金融泡沫与风险中的繁荣

Written by David.Hua

NOTICE: IGNORE THE GRAMMAR MISTAKES IN THE THESIS

In the current China, the swift changes in financial market have thrown the issue of financial bubble into sharpen focus, which was depicted as “irrational exuberance” by economists. In the remaining statements of this essay, I will describe and analyze the present perilous situation with an eye to its diverse perspectives of causes and psychological roots.

THE BOOM OF THE MARKET

The booming of the market started from 2000 approximately, after being recovered from the conundrums in 1997. With the development of enterprises and exporting industry, the average income of individuals increased dramatically as well as the expectation of revenue and economic outlooks. On this occasion, proper concerns were alternated by sightless complacency induced by the bubbles. Therefore, individuals would rather spend their money than save it in banks with the interest rate declines. And this pushed the appearance of over-output, which is the most difficult problem we are facing in the financial bubbles. THE LACK OF SUPERVISE

Regulatory inattention and central bank laxity before the

bubble were also significant parts of the bubbles, but not the central explanation, for these were consequences of the same complacency that the bubbles brought with them. The problem of credit card overusing has been existed for a long time after the installment plan was spread widely. But the regardless supervisors paid no attention to it as many of them did apparently believe the long-run economic pressures of population and economic growth inevitably would push consumption up. It seems impossible to have a marketing crisis in latter-day China from their personal view. UNREASONABLE INVESTMENTS FROM THE GOVT Traditional pattern of economic development relies on the direct investments from the government. It accelerated the increasing of GDP sharply from a short-term sight. However, it also damaged the relevant industrial structure and retarded the process of social prolificacy enhancing and resources effectively redeploying. Moreover, the negative impacts are appearing: the lack of consuming potentiality, the booming of social average commodity price and high level of financial deficit, which may depress the potential external investors.

PSYCHOLOGICAL ORIGINS

The psychological origins of the bubbles are anomalous simple, remaining having blindfold faith in the economic outlook and

immoderate belief in estating market, which exerted heavy pressures on policy makers and mislead primary investors to make wrong decisions.

MEASUREMENTS NEED PUTTING INTO PRACTICE 1.Leading the public to understand the definition and destructive influence it will have on the long-run economics.

2.Reinforcing the supervise over banking organizations and financial employees, and give financial aid to them in order to prevent them from getting illegal income from misleading investors. 3.Adjusting central industry structure to ensure economic system runs firmly and effectively.

4.Accelerating the reform of insurance organizations, release more business insurance products to counteract the risk of collapse for investors and merchants banks.

EPILOGUE

To sum up, the risk of bursting and collapsing we are facing are more and more critical, we have to act effectively in order to escape from the present predicament.