Long time in the future, Asia still faces large risks. Post-crisis era, eight issues of particular concern.

First, how the situation faced by Asia? Now that the economy seems to have to decline, and fiscal stimulus can exit? Japan withdrew from the 1997 fiscal stimulus, the results of more economic recession. If the United States, Europe, Japan and also exit the stimulus, we will not fall into the trap of global?

Second, how to deal with price distortions? Currently, the global prices are distorted. The basic reserve currency dollar global interest rates are now zero, the United States are adopting quantitative easing monetary policy, how much how much money to be printed. In this context, you can see three price: First, the price of capital goes to zero; the second is the low labor cost, because of cheap labor in emerging countries; Third, extremely high real estate prices. Three influence each other, into inflation.

Third, how to stimulate domestic demand in Asia? Developed countries “deleveraging”, economic growth must be slowed, imports and exports will be slow. How to boost domestic demand in Asia? If monetary policy, it will attract a large number of “hot money”, will also face inflation. What other means can be used?

Fourth, the current financial system and regulatory reform really effective? For the “too big to fail,” the reform did not start, not only to financial institutions “too big to fail” and more focused, even greater. Financial system’s assets is greater than 5 times the global GDP, not including financial derivatives. Financial derivatives as the real economy has become masters.

Fifth, who pays the bill for the financial crisis? Gains and losses from the global current account distribution, the surplus of 5 trillion in Asia, other countries have the basic balance of the Middle East oil states, about 2.9 trillion dollars, plus the total 7.9 trillion U.S. dollars, accounting for 49% of GDP. The GDP of 16 trillion U.S. dollars, accounting for about 25%. The current account deficit countries, including: Europe 2.6 trillion, 3.7 trillion the United States, Australia 0.5 trillion U.S. dollars, plus the total 6.8 trillion U.S. dollars, accounting for 23% of GDP. Liabilities of the country GDP about 29 trillion U.S. dollars, accounting for about 50%. GDP25% of the developing countries of the world to lend money to a share of global GDP50% of the developed countries. Now, the debtor country’s currency revaluation surplus requirements, which will cause much loss? If the 10% appreciation of the surplus countries of the loss of approximately 790 billion U.S. dollars, equivalent to GDP5% of the losses. Political roots of global imbalances is the problem of who pays the bill.

Sixth, the Asian financial structure should be how to build? Financial system is basically a state in Asia, but the state’s biggest challenge facing the financial system is how innovative, how and global financial institutions to compete.

Seventh, the relationship between market and government what? To market fundamentalism, so long as free market, government deregulation, the market will stabilize, it seems this is not entirely right. Asia’s traditional that the Government should play a role. However, problems caused by excessive regulation, the market although stable, but the lack of innovation. On the other hand, the government has developed a comprehensive intervention in the financial system.

Eighth, how to control the “hot money”? Developed by the loose monetary policy, if Asian countries can not control interest rates and exchange rates, a large number of “hot money” flows, resulting in large bubbles. In response, South Korea, Brazil proposed to take foreign exchange control. The key is that the global financial architecture emerged a big problem. In a country which can have a unified monetary policy, a unified regulatory policy, and fiscal policy to adjust the winners or losers. But from a global perspective, countries are competing with a very loose monetary policy, regulatory policy is not easy to work with everyone, not a global fiscal policy. There is no global financial policy, the global monetary system is difficult to sound.

The global crisis is not a single country can be solved, this is a global systemic contradiction. Even if every country in the world have remained stable or bank does not mean necessarily stable global system. Currently, the global financial architecture, the capital adequacy is less than 10% of global GDP, but after the crisis and the collapse of the bubble with a variety of natural disasters caused losses of loss has been greater than 25% of global GDP. So, what is the global financial system to help hedge risk, or exacerbated risk?

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Category: Business Management
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