“格林斯潘狂言：中国才是全球泡沫的祸首！”

这格林斯潘真是老糊涂了。

转一篇文章。谢国忠在格林斯潘还火的时候批评他的经济政策，最后不得不离开Morgan Stanley。

　　谢国忠：一个时代的结束
　　点击查看译文


　　Policymakers around the world have not shown understanding of the current crisis. It is the end of a two decade-long bubble. It is the end of the asset-based economy. It is the end of productivity dividends from IT revolution and globalization. Perhaps one tenth of the income in the global economy was from bubble activities and is permanently lost. The income will shift elsewhere. The resulting demand is different. The supply side has to change to meet a different demand mix in the post bubble economy. If governments don’t understand, the world may suffer a lost decade ahead. No, it is not Japan in the 1990s. It is Japan of the 1990s plus inflation, aka stagflation.

　　

　　Stock markets around the world have fallen close to or below the lows of November 2008. Concerns over bank bailout uncertainty and deepening recession drove the decline that reversed the 20% bounce from the lows of November 2008. The delays in releasing details by the US Treasury on its bank bailout plan led to suspicions that it didn’t know what to do yet. The exposure of European banks to Eastern Europe caused concerns over their solvency. If big global banks remain mired in bad assets, credit system won’t function normally, and the global recession has no hope to end soon.

　　

　　On the economic front, the news is grim: Japan’s GDP contracted by 3.3%, Euro-zone 1.5%, and the US 1% in the last quarter of 2008. The US fared better because it piled up inventories, which would lead to a worse situation later. The global economy probably contracted by 2% in the last quarter of 2008 from the previous quarter, the worst decline since the World War II. The first quarter of 2009 won’t be better. The January trade data of East Asian economies already cast a dark shadow over the quarter. All the data are portraying a global economy amidst collapsing.

　　

　　Three forces are driving the collapsing. First, the collapse of Lehman Brothers triggered a sharp increase in credit cost. Its impact was similar to increasing interest rate by 3-5 percentages by all the central banks together. To cope with high cost of capital every business has been running down inventory, which is the cheapest source of fund raising. In commodity industries, inventory unwinding has been dramatic. Most commodity users kept inventories high out of fear of price rise or for speculation. When commodity prices reversed, they were stuck with a depreciating asset and had to run it down as quickly as possible. I suspect that this force accounts for half of the economic contraction at present.

　　

　　Second, faced with rising credit cost and declining demand, businesses around the world have cut their capex sharply. This force is most visible in the IT sector. Japan, Korea, and Taiwan are most exposed to it. Their exports have declined dramatically, much more than China’s that has a broader mix. The tech heavy NASDAQ has lost half of its value from its recent high in 2007, despite its terrible beating during the tech burst in 2000-03 that saw the index down by 80% from the 2000 peak. (NASDAQ today is about at the same level as ten years ago. Despite technology revolutions like internet, mobile phone, digital TV over the past decade, investors have not made money in NASDAQ. It demonstrates that there is no direct relationship between making money and technology.) Semiconductor that is a major input into IT equipment is hit particularly hard. The Philadelphia Semiconductor index is down 60% from its 2007 high. Many semiconductor companies on NASDAQ are trading at market capitalization below 10% of their sales revenue. I suspect that the capex suspension is one fourth of the current economic contraction.

　　

　　Lastly and the most obvious, the negative wealth effect from the evaporation of $50 trillion paper wealth is cutting into consumption. The rule of thumb suggests that the negative wealth effect is about 5%. As two thirds of the global economy is consumption, ceteris paribus, the global economy can contract by 3% just due to this effect. Its impact is not all felt yet. Most consumers will adjust slowly.

