed to some of the emperor in Chinese history, a good time made him account for, and good use is over, the next is a bad thing to encounter.
Bernanke's choice
crisis does not seem much different. you think, compared with Greenspan, Bernanke is handling the crisis have its own characteristics?
Andy Xie: Bear Stearns Bernanke practice dealing with the long-term in response to Greenspan Capital Management collapse similar. but from now Bernanke's point of view, his approach is to wait until the economic recovery or stability of the time, he would quickly raise interest rates, which is very different from Greenspan. Greenspan quick cut in interest rates, and slowly raise interest rates, this asymmetry is caused by monetary reason for flooding is very important.
that his role will be the curtain call a tragedy.
Andy Xie: Bernanke has no way out. inflation index is so high that last year was 4.1%, this year may be higher. In this case, further reduction of interest rates, inflation would be more serious, after the deal will bring great pain.
pain or long pain problems. He is now asked to engage in financial stability, the financial institutions are saved, then control inflation. so that would not be too serious, but the digestion is slow, over time, coupled with interest rates, inflation control, the whole process of adjustment probably extended to 15 years.
I feel, might as well allow the bankruptcy of financial institutions, government financial means to support and then the economy. If Bear Stearns went bankrupt, the U.S. economy will ripple, but can be financial resources, coupled with cut interest rates to offset, of course, the economic recession will be relatively large.
Bernanke chose to use Depression, I think it does not necessarily, but there will be a big recession, a sudden decline by 5 percentage points, and then began to rebound into the rise of a new cycle of health.
low interest rates, weak dollar policy, have any effect on its economy in the end?
Andy Xie: The role is not great, so much the U.S. economy, the use of the weak dollar to promote exports, exports to other countries caused the economic slowdown. Do not country's economic needs will fall. So the weak dollar policy is limited.
large, more difficult. current decline in the absolute number of Chinese exports is not very likely, because the developing countries, the resource impact of higher prices, import demand is prosperous, China is benefiting from this, China's exports can sustain about . But the end of the year may go to low double digits next year, there will be three digits is possible.
should be limited to the behavior of financial institutions
financial regulatory blueprint. how do you see?
Andy Xie: impossible to achieve, he proposed a blueprint to simplify the regulatory system in fact, he is the sake of the entire financial sector, so much out of the sub-prime thing, the Parliament must Council passed a bill to limit some of the new financial system, space, and he now actually to increase the space, which is of course impossible. He is in fact draw a pie, and then create public opinion, so that the next parliament will not adjust done too far from the policy point of this is a move. The blueprint has been adopted by the Parliament nor the possibility that the Parliament will not even look to see.
proposed expansion of the Fed's financial regulatory authority, is almost impossible to achieve?
Andy Xie: Parliament there will be a new bill, the Council will suffer from it the sake of the people, how to reduce the people to pass the bill next longer the risk of suffering, which is the core of the bill, rather than more convenient to do business as the core of Wall Street. From this perspective, the Paulson blueprint is in no use.
U.S. financial system, many unreasonable, Paulson proposed a blueprint that should have some reasonable, right?
Andy Xie: There is a certain rationality, but he's starting point is wrong, he's starting point is for the financial institutions sake, this is impossible, and now not even think, the Parliament will not even look to see. five years, the U.S. financial system, the reform will occur gradually, the restrictions on financial institutions will become increasingly serious.
The problem now is that many people who engage in the financial sector sent the game to their own bonuses and hurt customers, harm the country, are for their own interests. is the core issue is how to limit their behavior.
Andy Xie Sohu blog