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Prime and sub-prime mortgage loan
proactive structural deterministic default , recovering modeling and risk early warning
Housing Market Strategy
Workshops
Housing
Prices Bubble Formation, Burst Mechanism, Crisis, Recovery, Risks Early Warning
Welcome to the World of
Proactive, Structural, Dynamics US/China/Global, Macro-economic Control, Wealth Effect Impact on Housing, Real Estate Properties
and Construction Materials Supply, Demand, Prices
, Loan Defaults Market Forces Mechanism Forecasts,
Simulation, Prevention Early -Warning,
Current US housing recession cycle , Defaults simulation forecasts
( workshop )
Proactive structural simulation of
global monetary, economic, fiscal policy impact on GDP, inflation, interest
rates, currency, commodity, stocks, housing prices bubbles, prime, sub-prime
mortgage loan, demand, defaults simulation, ,
predicted years, and 3 months ahead
last
20 years global housing price bubbles, economic-housing boom and bust cycles currency, financial crisis
China 1994-96 and current US, China macro-economic control,
economic overheating ,
2000 US IT bubble bursts, 2001 recession and excessive , tax
resulted 55 trillion wealth effect drive US, China coastal housing prices bubble almost
triple since 2000 , doing too little, too late in rate hikes to deflate
the bubble., leading to 2006 housing bubble burst, recession
,avoided current prime , sub-prime
loan defaults betting on
the wrong side of interest rates, bond yield, housing demand, prices
by using Monte Carlo probabilistic modeling in HSBC.
sub-prime mortgage loan default and Bear Stearn
2 mortgage bond hedge fund bankruptcy
, American Home Mortgage 56 billion defaults and BNP suspending 3
hedge funds .
Proactive
structural, dynamic US jumbo, and sub-prime loan demand , default, housing price
Operations Simulations Analysis (OSA)
Polarized US housing markets: Despite US housing markets bubbles burst, entering
recession housing starts and sales plunge 40 % since Jan 2006, billions dollars
sub-prime and hedge fund defaults in July 2007.
However high priced Jumbo mortgage and housing in New York City and major US financial districts
and IT cities ( San Francisco, Silicone Valley ) benefited by investment
banking stock prices tripled fat 26 billion bonus and IT bubble ( Goggle
and Apple stock price up 500 % HP up 400 % times lead to housing prices
soared 40 % June 2007, continue bowing the bubble nearing burst (
more than tripled from 2002)
Proactive, Structural US/China/Global Monetary
Policy and Wealth Effect impact on US housing and equities prices bubbles
identification, burst, recovery and burst, crisis early
warning simulation (
Proactive artificial Intelligence
neural net based multivariate nonlinear regression models and
Proactive structural VAR( Vector
Auto-Regressive ) and Exponential GARCH (Generalized Auto-Regressive
Conditional Hetroskedastic ) financial econometrics models tracking
forecast months, years ahead of last 20 years US/China/Global asset bubble
burst history with
correlation constant of 0.99 , maximum error below 4 %,
presented to 24 global central banks governors,(
China, US Fed, ECB, Asian)
risk management conferences and
in Peking University, China, 2007 June 16
Dr. Warren Huang thousands proactive structural dynamic
simulators tracking, forecast China/US/Global US Fed ignoring 55 trillion
housing and equities wealth gain resulted housing bubbles burst , sub-prime loan
and hedging fund default and jumbo loan high prices housing continue inflating
the price bubbles up 40 % in US, 70 % in China, Shenzhen will result further
housing bubbles burst markets recession drag down equities market and bubble
bursts lead to eventual US economic recession next year
.Dr. Warren
Huang CV
accurately
predicted Nov. 5, 2003 in Singapore ,Shanghai Euro-events conferences , and this
website that US Oil, commodity prices reaching 23 year high, inflation up 5 % in
May 2004
job creation, productivity, profit growth peaking out in the second
quarter 2004 Fed June 0.25 % rate hike China credit tightening, follow US rate
hike in summer 2004, China macroeconomic control repeat 1994, 400 % stock and
housing markets prices gain resulted trillion dollar wealth resulted
excess liquidity housing bubble burst Jan 2006, with unsold
inventory reaching 1.8 million units all time high and housing start plunged 38
% from Jan 2.33 million peak with sub-prime problem spreading to loan default
will continue into 2008 drag US stock markets correction, plunged 1000 points
since July 25 facing deflation, bubble burst market correction ,
China housing and stock bubbles facing burst loan default risks.