　　

　　The inventory cycle and capex reduction are temporary factors in pulling down the global economy. At some point, inventories are ago, and capex is too low to cut. I suspect that inventory destocking will be completed in the first quarter of 2009, and capex stablizes in the third quarter. The global economy will probably show stability then. As fiscal stimulus kicks in around the word, we may see a significant bounce in the global economy in the second half of 2009. But, stability or stimulus-inspired bounce won’t lead to sustained recovery. Consumption weakness will haunt the global economy for a long time. The over-levered western consumer needs to pay down debt for years to come. Rising unemployment will make the problem worse. The western consumer-the driver of the global economy for the past decade is down and out for good.

　　

　　Governments must understand the lasting nature of the current downturn. The bursting of the credit bubble triggered the fall. The mismatch between income and demand could delay a sustainable recovery for years. During the bubble era income distribution became more and more skewered towards asset-based activities. For example, the profit share of financial activities among the US listed companies quadrupled. Similar trends happened in many countries. The income for the workers in finance increased in a similar fashion. The bulging income from the financial sector was quite concentrated among a small group that spent money in luxuries and financial investment. This is the most important factor for rising concentration of income distribution around the world in the past decade.

　　

　　The bursting of the bubble will destroy most income in financial activities. The amount lost could be one tenth of GDP. From limo drivers to luxury homebuilders the multiply effect from the financial meltdown will leave unemployment across many industries and countries. The recovery becomes sustainable only when supply side is restructured to cater to a different demand mix. This process would take a long time to complete. But, governments could prolong the downturn by making the wrong decisions. For example, governments around the world are engaging in fiscal stimulus. To some extent they are choosing winners. If the choices of spending are way off what market would support, the stimulus would delay recovery. Stimulus is necessary in a severe downturn like now. It just needs to match the structural changes to come.

　　

　　Let us think through the problem facing an unemployed banker and his ex-driver. The banker was making 20 times his driver’s. He could splash and hire the driver. Of course, in addition, he was paying for his florist, tailor, maid, masseur, etc. On average, he spent 70% of his income on the equivalent of 15 people like his driver full time serving him and put 30% back in financial investment like in a hedge fund. Now, the ex-banker moves to Kansas City and becomes a high school teacher. His current income is the same as his ex-driver’s. He drives to work, cleans his own house, and forgoes massage. The economic problem is what happens next to the fifteen people who were serving him.

　　

　　The banker’s income before came from asset market activities, essentially redistributing income to himself by manipulating asset prices. As he stops doing that, the cost for economic activities goes down by the amount equal to his income. But, the people serving him have lost their income. The net result is that the economy contracts by the same amount as the banker’s income plus 15 unemployed people. In addition, the 15 unemployed people can’t spend. The multiplier effect magnifies the banker’s income contraction, possibly by a factor of 2. The world looks worse off with a smaller economy and more unemployed.

　　

　　When the government steps in to stimulate, it is essentially borrowing the equivalent of banker’s ex-income to spend. The purpose is to keep the 15 people employed. However, the government won’t spend on drivers, nannies, florists, or masseurs. The mismatch means the government can’t get the economy back with stimulus. It shouldn’t. The driver must find new consumers. The banker is gone for good. What the government should target is to stop the multiplier effect from the 15 people that the banker no longer hires. If these 15 people get unemployment insurance, it goes a long way to mitigate the multiplier effect. The economy can come back when it is restructured so that the 15 people find new employment.

　　

　　The world will eventually be better off. The banker was just redistributing income to himself. The money would lead to more productivity if it could be directed to more productive people. It’s just that the process of adjustment could be long. The world has experienced an asset-based economy for two decades. It has led to extreme income distribution. In the last few years, large manufacturing companies like GE and GM came to depend on financial activities for profits. Their industrial activities were really used as a fund raising platform. In China manufacturing companies depended on property development or stock market speculation for profits. The profit margins from their main businesses kept dwindling. Reversing the trend of the past two decades would take a long time. If governments don’t understand and try to bring back the ‘good time’ of the past, it will prolong the adjustment. The risk is high that the world may suffer a lost decade.

