U.S. Treasury Secretary Paulson held a news conference to announce two new stimulus measures to rescue the new measures the amount of money involved 800,000,000,000 U.S. dollars.
The crisis escalated in the new version. From the origin of the real estate market in the U.S. sub-loan crisis, shocked the United States for the development of financial markets, credit crisis, whereas today it has developed into an Asian economic crisis. In response to the escalating crisis, the U.S. government has also adjusted its rescue measures.
This time, the Federal Reserve (FED) announced that it would set up a scale 200,000,000,000 U.S. dollars called "asset-backed securities lending tools" (TALF) institutions, consumer credit and loans to small and medium enterprises inject liquidity. In addition, FED will also buy up to 600,000,000,000 U.S. dollars of mortgage-backed securities (MBS).
Ministry of Finance to adjust the means to rescue the market is obviously taking into account the real economy is currently weak consumer demand and shrinking of the current situation. Focus on consumer credit and loans to help small and medium enterprises, but also reflects the boost consumption and employment of a clear purpose, the previous water to the soil cover emergency move seems to be different.
The new measures focus on consumption and employment
Paulson 25, said at a news conference, "the Ministry of Finance and the Federal Reserve is attempting to support small and medium enterprises and consumer lending, which our economy is very important."
Paulson straight to the point that the city put out a policy of adjusting the main focus on "small business loans and consumer loans, such as car loans, student loans and credit cards."
Consumer credit, mortgage securitization is (ABS) financial institutions, consumer credit financing for the primary means of financial institutions after the release of loans packaged into asset will be proceeding with the sale of ABS. As the credit market this year, the situation was deteriorating, especially in the Lehman Brothers bankruptcy in September triggered an unprecedented panic in the market, close to the freezing of the credit market.
Since September, the size of the 2.8 trillion-dollar market, ABS only once 50,000,000 U.S. dollars of new consumer credit ABS issuance.
Federal Reserve data show that in September of credit card debt constituted 971,000,000,000 U.S. dollars in outstanding revolving loan of a considerable portion. In these outstanding loans, business loans are in the hands of 511,000,000,000 U.S. dollars, the securitization of 4,600 million.
Devoted to the acquisition of non-performing assets of the fund Lone Star in a New York director, told reporters, who are currently doing very deserted, "before Christmas is basically nothing else to do."
ABS not sell the bank, which in turn pushed up the consumer loan interest rates, that is, the cost of consumer credit. This reliance on consumer credit of the Americans, no doubt means that the wallet has shrunk and the amount of the reduction in consumption.
October consumer confidence index fell to a low of 38.0. Goldman Sachs economists Maikai Wei pointed out that the current state of consumer spending dropped very significantly, only the last century in the early 1980s, the tax credit control policies have resulted in a similar situation. Consumer spending is for the U.S. economy to contribute 70% of the powerful "engine", it adds to the sharp drop in the market economy in a deep recession fears.
"The rise in credit card interest rates increased the family's day-to-day expenses to pay the cost," Paulson said at a news conference that "there are no reasonable consumer credit, is seriously weakened consumer and economic vitality." Government at this time through the ABS for the consumer credit market 200,000,000,000 inject liquidity, it is the hope of stimulating consumption and production of consumer life, and to further boost the sluggish employment situation.
The purpose of a more diverse adjustment to the rescue package, the U.S. government not only to control risk, but also demonstrated through the boost consumption and stimulate economic logic of the path.
Paulson's piecemeal and short-sighted way
Paulson over the past six months have been busy, "Tinker".
"Housing is the continued vitality of our ability to rapidly out of the amendments to the property market, excluding financial institutions and financial markets, the key uncertainties." Paulson in August this year, has repeatedly stressed the importance of the real estate market.
Since the default rate of mortgage loans continued to rise this year in order to support the mortgage assets of the CDO, ABS, and other assets in August has been substantially reduced. Engaged in investment funds of hedge funds ProvidentGroup managing director told reporters WilliamLiu, LoneStar at the time the purchase of Merrill's non-performing assets with a face value of the actual price of 1 U.S. dollars of assets for only 6 cents.
Mortgage market slump, a large number of asset write-down to allow mortgage giants Fannie Mae and Freddie Mac at risk. "Bedroom" a common security 12,000,000,000,000 U.S. dollars in loans to more than half, if they collapse, the loss of highly leveraged through the amplification rate would be disastrous.
To that end on September 7, Paulson announced that the Ministry of Finance paid for the two preferred stock room and promised over the next two to provide more room to 2000 billion dollars to the two control room may have more liabilities than assets resulting from systemic risk.