.
OSA pioneer Dr. Warren Huang has been invited to speak to 24 global central
banks governors, financial management,
econometric conferences on "Simulation of Global Financial, Banking , properties
prices bubble Crisis, Recovery, Risk Management for financial markets speculation bubble
early Warning since 1998, offer speech at Beijin University global finance
conference on Global capital market, asset prices simulation, risk management and full day
workshop May 27-29, Beijin accurately predict US and global stocks, mutual fund overheat
for 30-50 % correction , ABS downgrade.
He also speak
to Asian central banks, stock exchanges, securities, properties, banking executives on
Global asset prices, bubble simulation, risk management for Asian Business Forum's Asset
backed securitization
conference Sept 30, 2002 introduced his thousands of proprietary strategic OSA
simulators maximize global investment banking profits at minimum risks through tracking
accurately last 20 years monetary, economic , fiscal policy, wealth effect, bubble burst
impact on global capital markets, real estate property prices, bubbles, investment
banking decisions during crisis : book
full day workshop
Global Economy and Financial, Housing, real estate properties Markets Prices
Simulation for Global Central Banks, Investment Banking and Finance Crisis
Real Options Risk OSA ( Operations Simulation Analysis Control, for
government, regulation, supervision and accounting malpractices early-warning:
Real Time Dynamic simulation of Global central banks Monetary, economic, fiscal
Policy Impact on daily money, currency, Housing real estate properties,
building material, supply, demand, , prices, corporate earning, stocks, bond,
commodity, financial futures and derivatives markets , including the causes,
onset, spread, recovery of energy crisis, Asian, Russia, South America Financial
Crisis and LTCM hedging fund failure and current US High tech prices bubble bursts,
recession, recovery impact on the new economy boom and bust and financial systems
stability with applications to global banking and finance , corporate pre/post
merger integration performance improvement and daily accounting malpractices, credit
default risk management for stocks markets, banking and insurance, real estate,
construction companies
Global Housing, real estate Properties, building material Prices, Bubble simulation,
risk management
Housing Properties , building materials
demand, prices bubble has been related to wealth effect from stock markets capital gain,
money supply growth and interest rates
US wealth effect impact on housing prices bubbles boom and bust recession
cycles.
These equation predicted US 6 year economic expansion since 1994, Dow Jones tripled from
3600 to 11400 , Nasdaq soared 5 times lead to wealth effect pushed nationwide housing
price index up 60 % in 2000 with some major high tech cities like San Francisco, Silicon
Valley, Boston, NY, prices even tripled. These will repeat bubble burst in 1990 Fed
interest rate hike resulted price plunge 50 %, trillion dollar saving and loan defaults.
However Fed 6 rate hike led to new economy bubble burst in early 2000 and
2001 recession (accurately predicted by Dr. Huang on
www.osawh.com/
www.sina.com ), Nasdaq plunged 80 %, Dow loss 30 %,
resulted 7.5 trillion wealth effect loss drag US house prices plunge 20 % in silicon
valley. However, 13 rate cuts to 1.0 % and trillion dollar tax cuts were
excessive, led to US 49 trillion dollar wealth effect drive up stock rally
( Nasdaq more than double from 1100 to 2780, Dow Jones doubled from 7400 to
14000 and
coastal area housing prices more than triple since 2000 ( San Diego up
237 %,
Los Angeles up 218 %, Miami up 205 %, Las Vegas up 203 %, DC up 97 %, NY up 134
%, SF up 178 %, Boston up 144 %) wealth gain support the housing markets soaring building materials ( Plywood prices
doubled, lumber up 60 %, and soaring oil prices.
