Chapter 21 5. Financial institutions stop playing

●The US economy used to rely on constant capital flows. ●The entire consumer loan, including credit card payment, student loan, and consumer loan, has been frozen. ●The current problem is that the banks do nothing and don't want to do anything, and the whole thing is stagnant. What happened to the US financial system after the financial crisis?The financial institution stopped playing, and the money was not lent to B and C.Since a financial institution does not lend you money to spend, its funds will not decrease. Since it has a lot of funds, it does not need to sell bonds to investors. Can it do nothing?

The U.S. economy used to run on a constant flow of money, from investors to banks, and banks to consumers, and it kept flowing, and it kept flowing.Therefore, the debt of Americans can be as high as 95% of GDP.That's why we Chinese need to produce so many products to sell to it.What if they are all suspended? This is what Comrade Paulson said at the press conference—the entire consumer loan, including credit card payments, student loans, and consumer loans, has been frozen.That's what I just said, keep the money here and don't move anything like a fool. I won't lend it to you anyway, and don't come to me. I'm not in a good mood recently, so I won't lend it.So if the financial institution does this, it's over.

The result of this is that due to insufficient funds, consumption has declined, thus pulling down the GDP of the United States.The result of the decline in consumption will inevitably affect China's exports. The Chinese are unwilling to see this result, and neither are the Americans.So what to do?Paulson mentioned it at a press conference on November 25th. He said that the U.S. government increased the rescue funds from 700 billion US dollars to 800 billion US dollars, and lent more than 100 billion US dollars to investors (the so-called investors are again international finance capital or its pawns).What does that mean?It is to ask investors to take $1,000 of the $100 billion to buy car claims from the bank, and then the bank will lend $1,000 to B to buy a refrigerator, and then sell the $1,000 refrigerator debt to the investor. Of the 100 billion US dollars, another 1,000 US dollars is given to the bank, and the bank lends the 1,000 US dollars to C to buy a computer.Then the bank sells the $1,000 credit on the computer to the investor, and the investor takes $1,000 of the US government's $100 billion to the bank to buy the computer.Through this kind of funding from the US government, the consumer market can be unfrozen, prompting banks to lend funds.

This matter makes me feel very nervous, what is the nervousness?What if the bank still doesn't move?If it is frightened by the "melamine incident" of subprime loans and refuses to lend money to consumers to buy cars, can it be done?Is it okay not to lend money to consumers to buy refrigerators?It doesn't do anything, can it? Then there is no way. If this is the case, it will be a disaster for all countries in the world, not just China.Therefore, the entire financial crisis has now extended to 2009, and the current problem is that the banks do small things and don't want to do anything, and the whole thing is stagnant.

So Paulson said, the whole system was frozen.I believe everyone understands it.You may ask me, Professor Lang, we all understand, we are very excited.We want to help our country, help our export, Professor Lang.Can you tell us what we should do?What should we do about Bank of America's inaction?I think there are only four words: "Helpless".We can only hope Comrade Paulson and see what they do. So the only thing we can do is pray.I am not praying to others, but to Comrade Paulson: Please, next time you hold a press conference, encourage you American people not to live within your means.What is living within our means?For example, I bring cash with me when I eat. If I don’t have enough cash, I will use a debit card. I will never use a credit card. I find it annoying.I can't do that because I'm old.More conservative, the consumption pattern of people like me who spend cash and use debit cards is to spend within their means.Because I am a traditional Chinese, I still retain the virtues of traditional Chinese.

But if Americans also start to use UnionPay cards or cash, then we will be finished, so I hope that the US government can revive this stagnant pool through the US$100 billion consumer credit.