Chapter 34 Chapter 7 Under the Impact of the Financial Crisis: Outlook for China's Stock Market in 2009

Iceland was selected by the United Nations as the most livable country in the world in 2007.Although Iceland has a population of less than 320,000, in 2005, Iceland's per capita GDP reached US$54,975, ranking third in the world.In addition to having a high GDP per capita, Iceland is also the second longest-lived country in the world. In 2005, the average life expectancy reached 81.15 years.Iceland's welfare is also very complete, and even universities are exempt from paying tuition fees. Welfare is good, the level of education is high, and the quality of the population is naturally high.Icelanders understand that it is impossible to make the country rich by fishing for a living, so they vigorously develop the financial industry.Attract overseas funds with high interest rates and an open financial environment with low controls.Icelandic banks have also followed the example of other international investment banks, borrowing a large amount of short-term bonds with low interest rates in the international capital market, and investing in high-yield long-term assets. Subprime mortgage assets are one of them.The global economic boom of the previous few years had led Iceland's banks to over-borrow.As a result, financial leverage has reached an astonishing level, and the scale of total external debt is actually 12 times that of GDP.The total foreign debt is as high as 100 billion euros, while the Icelandic central bank's liquid assets are only 4 billion euros.The banking industry has reached a point where "wealth is incomparable to a country", so once a problem occurs in a bank, the government cannot rescue it at all, so it has to declare bankruptcy immediately.

Iceland is an extreme example of the global financial crisis. However, in 2008, the global stock market and the global economy performed poorly just like Iceland. One thing to be thankful for is that our stock market has not yet ranked first in the world in terms of decline throughout the year. The number one in the world is a poor country called Iceland.Iceland is such a miserable country!Iceland is a very interesting country, and I want to tell you how much the financial crisis has hit it - their stock market has lost more than 90% of its value.Iceland has a population of only 320,000, but its per capita GDP ranks third in the world, even surpassing that of the United States. It is a very wealthy country.And if you have the opportunity to go to Iceland, you will find that this country produces nothing but ice.All the houses in it are pointed, so it is easy to drain the snow, and Icelanders decorate the houses very beautifully, just like the scenes in fairy tales, it is a very beautiful country, especially until five or six in the afternoon At that time, the night scene was very beautiful.

However, the stock market value of such a beautiful country has fallen by more than 90%. Why?It is the impact of the financial crisis.On a snowy morning, the Icelandic people came together and found that everything had changed. When he went to the bank to withdraw money, he found that all the banks in Iceland had closed down.When I wanted to go to work in the government, I found that the government had also closed down and the country was bankrupt.What is National Bankruptcy?That is to say, the foreign exchange is used up, and no one uses their own currency. They use the krona, not the euro.Not using the euro was the small country's biggest mistake, and the krona collapsed, devaluing by 30-40%.Large numbers of Icelanders fled Iceland, like the Great Escape.So the common people in Iceland say that when they wake up in the morning, they suddenly feel like they have been thrown into a cold prison, with nothing left.But the problem is that I don't know what I did wrong.The Icelandic government is very interesting, I think they adopted a very humorous policy, they started talking to the outside world through the media and said, sorry guys, we screwed up, the government is bankrupt, and unfortunately the country is also bankrupt Yes, the most unfortunate thing is that there is no foreign exchange, so starting today, we have no way to import rice, wheat, pork, beef, chicken, duck, and fish.Why?No money.The common people said, what should we do?The government said that you have nothing to eat.

The Icelandic government is quite humorous, because Iceland does not produce anything and has nothing to eat, so the government encourages all 320,000 people to go to sea from that day, not for business, but for fishing.I’m not joking with you, this sentence is true, I really ask Icelandic people to go fishing, because Iceland is a country that fishes for a living. This fate.However, I think there are only 320,000 people in Iceland. If they go fishing, there is no problem, because the population is small and the fish population is large.If the same thing happens in China, it will be very troublesome. We have a population of 1.3 billion, and I suspect that there are more fish than fish. In the end, it may be more practical for fish to catch people.At a time when Iceland's economy was facing total collapse, the people of this democratic country beat the Prime Minister of Iceland by a more effective method—fist—for the first time without voting.

It was because of this impact that the market value of Iceland's stock market fell by more than 90%, ranking first in the world in terms of decline.Among Asian countries, our stock market has the second worst decline. Vietnam is worse than us. We fell 67%, so we are not the worst.