US Fed 17 graduate rate hikes is doing to little too late to cut the
consumer , business demand and housing demand to deflate the bubble
with business spending up 23 %, continue
blowing the bubble to burst, lead to housing bubbles burst starting Jan 2006,
housing start plunged 40 % and stabilized by soaring stock markets
wealth gain at current 1.46 million. However sub-prime loan default problem will
spread into mortgage loan markets and mortgage bond, trillion credit
derivatives markets default as housing recession extend into 2008,
dragging US stocks for correction and economic recession, which lead to 1000
point plunge in Dow Jones recently
OSA/Japan: Macro economics and financial markets applications:
These equation indicated Japan enjoyed 9.6 % GDP growth at 13.5 % money supply growth and
double digit export growth are excessive, inflationary in 1990 lead to Nikkei to 38000.
and soaring building material housing properties prices in 1990. The housing
bubble burst with prices plunged 70 % since 1991 till 2001 as Nikkei plunged to
7600 last
year resulted trillion dollar banking nonperformance loan. Despite benefited
by soaring export and BOJ stimulus package to boost the domestic demand boost the money
supply from 4 % to 10 % and at zero interest rate Nikkei rebound from 15000 to 22500
in 2000 lead Japan getting out of deflation in 2000. However US, EURO slowdown and rising
oil prices lead to Japan trade deficit, export decline, US high tech stock plunge drag
Japan money supply growth rate to 2 % ,Nikkei to 7700 , despite Bank of Japan inject money
into the financial systems, buy back 368 billion stocks to remove banks nonperformance and
boost money supply Japan declining consumer spending and GDP contraction and
5.2 % high unemployment
Japan Housing prices bubble Simulation /Forecasts:
This equation predicted Japan housing prices soared 10 times during the late 1980𠏋 as money
supply growth soared form 5 % to 13 %, Tokyo house prices soared 10 times, ranking top in
global prices, as Nikkei soared from 15000 to 38000 . Tokyo house prices plunge 70 % as
money supply growth plunge from 13 to 3 %, during 1990- 1998, It rebound 30 % as money
supply growth from 2 % to 5 % in Asian crisis recovery in 1999 and government economic
stimulus package, Nikkei rebound from 13000 to 23000 in 2000,. However it down 20 % since
Nikkei plunge from 22000 to 9000 in 2001, and drop another 4 % in
2003 resulted additional loan default,
simulation results will be demonstrated in the conference.
OSA/China Financial, Housiing Markets and Economy Application:
How China avoided 1994 Financial Crisis and made soft-landing and 1998 Asian Financial
Crisis and Current Overheating in Housing, Stocks Price Bubbles Facing Bursts Simulation:
This author with Ji and Dai spending half time in China during 1988 - 1998 implementing
hundreds proactive structural dynamics simulators tracking Taiwan, Hong Kong and China peoples banks monetary policy
impact on inflation and GNP and interest rate, Taiwan and RMB currency and Stock,
Housing
markets prices. It accurately tracking and predicted daily China economy and
financial, housing markets activities, how the former Prime minister Zhu Rongji successfully managed China's
monetary policy led China avoided possible financial crisis by successfully controlled the
inflation, to bring it down from 35 % and 100 % currency depreciation to deflation of 3.5
%in 1999 and current 2.5 % by cutting the money supply growth from peak of 35 % in 1994 to
1996 15 % to achieve soft-landing and boost domestic demand to maintaining 15 % money
supply growth 7.8 % GNP growth which lead to Shanghai stock index plunge from 1994𠏋 peak of
1550 to 333 and stabilized traded between 600 and 800 during 1994 and 1996 through three
stages credit tightening to cut the domestic demand and reduced the import duty by 30 % to
reduce the importing inflation and implemented stock markets and financial institution
regulation and full transparency, ban short term foreign capital speculation in the
housing and stock markets achieved perfect soft-landing in 1996. And also predicted 1996
interest rate cuts leading to bull markets, with Shanghai A index tripled from 520 to 1650
. ( all predicted by the author on lectures to 20 million 15 cities TV, radio programs and
national newspapers during 1994- 98 .The state enterprise reform and Asian crisis resulted
high unemployment and export slowdown, pulling the money supply down from 1996?s 28 % to
14 % in 1999, drag the GNP form 9.5 % to 7.8 % . But recovered strongly by domestic
stimulus package and strong export growth (40 %) this year in soaring global demand, .
