A year later, the United States.

As New Century Finance, the second-largest subprime mortgage company, announced that it was filing for bankruptcy protection, a financial storm suddenly swept Wall Street and quickly spread throughout the Western world. On June 22, 2007, Bear Stearns, the fifth-largest investment bank in the United States, announced that two of its funds investing in subordinated debt had incurred huge losses. Subsequently, banks announced that they would write off non-performing assets, including Citigroup by $15 billion, Merrill Lynch by $7.9 billion, and Bank of America by $3.3 billion. Financial experts estimate that the losses caused by the subprime mortgage crisis in the United States are between $100 billion and $200 billion.

In Europe, HSBC drew $3.3 billion in bad debt reserves, Barclays wrote off $2.7 billion, and Swiss banks wrote off $3.7 billion in subprime mortgage-related bad debts in the third quarter, and ended the year by claiming $10 billion in subprime mortgage-related losses.

The situation in Asia is also not optimistic, with Japan's Mizuho Financial Group, Shinsei Bank and Aozora Bank all claiming to have suffered a sharp decline due to subprime mortgages. China's financial institutions are expected to lose one-fifth of their holdings of tens of billions of U.S. subordinated debt.

The Western economy is completely built on financial credit, and the huge shocks in the financial industry inevitably involve the real economy. The housing market was the first to be affected, with house prices falling sharply in all countries, housing credit defaults soaring, and new housing starts plummeting. The manufacturing sector was also affected by the credit collapse, with the market for investment goods shrinking as banks suffered heavy losses and loans were difficult to disburse, leading to a sharp contraction in corporate investment.

A large number of enterprises that have fallen into operational difficulties have begun to lay off employees or cut wages, and people's incomes have decreased, which has further exacerbated the market downturn. Most people in the West do not have any household savings, and their daily consumption is based on credit cards, which has the typical characteristics of eating grain. Declining incomes and tightening consumer credit by banks have put the lives of countless Westerners in a state of embarrassment.

The outbreak of the subprime mortgage crisis did not happen overnight. The fundamental reason for this is that the economy of the entire Western world has turned from real to virtual, everyone is keen to make quick money in the financial market, and no one wants to do business in a down-to-earth manner. In order to be able to make more profits, Wall Street financial experts have invented a variety of financial derivatives, which have been hyped up in turn to create a false prosperity. In this prosperity, everyone has the illusion that they have a lot of wealth, but they don't know that this wealth is completely in the air, and it will come to naught when they wake up.

On the other side of the ocean, in the large conference room of China's National Development and Reform Commission, a meeting is being held on the response to the impact of the subprime mortgage crisis, and the personnel are all officials from various economic functional departments.

"According to the analysis report submitted by the Macroeconomic Research Institute of the National Development and Reform Commission, the subprime mortgage crisis has begun to spread to the real economy, and European and American countries have lowered their GDP growth rates by 0.5 to 1 percentage points this year, and the manufacturing activity index in the United States has fallen below 50 last month and entered a recessionary period. Survey data from the Bank of Japan showed that the confidence index of large manufacturers was negative, and the market outlook was pessimistic. We predict that the impact of the subprime mortgage crisis will further expand in the latter months of this year, with the possibility of evolving into a full-blown economic crisis. This is Wang Zhenbin briefing the officials attending the meeting.

"Director Wang, I read in the newspaper that some experts believe that the subprime mortgage crisis has bottomed out, and the U.S. economy is expected to pick up by the end of the year, which is different from your prediction. One of the participating officials questioned.

"yes, I've seen that too. Another official chimed in, "By the way, Gao Lei from the original Academy of Social Sciences is now a professor at Harvard University." A few days ago, he gave a speech, saying that China's analysis of the subprime mortgage crisis is too alarmist, and that the Federal Reserve has rich experience and can quickly adopt policies to reverse the situation, and the subprime mortgage crisis will definitely end if it lasts for another two or three months at most. ”

"Gao Lei is just a family's words. Han Hong, deputy director of the National Development and Reform Commission, who presided over the meeting, smiled slightly, "What we have learned is exactly the opposite. Fed officials have privately said that they have already taken all the measures they can take, but the market confidence is seriously low, and the slightest wind and grass may set off a new round of storm, when the financial institutions will be affected far more than now, and they are already preparing various aftermath measures. ”

"Top economists in the United States are not optimistic about the prospects of the subprime mortgage crisis, and they believe that the probability of a further crisis next year is more than 70%. Qi Ruicang, a researcher at the National Development Research Center, added. He is now one of the world's top scholars, and he is often invited to attend important conferences like this.

