Fallacies Cannot Change the Facts

Published in Xinhuanet
(China) on 06 January 2009
by Huang Xin (link to originallink to original)
Translated from by Eugene Tan. Edited by Louis Standish.
Burdened by the Wall Street financial storm, the global economy has fallen into a pit and up until now, has not been able to get out. At this moment, Treasury Secretary Henry Paulson, who will soon step down, has issued a shocking statement claiming that the high savings rate of China and other newly emerging markets knocked the global economy off-balance and is the reason for the financial crisis. The Chairman of the Federal Reserve Ben Bernanke directly blamed the large savings of foreign countries, especially China, for the American real estate bubble.

This type of “brilliant remark” gave the world a shock, provoking endless comments from many media sources.

However, fallacies cannot change the facts. As everyone knows, what triggered this crisis is American subprime lending, and the factor that directly triggered America’s excessive credit spending is the country’s own long-term low interest policies.

Ever since America was lifted out of the 1990’s economic recession, the ultimate goal of its currency policy has been ample employment, stable prices and preservation of long-term low interest rates. It is obvious that a low interest rate has been the policy that America started pursuing many years ago, and at that time, whether it was China or another newly emerging market, there was no large trade surplus, let alone large savings. Therefore, Paulson’s statement about emerging markets causing low interest rates actually confuses cause and effect.

In 1971, President Nixon unilaterally announced that he was taking the U.S. dollar off the gold standard, and the dollar continued to become the international currency standard, used by other countries as a reserve asset. Until today, there is no other country whose economic power matches that of the U.S., and the dollar’s powerful position has had no fundamental change. Under the current conditions, China and other developing countries still do not have enough strength to lead the world economy and could not have created the current crisis.

Confucius once said, “When meeting those who are not virtuous, we should turn inward and examine ourselves.” Even among America’s academic circles, some view America itself as the reason for its own continuous drop in savings rate and long-term worsening of its current account. For various reasons, what people widely criticize is the entire society’s habit of excessive consumption, misuse of financial derivatives, and lack of market supervision.

After the crisis broke out, the stock market, one of the barometers of the global economy, began to wreak its “bear” havoc. The 65.4% drop in China’s Shanghai Composite Index in 2008 ranked seventh when compared to a list of drops in other global stock markets. In first place was Iceland’s OMX in Reykjavik, whose index reached a 94.4% drop.

Looking at the top 20 spots on the list, we do not see America’s three major stock market indicators. Statistics show that although New York’s three major stock market indicators fell to their levels from 10 years ago, their drops are small compared to those in other stock markets. Analysts find that when problems arise with the capital chain in the country, American investment institutions will de-leverage and sell large quantities of overseas assets, causing emerging markets to suffer serious withdrawals of foreign capital. This is why the crisis happened in America and caused the global economy to suffer.

If we compare the American economy to a car, then emerging markets have become this car’s windshield in this prolonged crisis. We can infer that if the risk in capital markets were greater, then the damage done to China, this piece of glass, would be more serious. Now that this car has broken down, can we really blame the windshield?

We should admit that the reasons for this crisis include imbalances in global trade and investment, but the relationship between cause and effect should be made clear. It is the indulgent supervision and excessive investment of the U.S. dollar that caused the global problem of excessive liquidity to become more serious and that caused inflationary pressures to continually increase. In the end, it has become hard to carry on the low-interest policies of the U.S. dollar.

When an honest man gets caught in a predicament, he will certainly start by examining himself. However, if he believes he is always right, he will blame everyone and everything except himself and push responsibility onto them. When we look back, we see American realtors, investment banks, and insurance companies who acted like multi-level marketers playing with a variety of financial derivatives; we see Wall Street’s elite blowing a bigger bubble, gaining annual salaries of tens of millions of dollars, even over a hundred million. Where were Paulson and Bernanke? And where were the people in charge, who were talking about the world’s most advanced, most perfect American financial system?