with GDP 8.3 % and Shanghai index soared to 2100 new high while global stocks under
correction due to US interest rate hike
US recession in 2001 drag China stock for 40 % correction as predicted by Dr.
Huang to China Peoples Bank staff in Beijin July 2001 ( Shanghai A plunged from
2200 to 1450 in late 2002
China Housing prices bubble
Simulation /Forecasts:
This equation predicted China housing prices soared 10 times during 1986- 1994 as money
supply growth soared from -5 % to 35 %, Beijin, Shanghai house prices soared 10 times,
ranking top 5 in global prices, as Shanghai stock index soared from 150 to 1500 . Housing
prices plunge 70 % as money supply growth plunge from 35 to 12 %, during 1994- 1998, It
rebound 30 % as money supply growth from 12 % to 15 % in Asian crisis recovery in 1999 and
government economic stimulus package, Shanghai index rebound from 520 to 2100 since in
July 2001 and follow US Dow Jones, Nikkei, Henseng plunged below 9000, Shanghai index down
40 % to 1350 drag housing prices down 10- 20 % in Beijin and 5-10 % nationwide due to loss
of trillion yuan wealth effect. However, the 30 % increase in export and
57 billion foreign
capital inflow in 2003, lead to excessive monetary growth of 24 % and bank loan
soared 33 % , despite 2007 China Peoples Bank raise rate 3 time, and
bank deposit ratio 6 time and raising capital gain tax and margin down
payment, credit tightening, China A shares up 400 % since 2006 pushed Beijin and coastal cities Shanghai
, Beijin, Nimbo, Guanzhou, Shenzhen prices almost triple, and Shenzhen housing
price up 500 % close to that of Hong Kong price with first half 2007 price up
almost 70 % benefited by 500 % wealth gain in Shenzhen stock index
Shanghai up 20 %
Hong Kong Housing prices
bubble Simulation /Forecasts:
This equation predicted Hong Kong housing prices doubled in 1997 money supply
growth soared form 8 % to 24 %, It plunged 50 % in 1998 Asian financial
crisis, as interest rate soared from 5 to 19 %, Henseng index plunged 70 %, It
recovered 20 % in 2000 boom, and plunged 25 % since 2001 recession, It
tripled from 7500 to 23500 due to US and China housing, stock market
bubbles drive up housing prices over 1997 pre crisis peak .
S. Korea Housing prices bubble
Simulation /Forecasts:
This equation predicted S Korea housing prices doubled in 1995- 1998 as
money supply growth soared form 5 % to 18 %, Seoul index from 300 to 1400,, It
plunged 50 % in 1998-99 Asian Financial crisis, as interest rate hike from 5 % to 15 %,
Seoul index plunged to 200, and rebound 20 % since 2000 till now, housing loan
more than doubled, amount to100 % of GDP, overheated, lead to Bank of Korea raising
interest twice. facing deflation and bubble burst risks . Housing prices lifted
by China economic expansion, housing, stock prices bubbles and Korean stocks
More than doubled from 900 to 1900, housing price gain wealth up 50
% in since 2003
Korea economic contraction.. and stabilize at current level as interest rate
raised to 4.7 %
Australia Housing Bubble Burst Simulation :
Excessive money supply growth at 13 %, low interest rate at 4.8 %pushed
Australia housing prices up 19 % in 2002 and 18 % in 2003 among the top gainers,
despite only 2 % GDP growth will facing bubble burst , plunge 30 % in future
interest hike
European Housing Bubbles Burst
Most European countries following US rate cuts resulted uneven development in
overheated housing market; UK, Spain, Ireland, Netherlands, Ireland
housing prices more than doubled since 1995,France, Italy, Belgian house prices
up 10 % since 2002, despite economy facing contraction.
