european debt

european debt - O Fundamental reasons Financial crisis...

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Unformatted text preview: O Fundamental reasons Financial crisis United States long-term looser monetary policy. The excessive innovation of financial institutions Serious dereliction of the regulation. The deluge of financial derivatives and Wall Street’s greedy. European debt crisis * The contradiction of practicing long—term super- high welfare socialism more than their own financial resources and extreme democratization of the political system. ' The contradiction of the unity of monetary policy and differences of fiscal policy. characteristic Financial crisis Resulted from subprime crisis. Capital chain ruptured amongtransnational enterprises. The bankruptcy ofsubprime mortgage lenders Investmentfunds being closed down and the violent shake of the stock market. European debt crisis - It was a sovereign debt crisis.The debtor nation existed the risk of debt default. * The budget deficit remained high. ' Debtcrisis resulted in the decrease of the stock market. fl Measures and consequences Financial crisis Every country made concerted effort to cooperate with each other and united as one to deal with the crisis. Emergencyturned into chronic problems. fl European debt crisis All countries were seeminglyin harmony dealing with the crisis but actually at variance. * The negative attitudes and measures made the crisis become increasingly fierce. Financial crisis Influence on China The stock market shrunk 60% market value of about 20 trillion Yuan The impact on economic entity: exports dropped dramatically. The increaslng speed of GDP was getting slower. The real estate market and consumer market were negative. Small and medlum—sized enterprises were difficult to live. China’s measures Forced Chinese government took out 4 trillion RMB to save the stock market. Monetary policy: The People’s Bank of China decrease the benchmark interest rates of the financial institutions at the forth time. The deposit reserve rate of RMB of the large deposit financial institutions and small and medium— sized deposit financial institutions was cut for the third time. The Chinese government announced ten measures to expand domestic demand. Influence on China 0 European debt crisis China’s measures Use dollar or RMB as the form of payment when exporting or importing. The debt crisis will affect the ‘ export of China through the shrinking economy and Euro devaluation, ' Strengthen the measures of . supervision of the stock and Elle Upvaluatlon Of RMB to the real estate market to guard uro. against short—term capital inflow excessively. Negotiated with the European Union in the field of trade to help and guide the enterprise actively participate in antii dumping litigation. The direct investment from Europe declined. ° More short—term capital inflowed to put pressure on the domestic inflation and assets prices. Revelation to China Improve the ability of independent innovation continuoust and change the economic growth pattern to explore the new growth point of economic development. Improve the international competitiveness of country’s industry and strengthen economic growth ability. Pay attention to avoid super-high welfare like some capitalistic nation when reform or perfect social protection system. Cannot establish or join the Asian common currency area carelessly. Formulate appropriate monetary and fiscal policy accordingto the national conditions. Strengthen international exchanges, negotiation and cooperation. ...
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This note was uploaded on 03/08/2012 for the course ECON 305 taught by Professor Rogers,w during the Spring '12 term at Winthrop.

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european debt - O Fundamental reasons Financial crisis...

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