The US government itself took over a big problem, which was the world's largest insurance company, the American International Group, with total assets of more than one trillion US dollars.
At that time, the US government was powerless to help other financial institutions. Otherwise, they would not have allowed Bank of America to acquire Bank of Merrill Lynch, nor would they have found someone to take over Bear Stearns, and they would not have ignored Lehman Brothers' bankruptcy filing. Lehman Brothers was the top investment bank in the US.
This time, the US government took over Fannie Mae and Freddie Mac, and Feng Yu found someone to expose the US government's high financial deficit. The US financial crisis broke out.
The US sub-prime mortgage crisis was already very serious. Otherwise, there would not be so many financial institutions going bankrupt, and European and Asian banks had to inject capital.
But at that time, the US government pretended to be strong and could solve these problems, and the market was temporarily stabilized.
This time, when the scams were exposed one by one, the US government could no longer suppress it. The subprime mortgage crisis had truly evolved into a financial crisis in the US, or even a financial storm, and it would affect many countries and regions around the world.
Some countries had bought US government bonds or invested a lot in the US. When the US economy declined, they suffered losses.
Some countries pegged their currencies to the USD, and when the USD depreciated, their currencies also depreciated. Their purchasing power fell, and it became inflation.
But the root cause was the US government's own fault!
Bush's housing plan stimulated the development of the real estate industry, and more sub-prime loans were issued. The quality of the assets was ignored.
Initially, this problem is not too serious. But Wall Street in the US encourages "innovative" financial products, and all kinds of financial derivatives are abused. The chain of financial transactions becomes longer, and asset securitization turns a product worth one US dollar into more than ten US dollars, which seriously exceeds the original value.
Among them, Merrill Lynch and Lehman Brothers were the most prominent, so they were also the two largest financial institutions that declined or even went bankrupt because of this.
Some people said that the root cause of this was the decline in real estate prices, or even the collapse of the real estate market, which led to an increase in the default rate. It was even closely related to the recession of the US automobile industry. Otherwise, there would not be so many unemployed and the default rate would not be so high.
But in fact, this was all because of the US government.
Around 2003, when Bush's housing plan was implemented, the US bank's interest rate was only 1%. In less than two years, the interest rate dropped from 6.5% to 1%.
At that time, the real estate prices were rising at a much higher speed.
Therefore, many people realized that the interest of loans was not as fast as the rise of real estate. It was very cost-effective to buy a house now.
After they bought the houses, the Federal Reserve kept raising interest rates.
By the end of 2007, the interest rate had returned to 5.75%, which meant that many people's loan interest had increased by more than five times!
In addition, many employees of financial institutions deliberately left loopholes in the contracts, allowing the interest of the loans to rise with the Federal Reserve's adjustments, sharply increasing the pressure on many people to repay.
Why did the US adjust interest rates? It was because they needed to increase their income. The US government was so poor that they had no money.
The US economy used to be so good. How did it suddenly run out of money? It was because of war!
The US started wars in Iraq, Afghanistan, and other regions. One reason was to show off its military strength, and the other was to prevent internal conflicts from erupting. But the most fundamental reason was that Iraq decided to change the US dollar to Euro for oil.
The US is afraid that other OPEC countries will follow suit, and the status of the USD will decline. The few wars that the United States had waged were all related to this.
The US politics had always been supported by financial groups. The financial groups were mainly in the energy, finance, and military industries. Even Microsoft, the world's number one Fortune 500 company, Wal-Mart, is nothing.
The US had thought that 50 to 60 billion USD was enough for the wars in these two regions. This will allow them to achieve their political goals by linking oil prices to the USD, and at the same time, show off their strength, and suppress the growth of the Euro and Asia's economies.
But because of Europe and Asia's support for the Middle East, the US did not manage to end the war in a short period. Instead, the war dragged on for a long time, and the US's expenditure increased from tens of billions to almost 800 billion USD!
With such high expenditure, how can the US not increase taxes? If the US government did not think of ways to increase revenue, the US government would have gone bankrupt!
The root cause was the US government's decision and George W. Bush's policies.
Compared to Clinton, George W. Bush was much worse. Bill Clinton had also started a war in Kosovo. At that time, the Euro was challenging the USD.
In the end, Bill Clinton successfully changed the Euro from 1: 1.17 USD to 1: 0.86 USD. The USD did not appreciate, but the Euro depreciated.
During Bill Clinton's term, the Asian financial crisis happened. Other than Hua Xia and a few other countries, the fastest growing regions in Asia, including Japan, suffered heavy losses.
George W. Bush might seem to be doing well in the US economy, but the US economy is in trouble. Those financial groups had completely messed up the US financial market.
The US had many investment banks in the past, and these investment banks are China's securities companies. These investment banks went bankrupt one after another.
The last two investment banks on Wall Street are Goldman Sachs and Morgan Stanley. These two investment banks had started to apply to be converted to commercial banks. This way, they can absorb deposits.
With the cash inflows, they can tide over the financial crisis without the government's help.
Of course, although they are commercial banks, they still have investment banking businesses.
But these two top investment banks are going to be converted to commercial banks, and this shows that the US government cannot handle the financial crisis.
All these years, Tong Yong Motors, Chrysler Automobiles, and Ford had announced their losses in the first half of this year and hope the government can help them.
Among them, Ford is still fine. They had sold some of their businesses and can tide over the financial crisis with their own capabilities. But Tong Yong Motors and Chrysler are different. They are also preparing to apply for bankruptcy protection!
Feng Yu looked at the news on the internet. This financial crisis had happened, but it is not serious enough. Seems like there is a need to push it further!
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