When a crisis breaks out, it often seems sudden, but the clues that lead to the crisis are often accumulated in risky prosperity stages, such as the subprime mortgage crisis in the United States.
From the late 1980s to the early 1990s, American real estate experienced more than ten years of prosperity. The sales volume of houses keeps setting a new record, and the house price also increases by more than 10% every year. From the perspective of economic growth, after the bursting of the Nasdaq stock market bubble in 2000, the Federal Reserve maintained a relatively loose monetary environment, which stimulated the prosperity of the real estate market. Now it is often criticized as "replacing another bubble with one bubble". Because of this, while mainstream financial institutions are dismissive of the subprime mortgage crisis, Greenspan, who has maintained a loose monetary policy during his tenure, has always stressed that the subprime mortgage crisis may evolve into a wider financial crisis, which shows that he has a clear grasp of the substitutability between these bubbles.
How did the subprime mortgage crisis in the United States begin? How will the road to crisis continue?
In fact, 10 years ago, the total real estate assets owned by American families did not exceed $8 trillion, accounting for about 40% of the total family assets; By the end of 2005, the total value of American family real estate assets has risen to $265,438 +0.6 trillion, accounting for 56% of family property. This continuous rise in real estate prices masks a series of deep-seated problems of subprime mortgage securitization, such as insufficient risk assessment ability and insufficient liquidity of securitization assets, which are not easy to be exposed during the continuous rise in real estate prices.
However, as the saying goes, the truth comes out. Since mid-2006, the American real estate market has begun to cool down and the real estate price has dropped. In September 2006, the median price of new houses dropped by 9.7% compared with the same period of last year, which was the biggest drop in the past 36 years. This makes the problems covered up during the period of rising house prices increasingly clear. According to a recent report released by Lehman Brothers, about 30% of Americans who got subprime mortgages in 2006 failed to repay their loans in time, and about 2.2 million people in the country may lose their homes because of their final inability to repay their loans. Affected by this, about 20 lending institutions and mortgage brokerage companies have gone bankrupt in recent months.
From the specific reasons, it can be roughly summed up in the following aspects:
First of all, the rapid development of derivatives has promoted the decentralization of risk-takers, and the global financial market has increased the contagion and influence of this risk. American financial circles often compare the current subprime mortgage crisis with the bankruptcy of savings and loan institutions in the 1980s. In the storm of savings and loan institutions, the explosion point of risk is certain, that is, those poorly managed savings and loan institutions; The losses are also basically measurable, basically loans from these specific institutions in the real estate field; The scope of risk contagion can also be roughly determined, that is, the institutions involved in the relevant deposit and loan business. Therefore, in such a traditional financial risk disposal, its impact on the financial market is limited and measurable.
In sharp contrast, the risk takers of the subprime mortgage crisis are almost global, from the United States to Europe and emerging markets including China; The measurement of risk loss is also uncertain, on the one hand, because the subprime loans of securitization are distributed in different financial institutions. At present, large financial institutions have basically assessed and disclosed their losses in the field of subprime loans, but many small and medium-sized financial institutions may not know how to assess their losses in the field of subprime loans. At the same time, due to the lack of liquidity of securitized subprime loans, this evaluation becomes difficult. The market is worried about uncertainty, and subprime mortgage has great uncertainty in many links, which can be said to be one of the fundamental reasons why subprime mortgage has caused such a big market impact.
Secondly, the rapid expansion of real estate credit under the condition of rising real estate prices has accumulated potential risks. In the process of expanding the scale of housing credit, because of market competition or in the name of financial innovation, the market access standards of housing consumers are often lowered, and some unqualified or insolvent consumers are allowed to enter the housing credit market. Some sub-prime financial companies have lowered the threshold one after another, and even introduced loan methods such as "zero down payment" and "zero documents". Without checking income and assets, the lender can buy a house without funds and without providing any proof of repayment ability.
Third, the rapid expansion of credit in the low interest rate environment, coupled with the unique interest rate structure design, has also increased the difficulty of objectively evaluating the repayment ability of subprime loans. The interest rate of subprime mortgage often fluctuates with the market after a certain number of years. Once the market wind changes, these loans may become high-risk varieties. Originally, when the real estate price rose, the lender could repay the loan by selling the house. Now that house prices are falling and interest rates are rising, more and more subprime borrowers are overwhelmed.
Some experts predict that the United States will enter an economic crisis in 2008. Will the American subprime mortgage crisis become the fuse of the economic crisis? Even deep enough to affect the global economy, thus triggering a global economic crisis?
The subprime mortgage crisis has indeed caused a lot of damage to related industries in the United States, but it is still too early to judge whether it will trigger an economic crisis in the United States.
