Xinhua News Review | 15 Years after the Lehman Event, the US continues to harm the world economy

Fifteen years ago today, the American financial giant Lehman Brothers announced its application for bankruptcy protection, which became the fuse of the American subprime mortgage crisis and triggered the global financial tsunami. Fifteen years later, today, the damage caused by the last round of crisis to the world has not yet been completely resolved, the United States pursues a monetary policy of big expansion and quick recovery, vigorously promotes "decoupling and chain disconnection", wields the big stick of sanctions, distorts the operation of the world economy, and endangers the recovery of the world economy.

Reflecting on the international financial crisis in 2008, the loose monetary policy of the United States has provided a breeding ground. The backwardness and absence of supervision in the United States and the obsession of Wall Street investment banks with high leverage, high return and high risk business models have led to the expansion of the bubble in the American capital market, which eventually led to a crisis sweeping the world. Fifteen years later, the problems of economic and financial governance in the United States are still prominent. The Silicon Valley Bank of the United States collapsed in March this year, becoming the largest bank failure in the United States since the last round of crisis. Later, the closure of the Signature Bank and the First Republic Bank occurred in the United States, triggering turbulence in the international financial market. In 2018, the United States relaxed its regulatory requirements for small and medium-sized banks, laying the groundwork for this year's banking crisis. However, the main reason for this banking crisis is that the Federal Reserve continued to raise interest rates aggressively.

In the past few years, in response to the impact of the COVID-19 epidemic, the United States implemented aggressive monetary and fiscal "double easing" policies, pushing inflation to a 40 year high. In order to alleviate inflation pressure, the Federal Reserve started a radical interest rate increase cycle in March 2022, which caused serious negative spillover effects on the world economy. Many non US currencies depreciated significantly, and emerging markets faced capital flight. As a result, many central banks were forced to carry out "concomitant" interest rate increases.

For a long time, the United States has used the hegemonic position of the dollar in the international monetary system to shift domestic crises, reap world wealth, and damage the economic and financial stability and well-being of other countries. When the US monetary policy is in the expansion cycle, a large amount of capital flows to the world, boosting asset price bubbles and earning high value-added income; When the US monetary policy entered the contraction cycle, capital returned to the US, leaving the consequences of the sharp devaluation of the local currency and the collapse of asset prices to other countries.

Specifically, the Federal Reserve has continued to raise interest rates over the past year. This "strong contraction" has led to the popularity of U.S. Treasury bonds and other U.S. dollar assets, so that the United States can absorb the return of U.S. dollars at an extremely low cost. The scale of US government debt has been rising year after year, the debt farce has been repeated, and the alarm of US debt reaching the top has been sounding constantly. Its response is to monetize the debt, directly repay the foreign debt and dilute the burden of foreign debt by issuing a large number of additional dollars. Its essence is to cut off the "leeks" of other countries, so that countries around the world can pay for the economic and financial problems of the United States. The United States also uses the dollar as a geopolitical weapon, frequently offering sanctions sticks, and frequently taking measures against other countries, such as freezing assets, blocking transactions and long arm jurisdiction, which also seriously undermine the international order and threaten economic and financial stability.

After the outbreak of the international financial crisis in 2008, countries have taken measures to strengthen international cooperation, improve financial supervision and promote the reform of global economic governance. It is international cooperation that has prevented the global financial crisis from turning into a "Great Depression", which is an important experience learned by the international community in dealing with this crisis. But more than a decade later, in the face of the sluggish global economic recovery, the United States has vigorously engaged in "decoupling and chain disconnection" and promoted the so-called "risk reduction", which has led to a reversal of global cooperation.

key word: U.S.A crisis finance Global