The outbreak of Dubai's sovereign debt crisis has also awakened global concerns about the threat of US government debt to the global economy. From a global perspective, the potential risks of sovereign debt of various countries still exist, which puzzles the host government. Any risk caused by sovereign debt will spread market panic and become an "invisible black hand" that restricts the global economic recovery.
From Iceland to Dubai
Deja vu "national bankruptcy"
Since165438+1October 25th, Dubai Emirates, the second largest emirate in the United Arab Emirates, announced that Dubai World, the largest state-owned enterprise, had delayed payment of $59 billion in debt, and the worries caused by the debt crisis in Dubai continued to spread. From a global perspective, similar sovereign debt crises have occurred before, and there may be another wave of sovereign debt crisis in the future, which will greatly slow down the pace of global economic recovery.
From June 5, 2008 to 10, the "domino effect" of the global financial turmoil has already appeared. After the accidents of large western financial institutions, the spearhead was directed at small countries in Europe and Asia. The currency depreciated in an all-round way, the stock price plummeted and banks closed down one after another. At this point, a new term began to enter the global vision: national bankruptcy. Iceland's financial industry "implicated" Iceland as the first country called "national bankruptcy".
Will there be a global government debt crisis?
After a lapse of 1 year, Dubai is now in debt crisis, which is rooted in Dubai's long-term dependence on foreign investment and real estate development model. Iceland and Dubai went from rich to abject poverty and from rich to negative overnight. The root causes are the same: speculative finance and speculation, but the asset bubble is at the bottom and there is no support from the real economy. The sovereign debt crisis in the two places is exactly the same, and its warning significance cannot be underestimated.
The "national bankruptcy" derived from enterprise bankruptcy essentially refers to a country's sovereign credit crisis, specifically refers to the risk that a country's government defaults and cannot fulfill its foreign debt repayment obligations in time. The sovereign credit crisis of a single small country can be overcome through the assistance of the IMF or other big countries. Once the global sovereign credit risk is widespread, it means that the global "reluctance to lend" reappears.
It is reported that since some governments are borrowing heavily to save the financial industry and stimulate the economy, investors are mainly worried that the global private debt crisis may turn into a government debt crisis.
From Dubai to the world
Sovereign debt crisis plagues the world.
The key question of this debt crisis is: Does the sovereign debt of other countries have similar default pressure? Dubai may be the starting point of a series of sovereign debt turmoil.
Since the global credit crunch was the main tone in 2009, the global sovereign credit risk has been maintained at a high level. Developed economies such as the United States and Western Europe spend a lot of money to rescue the financial industry and stimulate the economy. Although its overall economic strength is strong, a large number of rescue costs have caused high government debt, deteriorating financial situation and insufficient financial liquidity, which will increase the risk of sovereign debt crisis. Some scholars and institutions even assert that the global sovereign credit crisis, including the United States and Britain, is about to break out.
In addition, emerging economies are weak in their own strength, high in economic fragility and difficult to adjust their economic structure, and sovereign credit default and sovereign credit rating downgrade occur from time to time. At present, investors are wary of the huge national debts of Eastern Europe, Ireland and Greece.
In the medium and long term, the stimulus policy has led to a substantial increase in global debt and a slow and difficult global economic recovery. The possibility that global sovereign debt risks continue to accumulate or even erupt cannot be completely ruled out. Any market panic caused by sovereign debt risk is an "invisible black hand" that restricts the global economic recovery.
From edge to core
The US debt threat has been awakened.
Some investment analysts believe that the Dubai debt crisis is an example and cannot reflect the trend of the global economy. In other words, the default or crisis of all "marginal markets" of international finance is not enough to impact the global financial market.
What the world really cares about is: does the United States, the "core" of the world's reserve currency, have a huge risk similar to the Dubai crisis? Judging from the development track of the subprime mortgage crisis in the United States, in order to maintain market confidence and stabilize the financial situation, the United States initiated the process of "nationalization" of financial institutions last year, and the Obama administration also launched a $780 billion economic stimulus plan, making the country the "last backer" of this once-in-a-century crisis.
The solution "stealth" appears.
The outbreak of the Dubai debt crisis has also awakened global concerns about the threat of US government debt to the global economy. Once the United States, which symbolizes the world's highest credit rating, shows signs of sovereign default, it will put the last straw on investors' already fragile confidence.
For the United States, the issuer of reserve currency, the way to solve its sovereign debt crisis is even more intangible. There are only two ways to solve it: one is to default through inflation; The second is to default through the depreciation of the US dollar (printing banknotes). Because the United States plays a key role in the global economy, its slight breach of trust or invisible default of sovereign debt will greatly destroy market confidence, endanger the stability of the international financial structure, and spread to creditor countries holding US Treasury bonds, aggravate global inflation and slow down the pace of global economic recovery.
Debt-ridden countries often show warning signs.
In the past 20 years, there has never been such a large-scale sovereign credit crisis. The guarantee cost of sovereign credit default swaps (CDS), which reflects the risk of government bonds, has risen sharply since the end of September 2008.
US: Public debt is rising.
By the end of 1 1, American public debt exceeded 12 trillion dollars for the first time, setting a record since the end of World War II, which made the commercial risks in the market quickly concentrate on sovereign risks. The plan to stimulate the economy and solve unemployment has become the main reason for the increase of American debt in the past 1 year.
Roubini, a professor of economics at new york University, believes that the proportion of public debt in GDP in the United States will rise from about 40% to 80%. In June 1 1, Obama warned that if the rising public debt is not controlled, the US economy may fall into a "double-dip recession".
Central and Eastern Europe: Credit risk is too high
At present, the overall sovereign credit risk of Central and Eastern Europe is relatively high. The foreign debts of Latvia, Hungary, Lithuania and Estonia all exceed their GNP. It is estimated that by 20 1 1, the total Greek national debt will rise to 135.4% of GDP, making it the most indebted country in the EU.
In February this year, the market was once worried about the solvency of the euro zone countries. The countries that the market is most worried about are Portugal, Ireland, Italy, Greece and Spain. Once more and more member States are insolvent, the EU's aid will be greatly reduced, even triggering the second wave of debt crisis in Europe.
Britain: sovereign credit is warned
165438+1On October 30th, Morgan Stanley released a research report on Britain, saying that rating agencies may downgrade Britain's AAA rating. Many large financial investment institutions around the world, including sovereign funds and pension funds, will not invest in AAA-rated and below national debt. Fitch Ratings, a credit rating company, has warned that Britain is the country most likely to be downgraded among developed economies, which is the first time that a major international investment bank has issued a similar warning.
Emerging economies: declining solvency
After the Dubai debt crisis, the cost of CDS guarantee in emerging economies around the world soared. The price of CDS in Saudi Arabia in the Middle East rose from 18 to 108, Bahrain from 22 to 2 17, and Abu Dhabi from 23 to 160. In addition, in Asia, the contract price of default insurance in Vietnam rose from 35 to 248, and Indonesia rose from 25 to 227. In addition, some highly indebted economies (such as Brazil and Russia). ) CDS prices have risen sharply.
The deferred repayment of Dubai's debt has aggravated the market's concerns about the debt problems of emerging economies. Affected by the financial turmoil, the solvency of many emerging economies continues to decline, and the sovereign credit situation may further deteriorate.