Judging from the data disclosed at present, the economic prospect of the United States is still stable and progressing, and the overall strategic adjustment of the US dollar is the basic trend. Among them, the American manufacturing industry just got rid of the previous downturn and achieved the sixth consecutive month of growth in July. According to the forecast of the Federal Reserve, the national GDP growth rate is expected to remain at 2.5%-3% in 2007; Judging from the employment situation, in the first seven months of 2007, the average number of new jobs in the United States was 1.36 million per month. It is estimated that the annual unemployment rate will remain at 4.75%, which is close to the so-called "natural unemployment rate" of 4%. So the American economy has not changed substantially, and the situation is not as serious as some people think.
Secondly, the current American financial market has enough flexibility, liquidity and depth. Although the scale of subprime bonds has expanded rapidly, it is still not as good as the bond market. However, the proportion of American subprime mortgage market in American real estate is more limited. According to statistics, by the end of 2006, only 45% of American subprime loans could not or could only provide a small amount of income certificates and guarantees, and only 30% of these people could not repay their loans when they were due that year, and the sum of the two was less than 20%, and it will not exceed this figure in 2007. Therefore, perhaps this turmoil will cause some institutions and investors to suffer losses, but in the long run, the impact on financial markets may be limited.
Third, the large investment banks in the United States have less commitment to subprime mortgage companies. In recent months, the number of financing transaction commitments disclosed by many companies is on the rise. However, due to offsetting the losses caused by providing generous conditions, the income of these companies is generally maintained at about 2% of the total expenditure. In other words, even if unsold bonds are forced to be sold at low prices, the losses suffered by brokers are limited.
Finally, asset securitization actually plays the role of "risk diversification" while diversifying risks. Even industries that have been hit hard, such as hedge funds, have established corresponding short positions, which provides conditions for preventing the crisis damage from sinking further. In addition, from the perspective of the whole market, investors still have confidence in the market because they have not realized the impact of subprime loans so far. Although the stock market has been hit hard, it has begun to rebound, which just creates an opportunity for investors to adjust their positions or stop losses. At the beginning, the global stock market evaporated 2.66 trillion US dollars in two weeks. The most important reason was the stock market panic caused by investors' lack of confidence in the credit market, and investment banking stocks and financial stocks such as Goldman Sachs were the first to bear the brunt. It can be said that the psychological factors of the stock market crash are greater than the substantive factors.
Of course, it is also necessary for us to be cautious about the direction of the American economy. In particular, whether the next interest rate policy will run counter to the expectations of the financial market will become a key factor; At the same time, the deep-seated problems in the American economic structure also need to be solved in time.
In fact, at present, the foundation for supporting global economic growth still exists. At present, the reconstruction of the credit market order is a benign development process, and the global financial turmoil triggered by the devaluation of the Thai baht ten years ago will basically not repeat itself.
The fundamentals of the global economy remain strong. The annual report recently released by the Bank for International Settlements predicts that the good development trend of the world economy is expected to continue in the next two years, but the growth rate will slow down, which may be slightly lower than 4.5%; However, not long ago, the International Monetary Fund once again raised its global economic growth forecast for this year and next to 5.2% from 4.9% in April 2007. At the same time, it predicts that the economic growth of Japan, the euro zone and many emerging markets and developing countries will be better than the original estimate.
As a strong driving force of global economic growth, the overall economy of emerging economies, especially Asian countries, has not been affected. On the one hand, these countries generally have abundant foreign exchange reserves and have the ability to buy back their own currencies in the international foreign exchange market in order to avoid the currency crisis caused by rising global interest rates.
In short, although the subprime mortgage crisis has had a certain impact on the bond market, liquidity and capital market in the United States and even the world, as the global economy is still facing a good development environment, as long as the relevant financial institutions strengthen risk management in time and the policies of relevant countries are handled properly, the United States and the global economy may undergo short-term adjustment, but it is unlikely to fall into economic crisis.
At present, to what extent can the central banks of major economies inject capital into the short-term financing market to curb the spread of the US subprime mortgage crisis?
The central banks of the United States, the European Union, Japan and Canada have injected huge amounts of money into their short-term financing markets to alleviate the lack of liquidity. Although it is criticized by the market for conniving at the risks brought by market speculation, it has formed moral hazard, but objectively it does help to ensure the orderly adjustment process, and at the same time it also helps to enhance investors' confidence and avoid the expansion of the crisis. At present, although this rapid relaxation of liquidity may have some medium-term negative effects, the effect of stabilizing the market atmosphere in the short term is still worthy of recognition.