评论:谬论改变不了事实

新华网北京1月6日电:评论:谬论改变不了事实

新华社记者黄歆

受华尔街金融风暴拖累,全球经济陷入泥淖,至今不能自拔。此时,即将卸任的美国财长保尔森却放出惊人之语,说中国等新兴市场国家的高储蓄率造成全球经济失衡,是导致金融危机的原因。美联储现任主席伯南克则干脆把美国房地产泡沫归咎于外国人尤其是中国人的高额储蓄。

这种“高论”一时使全世界错愕,众多媒体也对此品评不已。

然而,谬论是改变不了事实的。众所周知,这次危机的导火线是美国的次级房贷,而导致美国信贷消费过度扩张的直接因素就是其国内长期的低利率政策。

自90年代走出经济衰退以来,美国一直以充分就业、价格稳定和长期保持低利率作为其货币政策的最终目标。很明显,低利率是美国多年前就开始奉行的政策,那时无论是中国还是其他新兴市场国家,都还没有多大的贸易顺差,也谈不上高额储蓄。因此,保尔森关于新兴市场国家造成低利率的说法刚好颠倒了因果。

从1971年尼克松政府单方面宣布放弃美元与黄金挂钩,到美元惯性地继续作为国际中心货币被越来越多的其他国家用作储备,直到今天,还没有另外一个国家的经济实力可以与美国抗衡,美元的强势地位也没有根本改变。在此情况下,中国和其他发展中国家尚无足够实力主导世界经济发展进程,也不可能是眼下这场危机的始作俑者。

孔子说过,“见不贤而内自省也”。即使在美国国内学术界,也有观点认为美国的储蓄率持续下降,经常项目长期恶化,是美国自身的原因。在诸多原因中,被人们广泛诟病的就是全社会超前消费的习惯、金融衍生品的滥用和市场监管的缺失。

危机爆发后,全球经济晴雨表之一的证券市场“熊”风肆虐。中国的上证综指以65.4%的跌幅在2008年全球股市跌幅排行榜上位列第七,排名第一的冰岛雷克雅未克OMX指数跌幅更是高达94.4%。

在前20名里,我们并没有看到美国三大证券交易所。统计数字显示,纽约股市三大股指虽然全部跌回10年前的水平,但跌幅远远小于其他地区。分析人士认为,当美国投资机构在本土的资金链出现问题,他们就通过低杠杆化来抛售海外资产,结果导致新兴市场遭遇严重的外资抽逃。这也是为什么美国发生危机,却使全球经济遭殃。

如果把美国经济比作一辆车,在这场旷日持久的风暴里,新兴市场就成了这辆车的挡风玻璃。可以推测,如果资本市场风险敞口更大一些,中国这块玻璃受损会更加严重。现在,车出故障了,难道要怪挡风玻璃吗?

应该承认,造成这场危机的原因里包括全球贸易和投资的不平衡,但因果关系必须搞清楚。是美元在监管层纵容下的过度投放,致使全球流动性过剩问题越来越严重,通货膨胀压力不断加大,才最终使得美元低利率政策难以为继。

当一个人陷入困境,如果他诚实本分,就必然会先从自身找原因;而如果他一贯自以为是,就会怨天尤人,把责任推到别人头上。回头看看,当美国的房地产商、投资银行、保险公司等像传销一样玩弄五花八门的金融衍生品的时候,当华尔街的“精英 ”们把泡沫吹大从中捞取数千万美元乃至上亿美元年薪的时候,保尔森或者伯南克在哪里?号称全球最先进最健全的美国金融体系的监管者又在哪里?
This post appeared on the front page as a direct link to the original article with the above link .

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  1. if you spend more than you make soon problems will arise.

    pretty simple economics.

    our economists have sold we in america a bill of goods. ie debt is good.

    I knew we americans would figure out a way to blame the rest of the world for our downfall.

    that is the mentality of arrogance and greed. or is it greed and arrogance.

    our mega industrial military complex and wars for profits for the few did not help.

    our corp fascist media refuse to tell the real story.

    reagan economics appeared to be working but look close that is when the problems really begin.

    the trickle down trickled up. reagan knew that the americans did not. most still dont.

    paradigms stay intact in spite of the evidence.

    we are witness to that now in america. paulson is about paradigms not economics.

    america will become a second rate country as soon as the world quits loaning us mega amounts of money for our overspending and wars for profits so they can sell us stuff. ie imperialism.

    americans dont have a clue they are imperialists. they think these wars for profits are for our freedoms. ie corp media brainwash.

    we are bankrupt in more ways than one.