For the Japanese
government, they gradually began to implement an open domestic financial market
policy to make the interest rate of Yen liberalizing in the 1970s. Then the
adjustment of financial and monetary policy has facilitated the emergence of
the housing bubble. For the US government, in order to foster economic growth,
they encourage excessive consumption in the whole society. Moreover, financial
institutions lack of supervision and lure people consuming and speculating in
the market (views of Bernanke and Greenspan).
Compared
with the Japanese and the US housing bubble, despite the historical background
is different, but they have the common characteristics. Firstly, the irrational
industrial structure in the real estate market and the stock market result in
growth of capital flows, as well as the financial leverage and speculative
activities, causes the housing bubble and stock market bubble. Secondly, the
two countries implement financial liberalization policies. With the higher
degree of financial liberalization, the international investment will seek new
profit and enter the market when the economy starts to overheat then blowing
the bubble. Thirdly, the real estate economy account for a large proportion of
the national economy, the fluctuations in the real estate market will cause
macroeconomic shocks.
For the Chinese government, the first step is strengthening
financial supervision system to avoid large amount of credit funds into
nonproductive sectors to cause bubble. Secondly, to restrict intervention of
banks in the real estate market and publish loan criteria. Next, establish a
national system of early warning and forecasting real estate market. Meanwhile,
take care about the excessive international capital flows in the Chinese
market. Finally, reform of how to reduce the gap between poor and rich and
remain the stability of housing price should be considered.
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