OSA pioneer
Dr. Warren Huang has offered thousands seminars, workshops, daily
commentary to TV, radio lectures for 30 million China, Taiwan, ASEAN,
Asian, US government, central banks, banking, finance, property, corporate CEO, CFO, senior
executive, fund , real estate development, sales, managers, analysts, investors on GNP
growth, price stability risks control policy, government, financial industry,
Corporate reform, reengineering, default risks supervision, regulation, prevention,
daily global financial market portfolio, housing real estate properties markets
bubble risks management, construction industries supply chain cost reduction on the
job training , decision support for e-commerce, e-business, e-finance,
e-investment applications
Simulation of monetary policy impact Analysis
Hundred
thousands integrated, global structural, dynamics, deterministic proprietary model
simulators
first time shown on this website
the most reliable global stock indices , currency OSA simulation charts
OSA Simulation Charts tracking forecasts 1-3 month
ahead monetary policy on last 20 years daily
A. Consumer spending, Fed Fund rate, Dollar exchange rate impact on Dow Jones Index
B. Japan money supply growth, Yen exchange rate, Dow Jones impact on Tokyo Nikkei index
C. EU money supply growth, EURO exchange rate, Dow Jones impact on German DAX index
D. Hong Kong money supply growth, interbank rate, Dow Jones impact on Henseng index have been developed, implemented supporting the following goal,
mission, performance oriented outsourcing strategic centers corporate/ memberships/ workshops
tailored to global government, enterprises, banking, finances enterprises board members, think tank
and executives in integrating into the global markets decision needs:Monetary Policy, Oil Prices Impact on Global Financial, Energy Crisis, Recovery, Risk
Control
The author has spend half of his time in Taiwan, ASEAN, Asia( 1980- 1996) and China, Hong
Kong(1994-1998 with Ji in China), and US(1970-2002), in developing, implementing dynamics
Operations Simulation Analysis(OSA) of global central banks monetary, economic policy, oil
prices impact on daily EURO, Asian, US, global macro economy, daily financial markets
normal, crisis , real estate, high-tech bubble burst dynamics during 1980 and 2003.
A: Root Causes of EURO, Asian and Global Economic, stocks, real estate bubble Boom
and Bust, Financial Markets Crisis, Risks Simulation :
These real time simulation systems tracking successfully the root causes of all global
economic bubble boom and bust, financial, banking ,energy crisis and associated risks came
from excessive government fiscal, central banks monetary policy and global players hot
money speculation resulted soaring properties, stocks prices, labor costs and associated
asset bubble, wealth effect led to soaring consumer, business demand, rising oils and
commodity prices, imports costs, declining export, shrinking trade surplus or expanding
trade, current account deficit and overpriced currency and properties, equities prices.
And eventual markets crash and crisis.
B. Simulation of the Onset of EURO, Asia, Global Currency Crisis:-Instantaneous releasing
overpriced stress
These simulators tracking the real causes and the onset of the 1980, 1987, 1990 US
recession, stock market crash, 1992 European, 1994, China, 1995, Mexico, 1997
Thailand, 1998 Korea and Indonesia , Russia, Brazil currency, financial crisis at moment
widening trade deficit (approaching one billion monthly) and current account deficits lead
to overpriced currency and the onset of crisis:- currencies plunge to release it's
overvalued stress, returned to new rational equilibrium. UK and Sweden, Italy suffered
currency plunge 1992, due to widening trade deficit . while Thailand, central bank float
the Bhat (has been fixed at 25 for 4 years), in July 1997, it plunge to 50, S. Korea in
Nov, Won plunge to 2100, and Sept, Russia float the ruble, and 1999 March, Brazil float
it's Real all at the wrong time ( at one billion US dollar monthly trade deficit and
current account deficit,) the currency take the plunge as shown in the simulation charts
in the conference), and Singapore dollar, Taiwan NT dollar dropped 30 % reflecting
shrinking trade surplus and turning into trade deficit. US dollar plunge to 102 Yen from
147 at the time Greenspan announce interest rate cuts in winter 1998, as it's trade
deficit soared to 26 billion due to wealth effect resulted soaring stock prices, import
demand and tripled oil prices.