　　

　　Japan suffered a lost decade characterized by stagnation, rising fiscal deficit, deflation, and strong yen. These characteristics were supported by Japan’s high savings rate and export competitiveness. The world as a whole could not replicate Japan’s experience. The US, for example, must borrow from foreigners to fund its budget deficit. Its currency is likely to be weak for years to come. As dollar is the currency for trade, capital flows and foreign exchange reserves, its weakness will lead to worldwide monetary expansion. The loose monetary condition will sooner or later lead to commodity speculation. The resulting inflation would lead to wage demand by organized labor, which opens up the channel between money supply and inflation. When I look at the government policies around the world, I fear for prolonged stagflation ahead.

　　

　　While we need to worry about the long term stimulus effectiveness, the short term effectiveness is not yet secure. With global banks still mired in toxic assets, they won’t be able to lend normally. If stimulus pushes up economic activities, businesses that want to invest to meet new demand may not get loans. In an upward virtuous cycle, rising demand leads to investment that leads to more jobs and more demand. Without a functioning banking system, this virtuous cycle is not possible. Instead, stimulus just perks up economy temporarily, i.e., it would be wasted.

　　

　　The immediate task is to repair the banking system, especially in the US. The US Treasury is promising overwhelming force now and details later. This may be a stalling tactic. The prices of big bank stocks and toxic assets already assume nationalization. The US government is right to be concerned of the permanent damage to its financial system from nationalization. But, to avoid it, the government has to grossly overvalue the toxic assets. The US taxpayers wouldn’t agree to throw taxpayers money at failed banks. If the US doesn’t fix its banking system, the $780 billion fiscal stimulus will be wasted.

　　

　　The right approach is to nationalize these banks, separate the toxic assets into a different entity, and relist the healthy halves. The proceeds from selling down the healthy banks could be used to pay for absorbing the losses from disposing toxic assets. This is what China did to repair its banking system. It may be the only way out for the US.

　　

　　Second, the West must contain the cost of its entitlement programs, beginning with healthcare in the US. If the US doesn’t institute radical reforms to contain its healthcare cost, it will go bankrupt, possibly within a decade. If Europe doesn’t reform. its pension and unemployment benefits, it will have to raise taxes or run bigger budget deficits permanently, and its economy would stagnate.

　　

　　The biggest economic challenge among developed economies is aging, which leads to escalating pension cost and exponentially rising healthcare cost. While the wrong policies allowed the credit bubble to happen, the desire to defend lifestyle. during escalating social overhead cost associated with aging was a major contributing factor. It allowed the western economies to delay the hard choices. The current system was set when aging was not a big challenge. The only viable course forward is to increase retirement age and ration healthcare access.

　　

　　Third, emerging economies must decrease export dependency. Export-led development usually reflects weaknesses in political economy-the inability to efficiently turn savings into investment. The causes are usually lack of the rule of law and income and wealth concentration. The export orientation is to import the global system. The model has worked for a long time. From Japan one century ago to the Asian Tiger economies fifty years and China thirty years ago, the model has made fast development possible.

　　

　　The problem with the model today is that it is crowded. Developing economies are already 30% of the global economy at current price and nearly half on a purchasing power basis. The export model cannot thrive for shortage of customers. Developing countries have to trade more with each other and develop domestic demand. It would require painful reforms to their political economies. The heart of the reforms is property rights and income distribution. The two must go hand in hand. Lack of domestic demand tends to result from income concentration, which is due to uneven playing field in opportunities. Many developing countries, like South American and Southeast Asian countries, have stagnated in the past decade due to their inability to reform. their political economies.

　　

　　Bursting of the credit bubble is triggering the biggest recession since the World War II. Repairing the global economy requires complex and difficult reforms. Simple stimulus couldn’t bring back prosperity. While stock markets may improve in the second and third quarter, it is merely a bear market rally. When inflation concerns hit the market towards the end of 2009, stock markets could fall sharply again. Indeed, the ultimate bottom in the current cycle could happen in 2010.