"The economics community is now reflecting on why the subprime mortgage crisis was not foreseen in advance, and everyone has combed through the many signs of the past few years, and found that the crisis was already showing signs five years ago, but it was masked by blindly optimistic market expectations. The consensus in the academic community is that the crisis would have been relatively easy to contain if it had erupted two years earlier. It is estimated that the global economy will be dragged down by it and it will be difficult to recover in the next three to five years. Qi Ruicang introduced to everyone.

"I see. The official who mentioned Gao Lei earlier sneered and gave himself a round game: "It seems that this Gao Lei's words are really unbelievable, Professor Qi is a university scholar with real talents." ”

Qi Ruicang waved his hand and said, "What kind of university scholar am I? I'm just relaying some consensus in the academic circles. Housing prices in the United States are now falling sharply, many homeowners are insolvent, and the number of abandoned homes is increasing. Although the bank was able to take away the houses of these people under contract, the auction price of these houses was not enough to compensate the bank for the loans previously issued, and the bad debts continued to increase. According to people familiar with the matter, the two most important home loan institutions in the United States, Freddie Mac and Fannie Mae, are now facing the threat of bankruptcy. If these two institutions go bankrupt, the impact on the US economy will be no less than that of an eight-magnitude earthquake. ”

"Alas, how can this be!" an official sighed, "A few years ago, we only heard about the South American debt crisis and the Asian financial crisis, but who knew that the United States would do the same. ”

Xu Zhenbo, director of the Ministry of Commerce, pouted and said: "This should be called retribution." Wasn't it the Americans who were behind the Asian financial crisis? Now it's their turn. ”

"Director Xu, let's just talk about this kind of thing, you are engaged in foreign trade, how can you say that?" someone joked to Xu Zhenbo.

Xu Zhenbo said with a smile: "You can't criticize the United States when engaging in foreign trade? You see that Mr. Feng of the equipment company does business with foreigners every day, doesn't he also say cool things to foreigners? To be honest, I still learned this problem from him. ”

Feng Xiaochen, who was sitting in the corner of the conference table, saw that Xu Zhenbo had brought the topic to himself, so he laughed hesitantly and said, "I agree with Director Xu's statement that retribution is unpleasant. Regarding the subprime mortgage crisis in the United States, our company's analysts have also done some research, and the conclusions are similar to what Director Wang just said. We expect the US to usher in a new round of larger financial shocks next year, dragging the global economy into a prolonged period of weakness. ”

"How long?" asked Xu Zhenbo with a frown. Although he has shown a gloating attitude just now, he still has a deep feeling for the impact of the subprime mortgage crisis on China. When he heard that the crisis would last for a long time, he couldn't help but feel a little worried.

"More than five years. Feng Xiaochen said with certainty.

"I'm afraid this won't be enough, right?" Han said, "The forecast on our side also suggests that there will be a more serious crisis next year, but it will last until about 2010 at most, and the recovery should begin." Western countries still have some experience in dealing with crises, and both the United States and the European Union have introduced policies to stimulate the economy, and if these policies work, the crisis will last for a maximum of three years, and then it will be over. ”

Feng Xiaochen said with a smile: "Western countries do have a relatively mature crisis intervention mechanism, which has also played a role in the past. However, this financial crisis is different from the past, and it may not be so easy for Western countries to get out of the quagmire quickly. ”

"What's the difference?" asked Han Hong.

Feng Xiaochen drew a circle with his hand, put the entire conference room into a circle, and then said: "This difference is China's role in this round of crisis. ”

"What do you mean?" Han Hong was a little puzzled.

Feng Xiaochen said: "In fact, the means of Western countries to intervene in the crisis is nothing more than to introduce economic stimulus policies to encourage enterprises to invest in order to restore economic vitality. In the past, they could do so, because they could absorb the stimulated capacity through the markets of developing countries, which is equivalent to using the markets of developing countries to fill the gaps in their domestic markets. ”

"What's different now?" an official asked.

Feng Xiaochen said: "The biggest difference now is that China has become the world's factory. The market of developing countries now belongs to us, and if Western countries want to occupy this market, it will have to pay a great price, and it will not be as easy to reap the rewards as in the past. Not only that, but we're also making inroads into Western markets and taking food out of their mouths, which makes it harder for them to digest capacity and harder for the economy to recover. ”

Han Hong thought for a while, nodded slowly, and said, "What you said has some truth. In the past, when there was an economic crisis in Western countries, the first measure to be taken was to digest their own production capacity in the international market, that is, in the market of developing countries, which is a transfer crisis. In recent years, China has become the world's factory, and a large part of the market of developing countries is occupied by us, and it is indeed difficult for Western countries to snatch these markets from us. ”