C. Simulation of The Onset of Global Stock Markets Crash Crisis Dynamics:- releasing
overpriced stress
These global stock markets dynamic simulators tracking instantaneous markets reacting to
rising interests rates, credit tightening ( to fight inflation and stabilize the currency,
created credit crunch. The currency and stock markets crashed to it's rational level, to
release it's overpriced stress to new equilibrium resulted trillion dollars loses . Global
financial market analysts have short memory on the interest rate hike impact on stock
prices despite interest rate hikes lead to Asian crisis which Thailand raised interest
rate to 25 % to stabilized Bhat at 50, took the Bangkok SET index plunge 70 % from 1000 to
250, Hong Kong raised it's short term interest rate to 19 % to defend it's HK dollars
stock to US dollar, took the Henseng index plunge 60 %(from 12500 to 6200),Singapore
raised interest rate to 12 % to stabilize the currency, Singapore Strait Times drop 60 %,
Taiwan Index down 48 % . US Dow Plunged from 11300 to 9000 , Nasdaq from 5100 to 1800 this
year and EURO stocks retreat 20 % reacting to US Fed and ECB interest rate hikes to
cool-off the overheated US, EURO stocks bubble in internet and biotech and housing, labor
markets due to wealth effect created excessive consumer, business demand. Similar crisis
onset in 1987 US Dow Jones, 1990 Japan cut money supply from 13 % to 5 % to cooloff the
bubble economy due to soaring stocks, housing markets, took Nikkei plunge 38000 to 20000,
Taiwan raise interest from 6 % to 14 % took stock plunge form 12400 to 2400 and in 1992
European currency, crisis took stock plunge 40 %, 1994 China runaway inflation caused by
100 % currency depreciation, Shanghai A index plunged from 1500 to 333, reacting to
doubled interest rates hike and Mexico crisis peso and stock market plunge 50 % Brazil
index plunged from 8500 to 5400 reacting interest rate hike from 40 % to 70 %
D. Simulation of the Spread and capital out flow, banking default of EURO, Asian and
Global Currency Crisis:
Thousands expert systems based simulators tracking, simulating the causes and spread of
the past major global financial market currency crisis, FDI capital In/outflow, banking
default and risks in the last 20 years are due to global central banks and financial
markets decision makers. The spread of global financial crisis and default risks are
caused through excessive central banks money supply followed by global players capital
inflow speculating the overheated financial markets and outflow created market plunge
resulted nonperformance loan and credit default(simulation results shown in the conference
demonstrated the spread of UK, EURO currency crisis in 1992, Thailand currency plunge
spread into ASEAN country, Hong Kong, Taiwan, S Korea, Russia default resulted LTCM into
US and EURO , Brazil and Japan and this year s trillion dollars market loses in US,
Taiwan, Korea are of poor investment strategy in US properties, stocks and Asian stocks
and manufacturing industries caught in excessive money supply and global short term
capital (hot money) inflow resulted overheated bubble economy (skyrocketing properties,
stock prices and labor costs, declining export, widening trade, current deficit,(with one
billion trade deficit) Indonesia, Russia were complicated by internal political turmoil,
resulted global player pulling capital outflow resulted currency, stocks, properties
prices plunge .
