Why U.S. businesses fail during the financial crisis

In addition, banks are worried that enterprises will not be able to repay their loans, so they have strictly restricted the issuance of loans, so that it is difficult for enterprises to obtain enough funds to turn over, so that enterprises are struggling to survive, and they have closed down one after another in the case of difficulty in obtaining loans, so as to protect their own maximum interests.

Insolvency, insufficient cash flow, broken capital chain, and untimely payment return.

Dear, I'm glad to answer your <>

The financial crisis triggered by Lehman Brothers in the United States in 2008 was different from today. Because Lehman Brothers is an investment company, much of its main business is leveraged financial speculation. The leverage ratio used is not only 5 times the leverage in the domestic market, but 20 times or even 50 times the leverage.

As long as a large loss occurs in the leverage operation of a certain key link during the delivery period, the principal of the entire Lehman Brothers company will be immediately lost, and the banks and other financial institutions that lend to Lehman Brothers will be trapped. This kind of loss with high leverage is often a loss of hundreds of billions, and the number of financial institutions that have been connected is also tens of thousands, and it is difficult to avoid causing a global financial crisis. In addition, globalization has caused a large amount of money and debt** to be dispersed around the world, and as long as financial institutions in various countries hold them**, once the U.S. loan crisis becomes a global financial crisis.

This will lead to the collapse of the global financial system based on the dollar and a recession. The reason for the failure of the Bank of America is because of the Federal Reserve's continuous interest rate hikes. In just nine months, the Fed raised the base interest rate from one to the other, with the undesirable effect of causing the interest rate on 10-year US Treasury bonds to be lower than the interest rate on short-term deposits.

Now that we know the reasons for the losses of the big banks in Silicon Valley, it is easy to rescue them: the Fed arranges loans to provide liquidity, or other banks inject capital to buy shares of Silicon Valley Bank's original shareholders to provide liquidity, which can be easy ways to defuse the crisis.

The U.S. financial crisis is ostensibly caused by problems in housing mortgage loan derivatives, but the deep-seated cause is the imbalance between the U.S. financial order and financial development, and problems with economic fundamentals.

The imbalance between financial order, financial development, and financial innovation, as well as the lack of financial supervision, are important reasons for the US financial crisis. While a country develops its finances, it must have a corresponding financial order and balance with it. After the Great Crisis of 1933, the United States promulgated the "Glass-Steagall Act" to implement strict supervision and operation of separate industries.

In the nearly 60 years that followed, the U.S. financial industry experienced unprecedented growth, but its rapid growth was accompanied by a corresponding increase in uncertainty in the financial markets. In 1999, the U.S. Congress passed the Financial Services Modernization Act, which promoted financial liberalization, relaxed financial supervision, and put an end to the pattern of separate operations of banks, enterprises, and insurance.

In addition, problems in the financial ecosystem have also contributed to the further development of the financial crisis. The financial crisis in the United States is not only a problem of financial supervision, but also the deterioration of social credit, lack of supervision, market chaos, information asymmetry, and moral hazard in the subprime mortgage crisis, which are important manifestations of problems in the financial ecology.

Since 1999, the deregulation of financial institutions in the United States has caused problems in the financial ecological environment. The fission of financial derivatives and the lengthening of the value chain finally broke in the real estate mortgage loan link, triggering the subprime mortgage crisis. Wall Street's chase for Secured Debt Warrants (CDOs) and Residential Mortgage Bonds (MBS) has gradually led to higher asset-to-equity ratios.

The leverage ratio of various investment banks is becoming larger and larger, and financial risks are constantly superimposing.

Another cause of the U.S. financial crisis is that the fundamentals of the U.S. economy are out of order. From the end of the 20th century to the beginning of this century, the world economic pattern has undergone major adjustments, and the world's original supply and demand curve has been broken and has risen. The United States has adopted the method of unilaterally controlling aggregate demand, with the result that the original supply gap has been widening, prices have continued to rise, the employment situation has reversed, and residents' incomes and purchasing power have declined.

Over the past 60 years, U.S. economic growth and domestic consumption have outstripped the capacity of domestic productivity. On the one hand, the United States has achieved overwhelming growth in the process of virtualization of the real economy and the bubble of the virtual economy; On the other hand, the United States has allocated its huge historical debts to the world through the dollar's reserve currency status and the value transmission mechanism of the capital market. This has increased the dependence of the US economy and shaken the status and confidence in the US economy and the dollar.

A series of laws and policies restricting imports and exports introduced by the United States before the subprime mortgage crisis were an important factor in the weakening of the economic environment. The creation of various barriers to developing countries on the import side, and the restrictions on technical products on the export side, these policies have directly promoted the rise of prices in the United States, reduced employment opportunities in the United States, and inhibited the domestic economic innovation momentum, which is also an important cause of the outbreak of the financial crisis.