Dear American people:

  It is not a cross road Americans face the first time, but I still think it is a must-be-that-way for all Americans. It is the without-holding-back quantitative easing. In the first place, the goal of QE 1 is to provide the liquidity for the US financial markets and to raise those deep-underpriced financial securities, including stocks, bonds and other public traded ones. To make a good cycle and to rebuild the faith on those financial securities are the priority of QE 1. The OT(Operational Twist) and the QE 2 are for the US homeowner who tries hard to reduce one's burden and to have more money for saving and investing. To raise the property price is the first priority of the QE 2 which makes those deep-underpriced properties to show their true nature. I think every well-knowledged scholar can't deny those QEs do fulfill those goals, but those actions of QEs are not conventional and considered to be some shocking steps we have ever seen.

  From the consequence of mainland China QEs, we know the China-QE has some side effects which include the property prices bubble shown in big Chinese cities, higher necessities prices and the metal commodities chasing, such as gold and silver. Those actions are meant to preserve people's purchasing power. Those kinds of side effect are little found in the USA because the USA has many well-run financial markets. The USA has well-run markets of derivatives which can reduce unreasonably anomalies. Also, the USA is a country with a larger output of agricultural commodities and meats. The mainland China once had lacked enough pigs to feed its own people, causing the price of pork rise into the sky in 2011 and 2012. All those things has not shown in the States because America has a decent financial market where the Fed tries hard to protect. When the property price has stabilized in the USA, the property rising seems to be a big issue to the USA again.

  A higher property price brings a variety of issues to discuss. A higher property price can encourage American families to own their houses. But the higher property price may let people choose not to own a house but to rent one. That is the reason which makes scholars confused. The goal of QE 2 is to reduce the cost of owning a house and to stop the endless falling property prices(according to the Cass-Shiller index). The QE 2 does stop the free-falling of property prices, but unfortunately the goal is not to be fulfilled to let families own their own houses when the payroll is still low and the job market is still bad in the USA. Because the USA is a free market society, the mortgage rate rises with the yield of the US ten year treasuries may become a problem. Researchers do worry about it may let US families not want to own houses. The side effects of rising yield of US treasuries are (1)The wealthy people may choose to own the treasury bonds instead to invest in the stock or other financial instruments which can promote the employment of the USA, and (2)The higher yield of US treasury may increase the burden of still fragile American family's balance sheet which decreases their pruchasing powers and deters the employment of other Americans.

  Of course, it can not be deny that the rising yield of US treasuries can restore the bad investment decisions to the normal level which may stop some disasters. The higher cost of capital leads the society avoid those lousy investments that may lead to some big troubles like the Sharp corporation in Japan. It is the belief of the British society which thinks it should keep a higher treasury yield to keep those lousy investments away and to help those retired elder people have a decent life. It is not a wrong idea, but it may not be a right one for the deep-unemployed society of the USA.

  The Chinese-QE makes their property price in big cities go even higher. The reason behind is obvious. The mainland China does not have a well-run financial market to store its wealth. The rising property price does have several bad consequences to their middle class. The first one is the middle class has to rent a house. Paying a higher rent may make them have less money to save and investment for their future. The second one is if the middle class tries hard to own a house, it doesn't mean the house price will not go down in the future when the price of house doubles or even triples its value after those years. According to the situation they face, we know the same situation may happen in the USA. It may be a minor impact when Americans have well-run financial markets that is what the China lacks.

  People in the USA can invest in the REITs or something else to share the profit of rising property prices, but those investments are still restricted by Beijing to all Chinese in the mainland China. It is undeniable if the home property price goes up even further and American families can not share the benefit. We may also see the same thing happens in the USA. The side effect is directed to the middle class of USA. That is why American people have to pay attention to their rent payments and related issues. That is the reason why scholars think it may be a good time to let the yield of US ten year Treasuries to go down a little bit and stabilize around 2.5%. The goal here is to encourage American families to own their houses as the propery price may go even higher. But the higher unemployment rate is the obstacle which stops American people to own their houses.

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