On the Credit Crisis

发布时间:2016-12-16 17:13:08    点击:

  Although the international community has adopted a series of bailouts in response to the global credit crisis since 2008, it is still uncertain about the extent of the crisis' breadth and depth. This makes it difficult to predict the prospects of the world economy. Humankind's most urgent, current task is to explore the complicated origin of the crisis and select the correct approach for global economic recovery.

  While studying the inherent laws governing the formation, development, and conclusion of the global credit crisis from the perspective of credit relationships, one discovers that two pairs of contradictions- namely the contradiction between production and credit and the contradiction between credit and rating- are the impetuses that drive the development of contemporary world economy. The nature of production's continuous expansion requires that consumption increase is promoted by increasing credit demand; the inherent requirement of this pair of contradictions' movement is pro-cyclical credit development. Credit subjects are creditors and debtors, and the precondition for creditors and debtors establishing a credit relationship involves creditors requiring assigned ratings for debtors regarding their maximum debt ceiling and underpinned by their real wealth creation capability. The inherent requirement of this pair's movement is counter-cyclical credit development. Therefore, of these two pairs of contradictions, credit and rating constitute the principal contradiction, while rating is the principal aspect of the principal contradiction. The current international rating system has failed to follow this law; rather, it violates the principle that credit increases must be based on the capability of real wealth creation, comply with the movement requirements of the contradiction between production and the credit, and continue to provide creditors with incorrect rating information, ultimately leading to the breakdown of international credit relationship. The global credit crisis is a process of adjustment to the insolvent credit relationship established according to incorrect rating information. The practice of creating a virtual credit relationship by increasing credit supply can only transfer the crisis, as it can never truly fix the crisis. The only way out, and the only way to keep the world economy from a precarious economic situation, is to establish a new international credit rating system that embodies the essential requirements of the credit economy, one that is able to assume rating responsibility globally and establishes a credit relationship that is supported by real wealth creation capability through impartial ratings. The purpose of this paper is to pursue the correct approach for the world economic recovery.