The 10th anniversary of the financial crisis: Why the poor are the most injured

Xu Jin: Back to the source of the financial crisis, the crisis began to start with the house. The core lies in the house, or even the mortgage lending caused this great recession.What lessons can China learn from American experience?

Between fingers, the financial crisis in 2008 has passed ten years.

"Why no one predicts"?In November 2008, when Queen Elizabeth visited the London School of Political Economics (LSE), if he asked the economist Hayek and Kos, philosopher Pop, investor Soros and other economic schools.

Now look back, in addition to the Queen's question, especially should I ask, why is the crisis in the past ten years, the most hurt is the poor?

House is the core

Even if the public's pain cannot be made up, it should be explained. Why does the financial crisis collapse?

The role of financial institutions is the most accused. Lehman's failure is considered the key point of the financial crisis and even considered irreparable errors.Some people say that if the Lehman brothers are called Lehman sisters, maybe it will not be so greedy and proud, nor will it be closed in the first summer, then there will be no series of consequences.

In this regard, the three giants of the US financial crisis Paulson, Gatener, and Bernanke all wrote books saying that they had done their best, the banking industry had to be rescued, and Lehman had to fail.

To this day, the banking industry that used to be "too big and unable to fall down" has learned some frustrations or lessons from these years?It is likely that the banks who once shouted were returned to places such as Dalworth, and Wall Street, which had flowed into the river, became more powerful.

The British "Financial Times" column writer Jilian Bull; Ji Ti's evaluation of this result is surprising. In the past ten years, not only the bank size has continued to expand, but the relative strength of the US financial industry has not been weakened, let alone.No one was directly imprisoned because of the crisis.

Investment bankers' greed, leverage of subprime derivatives, conspiracy of Wall Street, etc. These have occupied all kinds of explanations in mainstream media in the past, although they are in line with intuitive feelings, they also occupy the moral highland MDASH; mdash; these descriptions are really true.Whether it can explain the source of crisis and how the crisis continues so long is still questioning.In contrast, returning to the source of the financial crisis, this crisis began to the house, and the core may also be the house.

The two economics Star Atav Bull; Atif Mian, Mir Bull; Amir SUFI's research is exactly from this.Their research on housing mortgages explained the truth of the financial crisis, that is, the cause and expansion of the financial crisis lies in debt, especially family debt.

In the book of the "House of Debt" co -written, before they pointed out that the economic disaster occurred, the sharp rise in family debt and the significant decline in residential consumption have appeared from the United States to the international.

With the outbreak of the crisis, the family found that the debt it borrowed was too much, and the losses caused by the decline in house prices were completely borne by the family itself, so that the family's net wealth fell rapidly at a rate of incompetence, and the family consumption expenditure fell rapidly.Because consumption is the main force of the economy, the deleveraging starts, and the rapid decline in the economy, and it is difficult for all people to be spared.

To this day, the popular point of view still believes that real estate is just the starting point of the US financial crisis.Many people accuse the loose residence policy before the financial crisis, so that many people who are not qualified to obtain housing mortgage mortgage (mainly the poor) obtain mortgage mortgage. This should not be.The refund of the house to the bank is also the normal market clearing behavior mdash; mdash; this idea conforms to intuition and the spirit of free market spirit, but it is not comprehensive.

In fact, real estate credit not only affects US family debt, but also largely leads to this great decline.The truth is that the resident may have a luxury, but the economic consequences brought by the consumer directly to the ground may make many people unexpected,

Soft -class society: Lost middle -class

In recent years, the US economic recovery has been the fastest recovery in developed countries, but even so, in terms of American middle -class families, it can be said that it is a universal phenomenon for the loss of the middle class.I have also talked many times in the public account "Xu Jin Economic Man" that this is actually the different projection of the soft -class society in the world.

According to the analysis report of the Pew Research Center, the middle class in the United States has a hollow trend from 2000 to 2014, and 90 % of the large cities in the middle class have reduced.At the same time, the median income of all developed countries has declined, and the middle -class families are particularly serious. The median income is 77,898 US dollars fell 72919 US dollars, a decrease of 6%.what's the result?

A new landscape in the United States has appeared in more than forty years: the first time in the middle class is no longer the largest population in society.In terms of the widest definition, the United States currently accounts for half of the adult population, and in the 1960s, it was as high as 60 %.

Similar to China, the United States has also been in a vulnerable state and has become a soft class that is easily exposed to risks.The decline of the middle class did not affect the rise of 1%of the rich people and even the richest area. According to the "Wall Street Journal", it quoted Stanford University and Cornell University.The annual ratio is 7%, and in 2012 is 16%.

As for the lower levels, their encounters are even more sad.When the subprime mortgage crisis broke out, the rent in some slums in the United States not only did not decrease, but also rose, because when the poor people's houses were confiscated, they had to find a new residence mdash; mdash; in the logic, the price of potatoes like Ireland's famine rose.

