The United States Sub-loan Crisis And The Formation Mechanism Of Conduction Mechanism

In late twentieth Century, with the economic globalization and financialintegration deepening, countries in the world and regional economic and politicalrelations have become increasingly close, international cooperation is becoming moreand more frequent, the whole world economic development degree increase. Acountry or area is negative economic or financial turbulence generated by rapidexpansion, will transfer to other countries or regions. In2007, the United States realestate market bubble led to a global financial tsunami. After the outbreak of the crisisquickly bring strong impact on the United States credit market, capital market and realeconomy. In the asset securitization and the background of economic globalization,the financial crisis quickly spread to the whole world, the European developedcountries, Japan and emerging market economy countries, without exception areaffected.In this paper, the United States subprime mortgage crisis as an example, theconduction mechanism of sub loan crisis in the United States from three perspectivesof economic bubbles, the asset securitization and the international monetary system,and combine with other countries adopted for coping with the crisis measures putforward some policy advice to all countries to prevent financial crisis, has importanttheoretical and practical significance to the stable development on the countries andthe world economy. This paper mainly includes the following parts:First of all, on the basis of previous generation and transmission mechanism offinancial crisis, introduces the research background and research methods etc. Thesecond chapter reviews the relevant theory of financial crisis, the potential causes anddirect causes of the financial crisis.Then, from three views of economic bubbles, the asset securitization and theinternational monetary system and transmission mechanism of the United Statessubprime mortgage crisis evolved from the outbreak to the global economic crisis.The outbreak of the crisis in the real estate market, because the house price crash ledto the sub-prime mortgage default rates rise, caused by the credit loan marketdepreciation, the risk to the credit market; based on the loan on a series ofsecuritization derivatives have fallen, resulting in holders shrinking net write downs,have caused losses, capital market, stock and bond market, the money the market size of the market fell sharply; asset securitization risk from credit market conduction tothe capital market; financial institutions deleveraging leads to decrease in bank creditcreation ability, risk again being conducted to credit market; by the end of thefinancial market conduction to the American economy, making the United Statesinvestment, consumption and import and exports fell at the same time, resulting in theUnited States of America into recession. The crisis by lowering import demand inAmerica and other countries of the psychological effects of investors to the risk to theglobal market. Under the background of financial globalization, economicliberalization, the subprime crisis with the help of asset securitization and otherchannels by the real estate market conduction to the credit market, the credit markettransfer to the capital market, capital market and huge losses to the impact of thefinancial crisis to rebound to the credit markets, the virtual economic instabilityaccelerated by the recession in the real economy at the same time, the free flow ofcapital, the globalization of economy, the lack of financial supervision, marketconfidence and other factors to promote, the crisis spread rapidly in worldwide.Finally, through the introduction and analysis of the United States of America,European countries, Japan and China in response to the crisis measures, learn from itssuccess and put forward some suggestions on the prevention of and response to thefinancial crisis. Through the research of the the American loan crisis conductionmechanism should promote the coordinated development of real economy and virtualeconomy, to prevent the bubble economy, in the process of asset securitizationincrease financial innovation, improve the existing international monetary system,building a moderately flexible exchange rate system. At the same time, countries orregions in economic development, emphasizing their economic interests at the sametime, more attention should be paid to the risk, improve risk warning mechanism andin the prevention of and response to the financial crisis should be the correct role ofgovernment macro-control functions.