Depth report

　　

The yield of Greece's two-year government bond once soared to 10% in recent days, the highest level since June last year. The main reason for the surge in government bond yields is that the International Monetary Fund has recently issued a serious warning about Greece’s debt problems, believing that Greece’s fiscal surplus cannot reach the target of creditors in the euro zone, and Greece’s debt may increase explosively. At that time, the global financial market may have another shock, and it may even evolve into a "Brexit" ending. German Finance Minister Wolfgang Schaeuble also issued a few days ago that if Greece's debt is to be reduced, then Greece must withdraw from the euro zone.

    In response, Greek Prime Minister Tsipras responded on February 11 that he was confident that he could find a solution to the debt problem. He also warned the International Monetary Fund and Schaeuble to "stop playing with fire" in dealing with Greece's debt issue, and called on German Chancellor Merkel to "please her finance minister to stop the invasion of Greece."

 　 Many people believe that the Greek Prime Minister Tsipras hopes to solve the problem through the old trick of "Brexit", but this time it is really different. This year is an eventful season with many variables, and the internal and external environments are not conducive to the settlement of the Greek debt crisis.

  In terms of the internal environment, the current debt ratio of Greece is 179% of GDP. The reason why Greece’s debt problem has been chronically ill has been unresolved for 8 years. In the final analysis, the Greek government has eight bottles and seven caps. Even the situation of only four or five covers has not changed, but it is getting worse. In the past eight years, it has only depended on the assistance provided by the International Monetary Fund and the European Union.

 Moreover, Greece has always been plagued by challenges such as a narrow tax base, inadequate tax collection, weak bank balance sheets and supervision, as well as resistance to structural reforms pervading various regions. The speed of economic recovery is not as fast as expected, and long-term growth may only reach 1%. , There is a risk of significant decline in the future. It can be said that since 2008, Greece's current recession is far worse than that of the Eurozone as a whole, and the magnitude of the recession is even greater than the duration of the Great Depression of the United States in the 1930s. Greece has fallen into a death spiral in which the more economic recession, the more severe the debt problem, the debt problem cannot be solved, and the more recession the economy is.

 In terms of the external environment, U.S. President Trump is playing pro-Russian cards. How the EU should deal with the threat of Russia is not yet known; it also suffered from the aftershocks of Brexit, and the EU member states cannot protect themselves, plus this year’s European multinational elections. Involving the change of political situation, the Dutch elections will take the lead in March, followed by France in April, Germany in September, and Italy may also have elections earlier this year, making the overall situation even more unpredictable.

 What’s more serious is that even though the EU is willing to provide another debt relief for the “big man” of Greece to delay the outbreak of the Greek debt crisis, the debt problems of both Greece and the Netherlands and other EU countries have been accumulated and have been With the intention of "Brexit", this is undoubtedly pushing the euro, a currency union, to the edge of the cliff, and sooner or later the euro zone will be torn apart, which will further hit the global financial market including China.

 　 On the one hand, after the outbreak of the European debt crisis, some euro area countries are not looking for how to solve the problem, but for how to leave the euro area. There have been calls for "Brexit" in Greece, the Netherlands and other countries in the market. Greece calls "Brexit" "Grexit" and the Netherlands "Nexit".

  The Netherlands even cited many of the benefits of “Brexit”. One is that the Dutch government and central bank can no longer be restricted by the European Central Bank, and can re-implement fiscal and monetary policies in line with their own interests; the other is that they can plan their own country. Economic stimulus policies no longer need to consider the risks of inflation or deflation brought to other members of the euro zone; third, the euro is no longer used as a currency in circulation, and after the old Dutch guild is reused, the Dutch government can determine the exchange rate appreciation and depreciation on its own. In order to increase foreign trade exports and promote economic development.

  On the other hand, although the debt crisis has been plagued the euro area countries for eight years, the euro area countries have hardly made any practical remedies, such as improving the economic structure of the member states, restoring the long-term sustainability of fiscal policies, and rebuilding the currency union. Measures such as the institutional structure of the European Union, so that the euro can be more sustainable. Many governments in the Eurozone are choosing to evade the problem. They only hope to cover up the problem by printing money such as negative interest rates and the European version of the quantitative easing policy, hoping to leave it to the smarter European next generation to solve it.

    But these methods often backfire. The European Central Bank’s negative interest rate policy hopes to "drive out" money from the central bank and increase bank loans to enterprises in order to promote economic development. However, banks want to increase loans to enterprises mainly for consideration of profit, risk appetite and liquidity preference. Due to insufficient confidence in the economic prospects, the risk of bad debts of loans to enterprises cannot be underestimated. Therefore, even if the money is "driven" out, banks can use the money to invest in capital-guaranteed assets such as treasury bonds and precious metals. They don't necessarily have to risk lending to companies. The real economy may still be unprofitable.

    In addition, the implementation of a looser monetary policy is effective in saving the financial crisis, but it is not effective in stimulating the economy. Whether it is the QE policy of the United States or Japan, it has proved that printing money is thankless and will produce many sequelae. These measures will also make the euro zone countries with serious debts less motivated to implement austerity policies. Instead, they will do everything possible to get these over-printed banknotes and rely on these "easy money" instead of tightening their belts and cutting expenditures. Hard money" to pay off debts. This approach of demolishing the East Wall and replenishing the West Wall will only make the debts bigger and bigger, and the risk of the debt crisis erupting again will gradually increase.

  　 Therefore, the European version of the large-scale banknote printing measures will only lead to more and more problems accumulated in the euro zone, and eventually become a reminder of the euro.

  If the above situation continues, the euro will no longer be the euro in the next 3 or 4 years, and it is likely to split into "A Euro" and "B Euro". The member countries with strong economic power and very light debts such as Germany and France will use "A". "Euro", member countries with weak economic power and heavy debts such as Greece and Portugal use "B Euro". Some countries with severe debts such as Greece, Portugal, the Netherlands and other Eurozone members will exit the Eurozone and return to their own currencies if the situation continues to deteriorate. The Eurozone faces diversified risks.

  Regardless of whether it is the use of "B Euro" or the re-use of national currencies by some member states, the assets and liabilities of the above-mentioned countries that were once denominated in Euros will be converted into the national currency or "B Euro" without taking into account other financial matters. The Euro value of the tool. This may destroy the balance sheet and trigger global financial turmoil. Countries in the world, including China, cannot avoid being affected.