Looking back at history, the U.S. government encourages people to have housing dates back to the early 20th century. In 1918, the US Department of Labor launched the "own house" sports; in the 1960s, President Johnson proposed the goal of "great society", proposed to create the house and urban development department.He believes that having a house can increase a person in the community, so that people can proudly defend their homeland for this.

Now there are new changes.It ’s just that the house cannot afford. As the rent rises, when the poor are unable to pay enough rent, waiting for them to go out.Matthew Bull, a professor at the Department of Sociology of Princeton University; Matthew Desmond once studied expelction issues. He pointed out in the book "sweeping the ground" that most of the poor renting families in the United States today have more than half of their income in "Living in "this incident, at least a quarter of families pay more than 70 % of income to pay rent and electricity bills.

He takes Milwaukee in the Midwest of the United States as an example. It concludes that 105,000 households rent houses, and about 16,000 adults and children are swept out each year, equivalent to 16 families being expelled through court procedures every day.Compared with the formal procedures of the court, there are various "informal evacuations" in the local area; from 2009 to 2011, he pointed out that at least one of the eight local tenants has experienced mandatory relocation.

This is still the case in the context of the American dream. What about China?

Revelation of China

What are the inspirations for China's housing debt stories?How to take the initiative to avoid an unbearable financial crisis?

First of all, the situation in China and the United States is indeed different.China ’s down payment is high and the leverage is lower than the United States. In addition, the savings preferences of Chinese families are relatively strong in resistance to house prices.According to the data provided by the International Clearance Bank, the Chinese family debt leverage ratio (accounting for GDP ratio) was 48.4%at the end of 2017, only half of the US subprime mortgage crisis in 2007.Volkswagen pays more attention to Chinese corporate debt instead of family debt.

Secondly, American experience is still valuable.In recent years, the absolute level of family debt in China has not high, but the rise rate has been extremely fast. From 2016 to the end of 207, the leverage of Chinese family debt lever in two years has increased from 38.8%to 48.4%.The growth rate of debt leverage is 1.5 times as soon as three years.

At the same time, due to China's house price income ratioThe family was expelled through the court.Compared with the formal procedures of the court, there are various "informal evacuations" in the local area; from 2009 to 2011, he pointed out that at least one of the eight local tenants has experienced mandatory relocation.

This is still the case in the context of the American dream. What about China?

Revelation of China

What are the inspirations for China's housing debt stories?How to take the initiative to avoid an unbearable financial crisis?

At the same time, because China's housing price income ratio (median house price than household income) is much higher than the United States, up to 20 times in large cities, and the United States is only 3.9 times. Chinese families have the ability to absorb house prices in revenue.The family's 1/5mdash; mdash; In other words, the burden on household prices in Chinese houses is 5 times that of American families.

In this way, once the housing prices are winding, the impact on Chinese families will be huge. At present, the "rights protection" that flashes in various places because of the price reduction of real estate is just the beginning of impact.In this regard, although debt is beautiful, it is not appropriate to excessive. How to prevent problems before occur may be a lesson that Chinese decision makers should learn from.

In addition, it is worth noting that the dangers of crisis lies not only in the losses in the crisis, but also that the recovery after the crisis is often relatively long.In the book "Winners" and other books, I quoted the research of Harvard economist Carmen Bull; Ryinhart, Kennis Bull; Rogff.By analyzing the 100 systemic banking crisis in history, the average time required for the per capita income to return to the crisis before the crisis is 8 years, and the median is 6.5 years.

Not to mention, economic recovery does not mean yesterday.Even in countries such as the United States and Germany recover quickly, we have seen different social problems. If it is a country with a slower recovery, the test can be imagined.

In the financial crisis, millions of families were displaced (FT data was 7.8 million). Some people were forced to sell houses, and on the other side, some people took the opportunity to sucked in dips, and different from large institutional investors such as Blackstone poured into this market.After the year, I made a lot of money.Today, real estate in the United States has recovered, and the people who have been expelled have missed the benefits of economic recovery.How to make the appreciation of housing assets be more reasonable with the tenant, homeowner, and government, it has not been reasonably answered reasonably.

You may say that this is the logic of capitalism, successful with money, and losers with failure.But when a soft -class society appears, can anyone really be out of this game?

When the resident has a house in the United States, it is not enough to satisfy the country.When we look back, look at Trump's rise, Brexit, and even the Sino -US trade war, we will find that the changes in the times are not a sudden noise, but that it has already begun in silence.This article only represents the author's own point of view. The author is also the founder of the Economy Reading Club. Recently, he has published "No Loss, No Tokyo", and the public name "Xu Jin Economic Man".