US Investors Lose Sense Of Direction And Speed Up.

In November 24th, the Federal Reserve of the United States and the United States Federal Deposit Insurance Company jointly rescued the Citigroup. On the 25 day, it announced a $800 billion credit incentive plan. On the 26 day, the US Congress also announced that it had reconsidered the rescue plan for the three major auto giants.

Just three days, even three killer.

Such intensive rescue operations not only disrupt the normal pace of market adjustment in the short term, but also make investors more panic and anxiety.

In recent weeks, there has been a closed cycle between Washington and the horrific economic news. As long as there is a sharp decline in the market, Washington takes drastic measures to suppress it.

"Violent policy actions will change the path of economic recession and reduce the possibility of deflation."

Morgan Stanley, chief economist of the United States, Dr. Richard Berner believes.

When the US Treasury Secretary Paulson once again stood behind the chairman of the Federal Reserve, Bernanke, in the eastern time of the United States, Paulson realized that the possibility of trying to catch a breath after the new government came to power in November 25th had disappeared.

The US Treasury and the Federal Reserve announced on the same day that another US $800 billion would be allocated to help the US credit market resume its normal operation.

Since Bell Sten's crisis, Paulson and Bernanke do not remember how many sleepless nights they spent. Most of them spent two hours in Washington D.C.'s Treasury, the Federal Reserve and the White House, even the New York branch of the Federal Reserve and the office of the Wall Street giants.

No matter how many problems need to be solved, Paulson did not know that Bernanke did not know, and their "big boss" Bush did not even know.

President Bush is packing up his bags to leave the white house next January 20th.

From the rescue of Bell Sten in spring to the latest 800 billion dollars to stimulate the credit market, the financial assets of the Federal Reserve have surged from the US $1 trillion at the end of last year to the current US $2 trillion and 500 billion. With the gradual progress of the rescue plan, the Federal Reserve's financial assets exceed US $3 trillion by the end of this year, and there is almost no suspense.

In the past year, it has increased by 200%. This is the first time in the history of the United States.

From constantly reducing interest rates to inventing all kinds of financial instruments, the Fed's approach has made it more like the people's Bank of China in the era of planned economy: there is only one bank in the whole country, which not only manages currency issue, but also manages deposit and loan business, and manages various financial instruments and even the entire financial market.

Coupled with the Fed's guarantee of Citigroup's $300 billion toxic assets, it looks more like the Chinese government's four largest Asset Management Co to deal with the banks' bad assets.

These actions have begun to arouse criticism from the legislators in Washington. Many congressmen have begun to mutter: "the US Treasury and the Federal Reserve are better than merging into a United States Department of finance to manage all the financial industry and monetary assets of the United States."

"We are at the height of the credit crisis leading crisis, and it is a peak and then a peak. We can not predict where the next peak will be."

Morgan Stanley's Richard Berner Ph. D. told me.

"Therefore, the Fed and the Treasury are struggling to cope with the fact that the situation is not surprising. The crisis is indeed at the stage of" pressing down the gourd "." Bernanke's New Deal "has to continue, as long as the crisis has not yet shown signs of ending.

The US government seems to have lost its sense of direction when the rescue market disrupts the normal pace of economic adjustment and continues to emerge at the height of the financial crisis.

In November 24th, the Federal Reserve of the United States and the United States Federal Deposit Insurance Company jointly rescued the Citigroup. On the 25 day, it announced a $800 billion credit incentive plan. On the 26 day, the US Congress also announced that it had reconsidered the rescue plan for the three major auto giants.

In just three days, even three murderer cards have to be challenged by economists and market participants: is this frequent rescue operation a bit overdone?

The $700 billion rescue package has not yet been completed, even if the part of it needs time to digest, $800 billion will stimulate the credit scheme to emerge again, save financial institutions, save the credit market, and plan to launch the auto industry.

Chen Zhiwu, a lifelong professor of finance at Yale University, said that the US government's rescue efforts are too frequent, which has led directly to changes in financial market behavior.

"The US economy is suffering from the severe contraction of leverage. Although it is painful, it is a necessary step for the normal development of the US economy. However, the frequent intervention by the US government will disrupt the normal pace of macroeconomic and financial market adjustment."