E. Simulation of Global Monetary, Economic Policy, oil prices Impact on Post Recovery of
Asian and Global Financial Markets Crisis:
These systems tracking, simulate the IMF rescue plan progress results and the recovery of
ASEAN, Asian, Russia, Brazil and LTCM betting on the wrong of interest rates(US T-Bond and
Fed fund rates) and bond yield spreads. And predicted US Fed three interest rate cuts lead
to fast US and Asian stock market rebound and economic recovery:, reduce the interest rate
spread ,took the pressure off Asian currency , dollar tumbled from 147 to 111 While most
ASEAN and Asian troubled country benefited by high interest rate, falling commodities
prices, reduced domestic demand, imports, cheap currency lead to soaring export and trade
surplus(S. Korea has 40 billion ) and soaring export growth, are able to cut interest
rates to the pre crisis level., and maintain stable currency, lead to stock markets more
than tripled S. Korea already lead the recovery enjoy 11 % GNP Japan has 9 % GNP growth,
Thailand, Hong Kong, Singapore return to 10 % growth., China back to 8.1 % Taiwan back to
7 % growth getting out of recession and deflation ..
These systems predicted on May 1999 Macao's central banks policy conference the first US
interest rate hike to fight domestic inflation due to soaring oils prices, and demand, 5
other interest rate hikes in the author's 16 int'l conferences later (ref. 1-18)
These systems accurately predicted US and EURO 1999 last quarter excessive money supply
for Y2K resulted soaring global stocks and housing markets(asset bubble), resulted wealth
effect led to runaway consumer, business spending debt resulted labor shortage forced
Greenspan took series interest rate hikes in 2000 to cool-off the stocks, housing markets,
reduce consumer, business demand. These simulators accurately predicted in early 1999 that
global financial markets analysts overoptimistic over second half 2000 and 2001 earning
outlook Dow 15 % plunge, Korea, Japan, Taiwan, Thailand follow Nasdaq plunge 60 %, Dow
plunged into 9100 bear market and US NAPM index plunge to 41.7 recession low resulted
Greenspan 0.5 % rate cut with global high fliers internet, biotech IPO stocks plunge 50 %
to 95 % will drag Asian stocks into 50 %, EURO stocks into 20 % correction .
Goal Mission, Performance oriented multidisciplinary Risk Operations Simulation
Analysis(OSA) strategic and execution teams for risk management and restructuring,
reengineering
Hundreds risks OSA teams have been implemented in Taiwan, China, US: ASEAN by the author ,
Integrating daily central banks monetary operation into banking, financial markets debt
restructuring, pre and post merger integration performance improvement, transparency,
supervision, Basal, Prudential Regulations tracking and prevent various financial systemic
risk related nonperformance loan and credit defaults and government, banking, financial
markets, corporate reform, reengineering , management, technological innovation to improve
global competitiveness
On the job training workshops and Academic University Teaching and Research: The author
has offered these methodology and systematic analysis to thousands risk management
workshops in China, and Taiwan 14 major cities nationwide TV, radio program lectures to 30
million government, banking, finance executives, managers, investors and trained over 1000
chemical engineering, economics, global strategic management operations research senior
and graduates teaching and research program`.
Pre and post crisis recovery Simulation results of EURO, Thailand, Japan, Korea,
Singapore, Hong Kong, China, Taiwan , US inflation, GNP, interest rates, FDI capital flow,
bank defaults rate, properties prices, Currency, stock, bond index, profit margin and
corporate stock prices simulation will be demonstrated in the conference
Monetary Policy Impact on Global Money, Currency, Stocks and Derivatives Markets Prices
Risks simulation, control
Global central bankers have been facing daily challenges, risks from the macro economic
growth ,financial market prices stability in the trillion dollar Asian, Russia, Brazil
currency crisis and the mature financial markets turbulence like 1998 summer 4 billion
dollar LTCM failure betting on the wrong side of interest rate, bond spread and global
stock markets trillion dollars loses due to ignoring EURO, US interest hikes impact on
global slowdown, corporate earning decline, stock prices plunge 50- 90 % and global credit
crunch in 70 trillion dollar financial derivatives markets.
The global central bankers are playing dual role in provide prudent monetary policy to
achieving nations price and growth stability and monitoring it𠏋 impact on the
economics and daily financial market dynamics ( normal and crisis discontinuous) responses
and supervising the banking industry providing prudent credit decisions to support the
economic growth and healthy financial markets trading process.