However, only a week after Lehman Brothers will risk assets as a result of too much exposure can not be injected in a timely manner filed for bankruptcy protection, the Wall Street suddenly plunged into an unprecedented fear. To make matters worse, the largest U.S. insurance group AIG at this time because of the risk assets in a difficult position. AIG to 441,000,000,000 U.S. dollars of assets to provide risk insurance, of which 57,800,000,000 U.S. dollars more for the loan assets sub. Lehman in bankruptcy the same day, AIG shares have plunged 61 percent. "I can not think of any major bank without a substantial exposure of the AIG transaction," Bank of America CEO Kenneth Lewis, then pointed out that AIG's risk of bankruptcy.
To control the risk of continuing to expand, the Federal Reserve on September 17 to provide AIG the 85,000,000,000 U.S. dollars loan relief, to ensure that the insurance giant will not be to destroy the U.S. financial market blockbuster.
However, the credit market is still subject to a lot of impact. Credit market indicators London Inter-bank Offered Rate (Libor) of the dollar overnight interest rate once reached a high of 6.875 percent, the inter-bank did not dare borrow money from each other, so that the high cost of credit almost dried up liquidity.
To ward off this round of turmoil caused by the credit crisis, promoted by the Ministry of Finance plans to issue asset restructuring (TARP) was adopted on October 3. 700,000,000,000 U.S. dollars using the issue of acquisition of the assets and funds directly to the needs of financial institutions injected. In line with the Ministry of Finance to increase market liquidity, the Fed also announced the establishment of specific institutions, in order to purchase U.S. dollars with a face value of the high-March period of commercial paper. In the hope directly to the financial markets to inject liquidity way to save the nearly depleted the credit market.
It was a former Federal Reserve Chairman Alan Greenspan called the "once-in" in the financial crisis sweeping through global financial markets, but also from the virtual economy spread to the real economy. The high cost of credit increased the difficulty of financing business, the continuing high unemployment rate and the consumer price index losing more of the U.S. economy will be pushed to the brink of recession. The global economy and therefore are facing a "winter."
November 25 issued by the U.S. Department of Commerce data show that U.S. GDP in the third quarter from a year earlier than the ring fell 0.5 percent, domestic retail sales dropped 1.4%.
Paulson and thaw at this time to launch consumer credit market and to help small and medium enterprises of the two rescue package, a transfer boost consumer spending strong signal.
The crisis escalated in the new version. From the origin of the real estate market in the U.S. sub-loan crisis, shocked the United States for the development of financial markets, credit crisis, whereas today it has developed into an Asian economic crisis. In response to the escalating crisis, the U.S. government has also adjusted its rescue measures.
This time, the Federal Reserve (FED) announced that it would set up a scale 200,000,000,000 U.S. dollars called "asset-backed securities lending tools" (TALF) institutions, consumer credit and loans to small and medium enterprises inject liquidity. In addition, FED will also buy up to 600,000,000,000 U.S. dollars of mortgage-backed securities (MBS).
Ministry of Finance to adjust the means to rescue the market is obviously taking into account the real economy is currently weak consumer demand and shrinking of the current situation. Focus on consumer credit and loans to help small and medium enterprises, but also reflects the boost consumption and employment of a clear purpose, the previous water to the soil cover emergency move seems to be different.
The new measures focus on consumption and employment
Paulson 25, said at a news conference, "the Ministry of Finance and the Federal Reserve is attempting to support small and medium enterprises and consumer lending, which our economy is very important."
Paulson straight to the point that the city put out a policy of adjusting the main focus on "small business loans and consumer loans, such as car loans, student loans and credit cards."
Consumer credit, mortgage securitization is (ABS) financial institutions, consumer credit financing for the primary means of financial institutions after the release of loans packaged into asset will be proceeding with the sale of ABS. As the credit market this year, the situation was deteriorating, especially in the Lehman Brothers bankruptcy in September triggered an unprecedented panic in the market, close to the freezing of the credit market.
Since September, the size of the 2.8 trillion-dollar market, ABS only once 50,000,000 U.S. dollars of new consumer credit ABS issuance.
Federal Reserve data show that in September of credit card debt constituted 971,000,000,000 U.S. dollars in outstanding revolving loan of a considerable portion. In these outstanding loans, business loans are in the hands of 511,000,000,000 U.S. dollars, the securitization of 4,600 million.
Devoted to the acquisition of non-performing assets of the fund Lone Star in a New York director, told reporters, who are currently doing very deserted, "before Christmas is basically nothing else to do."