Judging from the short-term development trend, the United States is facing a policy conflict between restoring market confidence and coping with rising inflation. On the one hand, the current major financial markets are still unstable and market confidence needs to be restored; The real estate market in the United States is also in a state of deep adjustment, which will affect other aspects of the American economy, including the decline of the automobile industry, the weakness of real estate-related industries, and the reduction of corporate investment expenditures. More importantly, the decline of the real estate market will also affect related financial markets, not only the subprime mortgage market, but also the entire mortgage bond market, as well as the liquidity and capital level tension in the credit market, which may aggravate and worsen the current US financial market; Affected by comprehensive factors such as the downturn in the US housing market, domestic consumption also showed signs of decline. On the other hand, due to the impact of the aftermath of the subprime mortgage crisis in the United States and the relatively strong economic growth in the United States, inflation factors have begun to appear. This shows that the Fed is facing the dual pressures of interest rate cuts and interest rate increases. By directly injecting liquidity into the short-term financing market and opening the discount window, the Fed effectively eased the pressure of interest rate cuts, and at the same time transferred the pressure of interest rate adjustment to other economies. This is obvious in the current unbalanced global economic and financial development, especially in the case of different degrees of disasters in this crisis, but it may also extend the time required for the United States to recover from this crisis.
From the perspective of the European Central Bank, in fact, from the perspective of the degree of impact and loss, European financial institutions are far more than American financial institutions, and even some market participants believe that the financial crisis in the United States again and again is actually mainly paid by European financial institutions. Therefore, in the face of the strong impact of the US subprime mortgage crisis, European central banks took the lead in injecting liquidity into the market.
Judging from the actions of central banks in the Asia-Pacific region, the market has begun to think that central bank policymakers in the Asia-Pacific region have successfully restored the market to a delicate "unstable calm state" through huge capital injection. At present, because the market has not accurately judged the possible impact of the subprime mortgage crisis, commercial banks in various countries generally reduce short-term credit expenditure, and the financial system in the Asia-Pacific region clearly shows signs of credit crunch and rising loan interest rates. However, the central banks of these countries have taken precautions to alleviate the market tension in time, so that the economies in the Asia-Pacific region can still maintain the stability of liquidity after passing through the high-risk period.
Of course, the central banks of major economies have intervened in financial markets, which makes the short-term financing market indeed have a lot of uncertainties. At the same time, there is no obvious turning point in the American real estate market. The high loan interest rate in the market may lead to a further increase in the default rate, which also makes central banks, especially the Federal Reserve, face a long-term tight monetary situation after a large amount of liquidity is put in. The subsequent policy operations of central banks will have an important impact on the health and stability of global financial markets.
What is subordinated debt?
The so-called subordinated debt refers to the long-term debt of a commercial bank with a fixed term of not less than 5 years (including 5 years). Unless the bank closes down or liquidates, it will not be used to make up for the daily operating losses of the bank. The creditor's rights of this debt rank behind deposits and other liabilities. The condition that subordinated debt is included in capital is that it cannot be guaranteed by banks or third parties, and it must not exceed 50% of the core capital of commercial banks. Commercial banks should convert subordinated term debts into "subordinated term debts" in their balance sheets within five years before the maturity of subordinated term debts. If the remaining term is more than four years (including four years), it is counted as100%; The remaining period of 3-4 years, 80%; 60% of the remaining period is 2-3 years; 40% if the remaining term is 1-2 years; If the remaining term is within 1 year, it will be counted as 20%.
The procedure of issuing subordinated debt is that commercial banks can decide whether to issue subordinated term debt as secondary capital according to their own conditions. When issuing subordinated term debt, a commercial bank shall apply to the CBRC and submit the required materials such as feasibility analysis report, prospectus and agreement text. The financing method is directed by the bank to the target creditor.
On June 5438+February, 2003, China Banking Regulatory Commission issued the Notice on Subordinated Term Debt Included in Tier 2 Capital, and decided to supplement the capital structure of China's commercial banks and include subordinated term debt that meets the prescribed conditions in Tier 2 capital of banks. This makes it possible for commercial banks to broaden capital financing channels and increase capital strength by issuing subordinated term debts, which is helpful to alleviate the situation that China's commercial banks are inherently short of capital and have a single capital replenishment channel.
Compared with the convertible bonds that listed banks like to issue in the early stage, subordinated debt belongs to equity financing, while the former belongs to debt financing. Subordinated debt will not be converted into shares at maturity, that is to say, it will not be raised through the securities market, but from institutional investors to supplement the bank's capital. For banks, there is no risk in issuing convertible bonds. After maturity, it will be converted into shares, and the net assets per share will increase without repayment of the principal. However, there is pressure to repay the principal and interest when the subordinated debt expires, and the net assets will not increase. Therefore, banks must consider the pressure of repayment of principal and interest when financing through subprime loans to enhance their profitability. On the contrary, for investors, the risk of buying convertible bonds is of course much greater than that of subordinated debt, which is mainly aimed at institutional investors and has little impact on secondary market investors.
Market participants believe that the CBRC's move is the most substantial benefit for the banking industry in the near future, which can supplement the bank's capital shortage and alleviate the current situation that banks blindly reach out to investors in the secondary market. In the second half of 2003, bank stocks were sold off by the market because they frequently issued refinancing plans. The issuance of subordinated debt can alleviate the contradiction between banks and the secondary market.