A year later, the United States.

With the announcement of New Century Financial, the second-largest subprime mortgage company, bankruptcy protection, a financial storm suddenly swept Wall Street and quickly spread to the entire Western world.On June 22, 2007, Bear Stearns, the fifth largest investment bank in the United States, announced that its two investment subprime funds had made huge losses.Subsequently, banks announced the reduction of non-performing assets, of which Citigroup reduced $15 billion, Merrill Lynch reduced $7.9 billion, and Bank of America reduced $3.3 billion.Financial experts estimate that the losses caused by the subprime mortgage crisis in the United States range from 100 billion to 200 billion US dollars.

In Europe, HSBC withdrew $3.3 billion in bad debt reserves, Barclays in the United Kingdom made a write-off of $2.7 billion, Swiss banks wrote off $3.7 billion in subprime bad loans in the third quarter, and at the end of the year, it claimed that it had reached $10 billion in losses related to subprime loans.

The situation in Asia is also not optimistic, with Mizuho Financial Group, the Bank of Newborn and the Bank of Qingkong all claiming to be affected by subprime loans, and their performance has fallen sharply.China’s financial institutions are expected to lose one-fifth of their holdings of tens of billions of U.S. subprime debt.

The Western economy is completely based on financial credit, and the huge shocks in the financial industry inevitably involve the real economy.The housing market was the first to be affected, and house prices in various countries have fallen sharply, the default rate of housing credit has risen, and the number of new housing starts has plummeted.The manufacturing industry has also been affected by credit collapse, as banks have suffered serious losses, loans have been difficult to issue, business investment has been greatly reduced, and the investment goods market has shrunk.

A large number of enterprises that are in trouble with business problems began to lay off or reduce wages, and the people's income decreased, which further exacerbated the market downturn.Most Western people do not have any family deposits, daily consumption is based on credit cards, with the typical characteristics of eating food.With reduced incomes and banks tightening consumer credit, countless Westerners were suddenly trapped.

The subprime crisis is not a cold day.The fundamental reason is that the economy of the entire Western world is out of reality, everyone is keen to make fast money in the financial market, and no one is willing to make a business down to earth.In order to get more profits, Wall Street financial experts invented a variety of financial derivatives, took turns to create a false prosperity.In this prosperity, everyone has the illusion that he has a lot of wealth, but this wealth is completely a castle in the air, and once the dream will disappear.

On the other side of the ocean, in the large conference room of China's National Development and Reform Commission, a conference on the impact of the subprime mortgage crisis is being held, and the parameters are all officials of various economic functions.

According to the analysis report submitted by the Macroeconomic Research Institute of the National Development and Reform Commission, the subprime mortgage crisis has begun to spread to the real economy, and Europe and the United States have reduced the GDP growth rate this year by 0.5 to 1 percentage point, and the manufacturing activity index in the United States has fallen below 50 last month, entering a recession period.The Bank of Japan survey data shows that the confidence index of large manufacturers is negative, and they are pessimistic about the market outlook.We predict that the impact of the subprime mortgage crisis will further expand in the coming months of this year, and there is a possibility of a full-blown economic crisis.”This is Wang Zhenbin's briefing to the officials attending the meeting.

"Director Wang, I saw in the newspaper, some experts believe that the subprime mortgage crisis has bottomed out, the US economy is expected to pick up at the end of the year, which is not the same as your forecast results ah."An official questioned.

"Yes, I've seen that too."Another official echoed, “Yes, Gao Lei, who used to be in the Academy of Social Sciences, is now a professor at Harvard University.He gave a speech the other day, saying that our analysis of the subprime mortgage crisis in China is too alarmist, that the Federal Reserve has a wealth of experience and can quickly adopt policies to turn things around, and that the subprime mortgage crisis will surely be over for up to two or three months.”

“It’s just a family.”Han Hong, deputy director of the National Development and Reform Commission, who chaired the meeting, smiled slightly, "We have learned the opposite.Fed officials have privately said that the measures they can take have been taken, but the market confidence is seriously insufficient, a little bit of wind blowing, it may set off a new storm, when the financial institutions will be far more affected than now, they are already preparing all kinds of after-care measures."

“The top economists in the United States are not optimistic about the prospects of the subprime mortgage crisis, and they believe that the probability of further crises next year is above 70%.”Qi Ruicang, a researcher at the National Development Research Center, added.He is now one of the top scholars in the world, and important conferences like this often invite him to attend.

