The reason for Japan's return to normal is not tourism consumption, but the purchasing power of domestic consumers. Even before the outbreak of COVID-19, tourism revenue only accounted for 2% of Japanese GDP, of which 865,438+0% came from domestic tourists.
Thanks to the ultra-loose monetary policy of the Bank of Japan, Japan quickly returned to normal. Of course, the price paid for this is the rising inflation rate, which has reached the highest level in Japan in 33 years.
But the situation in Japan does not represent the global economy. In my opinion, this reflects the pent-up demand caused by the COVID-19 epidemic. I'm afraid this may be just a flash in the pan, because the global economy is slowing down faster than many people expected.
Many experts said that due to the Fed's early implementation of the interest rate hike strategy, the economic slowdown is very large, but the speed is very fast.
Historically, the Fed basically raised interest rates by 25 basis points at a time, and it lasted for one or two years. But this year, Jerome Powell, chairman of the Federal Reserve, adopted a new strategy of raising interest rates in advance to reduce inflation as soon as possible.
Therefore, raising interest rates by 75 basis points has become the new standard, and we will see this situation again at the upcoming Fed meeting.
Unfortunately, the side effect of this bold strategy may be the sharp contraction of the global economy in the first half of 2023. Analysts agree that the US economy will fall into recession next year.
The "almost certain" global economic slowdown may cause a fatal blow to the already depressed world financial system. At present, the financial industry has many problems and is on the verge of collapse. We may see the collapse of commercial banks and investment banks, thus triggering a financial crisis similar to the Great Depression in the 1930s or the subprime mortgage crisis in 2008.
The Great Depression led to the collapse of the American banking system. 1933, about 40% (9,000 banks) went bankrupt.
In September 2008, Lehman Brothers filed for bankruptcy due to investment losses related to subprime loans, and the world faced more serious financial turmoil.
The American economy contracted by 2.6%, and the unemployment rate rose to 9.25% in 2009. It's not just the American economy that has suffered. In 2009, the global GDP growth also contracted by 1.3%.
If the current financial crisis really broke out as people feared, it would be completely different from these two examples. It will be much bigger and contain many financial problems.
However, we don't want to see the sudden collapse of the market or the unexpected bankruptcy of banks. Things will happen gradually, and small problems all over the world will emerge one after another. It's more like the story of "four frogs boiled in warm water": we felt that the water temperature was not very high until we were suddenly scalded alive.
The first frog is the downturn in the cryptocurrency market. Cryptographic currency peaked at 202 1, 1 1, with a market value of 3.048 trillion US dollars, but by the end of September this year, it had shrunk to 0.972 trillion US dollars. The investment loss of $2.076 trillion (up to now) is 3.5 times of the total bad debts in the subprime mortgage crisis. Fortunately, this kind of loss is shared by many investors, rather than a single investor like Lehman Brothers, so it will not have a large-scale impact, but it will have a slow and painful impact on millions of investors.
The second frog is Russia's foreign debt. Most of Russia's foreign exchange reserves were frozen, so it was forced to default.
The third frog is the surge in private debt. The International Monetary Fund estimates that private debt accounts for 156% of global GDP. Before the financial crisis in 2008, the proportion was 139%. This may lead to a large-scale default.
The fourth largest frog is the global bond market, with a value of about 124 trillion US dollars, which is three times that of the global stock market. At present, bonds have fallen by 10.2% on average, resulting in a net sale of only175.5 billion dollars in the first nine months of this year. Sooner or later, the bond market will encounter big problems.
Will the bank go bankrupt? It won't happen immediately, but it will go bankrupt.
It doesn't matter which big bank falls first, because other banks will follow suit like dominoes, just like the past two times.
Related questions and answers: What impact does the financial crisis have on ordinary people? Financial crisis is an inevitable phenomenon in the process of capitalist economic development. Financial crisis is often sudden, which will first destroy the orderly cycle of the financial system, lead to the decline of social direct financing and indirect financing functions, lack of liquidity, and the break of social capital chain, which will cause great damage to the economy.
The financial crisis will lead to a sharp drop in the prices of risky assets such as stock market, real estate and commodities, and a sharp decline in residents' wealth. The sharp drop in asset prices will lead to the imbalance between supply and demand in the market, the capital chain will easily break, enterprises will easily stop production or even close down, the unemployment rate will rise, and the credit of enterprises and individuals will decline, leading to an increase in bad debts of banks, forming a vicious economic cycle and forming a domino effect, thus causing large-scale bankruptcy of small and medium-sized banks, enterprises and individuals.
In order to save the economic crisis, the country will use unconventional means to stimulate the economy, so it will adopt large-scale quantitative easing monetary policy and fiscal stimulus policy, and then it will form an inflation situation, and the wealth of residents will further shrink. In the financial crisis, a country's middle class is the most vulnerable to losses, and the weakening of the middle class means the imbalance of social wealth structure, which will pose a major obstacle to the long-term economic development.
The financial crisis will cause the overall chaos in the financial market. This cycle is often an important speculative period of domestic strength capital, and it is also a favorable opportunity for international capital to attack the city. Therefore, the effective market will be destroyed, commodity prices will rise and fall in disorder, the local currency will easily depreciate sharply, the country's foreign exchange reserves will fall sharply, and the debts of the state, local governments, enterprises and individuals will rise sharply. In serious cases, developed financial institutions will take the opportunity to empty the country's wealth.
Therefore, the financial crisis will reduce the living standards and quality of ordinary people, reduce social welfare and security, and also bring unexpected disputes, such as savings losses caused by bank failures. The financial crisis is often accompanied by the rise of social discontent, the social crime rate will rise, and even serious social unrest will be caused, so the quality of life of ordinary people will be greatly reduced or even miserable during this period.
Because the financial crisis itself has the function of squeezing bubbles, the price of risky assets will fall sharply in advance. What residents should do in this period is to reduce venture capital and hold or buy precious metals such as gold to hedge financial risks. When monetary policy continues to be loose and reaches a certain cumulative effect, asset prices stabilize after oversold, so we can gradually reinvest in risky assets, such as investing in stocks and real estate, doing more commodity futures and spot, and reducing assets such as gold.