Monetary Policy Impact on Global Economics ,Banking, Financial Crisis, Systems Risks
Simulation:
OSA/ASEAN and OSA/Asian, OSA/Russia, OSA/South America Financial Crisis Root Causes
Simulation:
These formulas indicated the rest of Asian emerging countries, Russia, Mexico, Brazil
failed to do so, maintaining excessive money supply and growth, by encourage short term
hot money speculating in housing and stock markets resulted soaring stocks and properties
prices and labor costs caused export decline and huge trade and current account deficit,
led to runaway currency depreciation and inflation, followed by rising interest rate and
tight money supply resulted economic contraction between 5 % and 10 % started July of 1997
, the burst of the asset bubble and widening of bond yield spread
These formula provide global central bankers and IMF combined feedforward and feedback
control of inflation GNP through micro-tuning policy, meeting growth and stability control
without causing damage due to deflation and inflation
Monetary Policy Impact on daily Global Financial Markets Dynamics Simulations:
Monetary Policy and shocks, speculative attack impact on global Financial Markets dynamics
under stress:
Global Interest Rates , Bond prices and spread, Debt Markets Dynamics , Credit, Market
Risk Simulations
The global central bankers use the commodity prices and inflation rate as the leading
indicators for setting the monetary policy and short term interest rates (inter-bank rate
or Fed fund rate), while the long term interest rate bond yield are related to the dollar
exchange rate which influence the capital flow
.Short term Interbank or Fed fund rate =F (Money supply growth rate %, commodity index,
oil price, inflation )
long term bond yield = F( money supply growth rate %, dollar exchange rate, inflation
rate)
These formulas tracking, simulate global interest rate, bond prices dynamics accurately.
It indicate that reduced demand due to Asian turmoil have drag down the global oils and ,
commodities prices and inflation,
US treasury and junk bond prices spread LTCM failure simulation :
The plunging oil prices during Asian Crisis allow US, China , Japan and EURO central banks
applying expansionary monetary policy, which lead to falling interest rates and all time
high in bond prices, US 30 yr ?T-Bond yield dropped below 4.5 % due to low inflation and
strong dollar, while the junk Russia bond and US corporate bond was hurt by global
financial crisis, especially Russia high inflation, plunge oil income lead to trade
deficit and falling rubble , pushed yield to all time high led to widening spread summer
1998 as predicted by this formula, while LTCM speculate on Russia junk bond believe bond
spread will converge below 2 %( it widening to 4 % instead) LTCM lead to US Fed three
interest rate cut to 4.5 % to cut dollar strength, therefore the bond spread due to due to
strong dollar and low inflation, oil prices
However, excessive money supply in 1998 lead to soaring US and global stocks, strong Asian
recovery , with excessive money supply in winter 1999 for Y2K pushed global stocks even
higher lead oil price doubled from 10 to 37, US inflation up from 1.1 to 3.5 % forced US 6
interest rate hike to 6.5 and EURO 7 interest rate hike to 4.75 % to cool off the soaring
US stock market fueling consumer, business demand, pushing housing prices and labor prices
bond yield soared from 4.5 % to 6.5%(with junk corporate bond yield soared to 13.5 %), due
to falling dollar, rising inflation, plunging stock prices and concerned about asset
bubble burst.
These deterministic models minimize risks , saving trillion dollar loses due to central
bankers monetary policy risks, credit risks in developing countries, and betting on the
wrong side of interest rates by LTCM and other banking and financial industry executives`
OSA/ASEAN, ASIAN and Russia, Brazil crisis applications While the troubled ASEAN and Asian
countries and Russia, Brazil, Mexico central bankers have to tight the money supply,
raising interest rates to fight inflation and stabilize the currency which caused by
excessive money supply and currency depreciation, led to capital outflow, bond , stocks,
plunge, bond yield spread soared to new high, instead of converge.
==================
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