Comment: China should be careful to prevent the risk of overflowing over the US debt c

Source: Zhongshi Electronic News

Wangbao Society Review

The upper crisis of the US debt limit was not solved. When the government was close to the door, the 16 largest banks in the United States were announced by the Silicon Valley Bank of Silicon Valley.The insurance company intervened urgently, and Shi Wuqian announced that it would provide a full guarantee of depositors to stabilize market confidence.The upper limit of the government debt is not related to the failure of financial institutions. There is actually inextricable relationship behind it, and the deep value is vigilant.

Financial institutions closed down successive

"Bonds" is the key element. In the past few decades, the US government has continuously issued bonds and banks have followed the purchase. The value of bonds has gained global trust with globalization and economic prosperity.The bond market allows the US government to have endless money. Americans enjoy the increasingly better social benefits, and financial institutions and bond holders also make a fortune.In order to maintain global hegemony and meet domestic demand, the government's debt is getting faster and larger.In the 8 years of Obama, US debt increased by about 8 trillion dollars. Trump spent 8 trillion in 4 years due to the epidemic in his tenure., Close to the debt limit.

The increase in debt is not necessarily a bad thing. As long as there are people who issue debts, there will be no problems.The US economic quantity and international influence have great influence, strong US dollar liquidity, and US bonds are easy to monetize. Some people are always willing to pay.Especially for some large retirement funds based on fixed income or foreign exchange reserves of central banks from various countries, whether it is based on liquidity, profitability or risk aversion considerations, US debt is the best choice.

It's just that since last year, due to the explosion of geopolitical risks of Ukraine's conflict, and the Federal Federation of Standards for 18 yards of violence, the US debt has become a tacit understanding between institutions and individual investors, and it has also become the global bond market.The mainstream movement.Japan and China, which holds the size of US debt in one or two of U.S. bonds worldwide, reduced their holdings of US $ 224.5 billion and $ 173.2 billion in 2022.Taiwan, which has increased to the US exports, has reached a new high in Taiwan, but the size of US debt was reduced by US $ 25 billion in 2022.

Not to mention that according to Nomura statistics, US public debt fell 12.5%in 2022. In addition to setting a record of the first two years in 63 years in 63 years, it was also the largest decline in 235 years since 1788.The position of highlighting US debt is gradually shaking.Silicon Valley Bank's closure incident, on the surface, there is a problem with liquidity and causing extruded storms. The behind is related to the reduction of the value of the assets held by the huge US debt.Because as the interest rate accelerates, the value of bond tickets has also fell rapidly, and the willingness to take over the market will not be too high.

Deepen the global economic recession

In particular, the upper limit of the US debt is in the two parties, and it has not solved it. It has deepened the crisis of the US government's closure of the US government in the year and made market investors more concerned.Recently, the US Congress Budget Office warned that if the two courts of the public do not raise the upper limit of debt, the US government may break the contract as soon as July. Under the premise of not fulfilling government obligations, the US economy will suffer huge losses.Taking the recent suspension of the Trump administration for 35 days as an example, the US Congress Budget Office surveyed that during this period, US economic losses reached $ 11 billion, with an average loss of 310 million US dollars per day.

It is worth mentioning that it is not only the United States that affects the US debt crisis. The spillover effect will spread to the world and deepen the risk of global economic recession.President of the Federation of Standards Power recently emphasized at the Congress Hearing that if the problem of U.S. bonds cannot be resolved smoothly, it will not only cause long -term damage to the US economy, but also have a catastrophic impact on the global financial market and economy.In particular, the global economy is currently suffering from inflation and interest rate hikes, and the doubts of recession have become increasingly rising. Once the US debt crisis is true, it will inevitably refuel the fire and push the global economy to a more declining abyss.

On the other hand, the US dollar trust that is due to the US debt crisis is the risk of overflow that must be guarded.Although the US dollar is still the world's most important trade, investment and reserve currency, the short -term international status is still difficult to shake, but as most foreign central banks, institutions and individuals generally reduce their holdings of US debt, the overall proportion of overseas holdings of US debt has been from 2008The peak 48%fell to 31%all the way, and even weakened the US dollar credit, impacted the US dollar as the long -term status of the main international currency.

The problem of the US dollar trust occurs, in addition to causing the US dollar assets to be sold further, it will also exacerbate the turbulence of the global financial market.In this regard, the world must be serious.Especially for China, we cannot hold a gloating mentality.The United States is the largest exporter in China. It means that the US economic recession is unfavorable to China's exports. Once the US debt crisis is out of control, it will evolve into a global financial turmoil. The global economy will be buried. China in the world's second largest economy can be careless.