ABS not sell the bank, which in turn pushed up the consumer loan interest rates, that is, the cost of consumer credit. This reliance on consumer credit of the Americans, no doubt means that the wallet has shrunk and the amount of the reduction in consumption.
October consumer confidence index fell to a low of 38.0. Goldman Sachs economists Maikai Wei pointed out that the current state of consumer spending dropped very significantly, only the last century in the early 1980s, the tax credit control policies have resulted in a similar situation. Consumer spending is for the U.S. economy to contribute 70% of the powerful "engine", it adds to the sharp drop in the market economy in a deep recession fears.
"The rise in credit card interest rates increased the family's day-to-day expenses to pay the cost," Paulson said at a news conference that "there are no reasonable consumer credit, is seriously weakened consumer and economic vitality." Government at this time through the ABS for the consumer credit market 200,000,000,000 inject liquidity, it is the hope of stimulating consumption and production of consumer life, and to further boost the sluggish employment situation.
The purpose of a more diverse adjustment to the rescue package, the U.S. government not only to control risk, but also demonstrated through the boost consumption and stimulate economic logic of the path.
Paulson's piecemeal and short-sighted way
Paulson over the past six months have been busy, "Tinker".
"Housing is the continued vitality of our ability to rapidly out of the amendments to the property market, excluding financial institutions and financial markets, the key uncertainties." Paulson in August this year, has repeatedly stressed the importance of the real estate market.
Since the default rate of mortgage loans continued to rise this year in order to support the mortgage assets of the CDO, ABS, and other assets in August has been substantially reduced. Engaged in investment funds of hedge funds ProvidentGroup managing director told reporters WilliamLiu, LoneStar at the time the purchase of Merrill's non-performing assets with a face value of the actual price of 1 U.S. dollars of assets for only 6 cents.
Mortgage market slump, a large number of asset write-down to allow mortgage giants Fannie Mae and Freddie Mac at risk. "Bedroom" a common security 12,000,000,000,000 U.S. dollars in loans to more than half, if they collapse, the loss of highly leveraged through the amplification rate would be disastrous.
To that end on September 7, Paulson announced that the Ministry of Finance paid for the two preferred stock room and promised over the next two to provide more room to 2000 billion dollars to the two control room may have more liabilities than assets resulting from systemic risk.
However, only a week after Lehman Brothers will risk assets as a result of too much exposure can not be injected in a timely manner filed for bankruptcy protection, the Wall Street suddenly plunged into an unprecedented fear. To make matters worse, the largest U.S. insurance group AIG at this time because of the risk assets in a difficult position. AIG to 441,000,000,000 U.S. dollars of assets to provide risk insurance, of which 57,800,000,000 U.S. dollars more for the loan assets sub. Lehman in bankruptcy the same day, AIG shares have plunged 61 percent. "I can not think of any major bank without a substantial exposure of the AIG transaction," Bank of America CEO Kenneth Lewis, then pointed out that AIG's risk of bankruptcy.
To control the risk of continuing to expand, the Federal Reserve on September 17 to provide AIG the 85,000,000,000 U.S. dollars loan relief, to ensure that the insurance giant will not be to destroy the U.S. financial market blockbuster.
However, the credit market is still subject to a lot of impact. Credit market indicators London Inter-bank Offered Rate (Libor) of the dollar overnight interest rate once reached a high of 6.875 percent, the inter-bank did not dare borrow money from each other, so that the high cost of credit almost dried up liquidity.
To ward off this round of turmoil caused by the credit crisis, promoted by the Ministry of Finance plans to issue asset restructuring (TARP) was adopted on October 3. 700,000,000,000 U.S. dollars using the issue of acquisition of the assets and funds directly to the needs of financial institutions injected. In line with the Ministry of Finance to increase market liquidity, the Fed also announced the establishment of specific institutions, in order to purchase U.S. dollars with a face value of the high-March period of commercial paper. In the hope directly to the financial markets to inject liquidity way to save the nearly depleted the credit market.
It was a former Federal Reserve Chairman Alan Greenspan called the "once-in" in the financial crisis sweeping through global financial markets, but also from the virtual economy spread to the real economy. The high cost of credit increased the difficulty of financing business, the continuing high unemployment rate and the consumer price index losing more of the U.S. economy will be pushed to the brink of recession. The global economy and therefore are facing a "winter."
November 25 issued by the U.S. Department of Commerce data show that U.S. GDP in the third quarter from a year earlier than the ring fell 0.5 percent, domestic retail sales dropped 1.4%.
Paulson and thaw at this time to launch consumer credit market and to help small and medium enterprises of the two rescue package, a transfer boost consumer spending strong signal.
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