George Magnus, a senior economist at UBS, points out in a report.

"The current rescue operation has indeed prevented the systemic bankruptcy risk of the banking industry, improved the credit market tightening and pushed the economy out of the crisis, but we need to give the market some time to complete its proper adjustment."

Dr. George Magnus said.

Most market participants are also aware that after announces the $700 billion rescue plan, it is unrealistic to expect financial markets to change in a short time.

However, as soon as the market falls rapidly, there are more radical policies. These actions make all parties in financial markets carry out activities around the rescue operation rather than the real macro economy.

The calendar of us macroeconomic data shows that a lot of important data will be released in the next week to two weeks, which will exert strong pressure on the financial market. "Then what will the Fed and the Treasury do?"

Fed policy analysts expressed concern about this.

More and more economists in Wall Street believe that the current crisis and the great depression and the ten years lost by Japan have largely exaggerated the extent of the current crisis.

The former is that tight monetary and fiscal policies have led to a severe recession and become a major crisis. Trade protectionism has made the situation worse.

In the end, the Japanese government finally took the right policy, including clearing up the bad assets on the bank balance sheet, but it took ten years to find the right way.

"In comparison, we believe that the Obama administration will learn from the first two lessons.

First of all, we have taken more vigorous macroeconomic measures and begun to play a role; second, the government departments are willing to adopt more policies to stabilize the financial market and weaken the foundation of the credit crunch.

Finally, the measures taken will greatly reduce the imbalance of triggering the severe recession of the economy, especially in the housing market.

Dr. Richard Berner thinks.

"But we really need to give the market some time and space."

More market participants expressed concern about this.

Frequently, the rescue market accelerated the departure of investors, and launched such a huge rescue plan within a week. The US financial market began to fluctuate nearly 2000 points up and down.

In fact, "the sharp fluctuations in the financial market will only accelerate the pace of investors away from the market, because no one can predict what kind of impact the next government action will have on the market."

CEO, an investment management company in Wall Street, told the author that the company currently manages assets of $320 billion, and the company manages assets of $450 billion at the beginning of this year.

Although the company has already prepared $50 billion in cash to deal with the redemption pressure, investors have also asked for another nearly $100 billion to be redeemed.

Similar to the company, most US financial market investment funds face more redemption pressure at a recent Investment Summit.

"In September, the redemption register day did not have many investors to register for redemption. However, in the month before November 15th, the redemption offer of investors came rash. Most funds did not take precautions against this, because the market situation in September was already in panic, but the investor's willingness to leave was not strong, and now it broke out several times larger than before, which many fund managers did not think of.

So in mid October, a large number of investors demanded redemption, which led to a sharp decline in the US stock market.

A 10 year old star fund manager told the author.

Like the redemption pressure of the investment management company, they must prepare the cash required by the redemption before the end of the year. Most funds say they have only raised the required 1/3, and the remaining 2/3 must be completed within a month before Christmas, otherwise the fund can only be turned off.

At the Investment Summit, if you hold hundreds of millions of dollars in cash, especially those who leave the field earlier, 50%~80% funds, which are all cash managers, are being pursued by other fund managers.

"We now have 70% of the funds are cash and cash equivalents, nearly 2 billion dollars, many funds sell their holdings to us, many of them have a net asset value of more than $1 per share, earning 20 million dollars a year, but the stock price is only a few cents. Even if we ask for half the price than the market price, there are still a large number of funds wanting to sell the stock to us, and we are shocked by this kind of scene."

George Harriss, a fund manager from San Francisco, said.

"Now the situation is, if you have a lot of cash, investors often do not have any desire to redeem, but if your fund net value fell by 20%, it has already performed well in the current market, but the demand for redemption will appear in large numbers, forcing you to cut off the meat."

Mr. George Harriss said, "however, if the government's rescue operations are too frequent, we dare not enter easily. We can not anticipate which actions the government will cause the market to go up, which will lead the market down, and the magnitude is so great.

Maybe we should wait for the chaos of the market and the chaos of the rescue operation to settle down. "

Editor in chief: Yang Jing