"The economics community is now rethinking why the subprime mortgage crisis was not foreseen in advance, and everyone combed through many signs over the years and found that the crisis had already been a symptom five years ago, but it was blindly optimistic market expectations to cover up."The academic consensus is that the crisis would be easier to control if it erupts two years earlier.Now the outbreak is already difficult to recover, and it is estimated that the global economy will be dragged down by it, and it will be difficult to recover in the next three to five years.”He told the crowd.

“So it is.”The official who mentioned Gao Lei laughed and gave himself a round field: "It seems that this Gao Lei's words are indeed untrusted, and Professor Qi is the real university."

He waved his hand and said, “What kind of college am I?”I’m just retelling some of the consensus in academia.Home prices are now falling sharply in the United States, many homeowners are insolvent, and abandonment is increasing.Although banks can take away the houses of these people on contract, because house prices have fallen, the price of these housing auctions is not enough to compensate for the loans previously issued by the bank, and the bad debts are increasing.Two of the nation’s leading home lenders, Freddie and Fannie, are now under threat of bankruptcy, the insiders said.If these two institutions go bankrupt, they will have no less impact on the U.S. economy than an eight-magnitude earthquake.”

“Oh, how could that be!”Some officials said, "In the past few years, we have only heard about what the South American debt crisis, what the Asian financial crisis, who knows that the United States will also do this, this is really a feng shui rotation."

Xu Zhenbo, the director of the Ministry of Commerce, said with his mouth: "This should be called retribution.Wasn’t the Asian financial crisis the Americans behind it?Now it's their turn."

"Director Xu, we say that, we just say it, you are engaged in foreign trade, why do you say so?"Someone joked with Xu Zhenbo.

Xu Zhenbo laughed: "We can't criticize the United States in foreign trade?"Do you see Feng General of the equipment company, who does business with foreigners every day, and still say cool words to foreigners?Seriously, I learned something from him.”

Sitting in the corner of the conference table, Feng Xiaochen saw Xu Zhenbo pull the topic on his head, heyly smiled and said, "I agree with Director Xu's unpleasant statement."Regarding the subprime mortgage crisis in the United States, our company's analysts have also done some research, and the conclusions are similar to what Director Wang just said.We expect a new round of greater financial shocks in the United States next year, dragging the global economy into a prolonged period of weakness.”

“For a long time?How long?”Xu Zhenbo frowned and asked.Although he has just shown a schadenfreude attitude, he still has a deep feeling for the impact of the subprime mortgage crisis on China.Hearing that the crisis would last a long time, he could not help worrying.

“More than five years.”Feng Xiaochen said with certainty.

“I’m afraid that won’t happen, right?”Han Hong said, "Our side of the forecast, the same is that there will be a more serious crisis next year, but at most until around 2010, it should start to recover."The West still has some experience in responding to the crisis, and both the United States and the European Union have introduced policies to stimulate the economy, and if those policies have worked, the crisis will last for up to three years.

Feng Xiaochen said with a smile: "Western countries do have a more mature crisis intervention mechanism, which has also played a role in the past."However, this time the financial crisis is not the same as in the past, and it is probably not so easy for Western countries to come out of the quagmire very quickly.”

“What’s different?”Han asked.

Feng Xiaochen drew a circle with his hand, rowed the people in the entire conference room into the circle, and then said, "This difference is China's role in this round of crisis."

“What do you mean?”Han Hong did not understand.

Feng Xiaochen said: "In fact, the means of intervention in the crisis in Western countries is nothing more than the introduction of economic stimulus policies to encourage enterprises to invest in order to restore economic vitality."In the past, they could do so, because they could absorb the stimulated capacity through the markets of developing countries, which is equivalent to filling the gaps in their domestic markets in developing countries.”

“What’s different now?”The officer asked.

Feng Xiaochen said: "The biggest difference now is that China has become the world's factory."The markets of developing countries are now ours, and if the West is to occupy it, it will pay a great price and not be as easy to return as it used to be.Instead, we are also entering Western markets and taking food from their mouths, making it more difficult for them to digest capacity and the economy more difficult to recover.”

Han Hong thought about it, nodded slowly, and said, “What you said is some truth.”In the past, when the economic crisis in Western countries occurred, the first measure was to go to the international market, that is, you said that the developing country market digested its own production capacity, which is a passing crisis.Over the years, we have China become the factory of the world, and most of the markets in developing countries are occupied by us, and it is indeed more difficult for Western countries to grab these markets from us.”