Chapter 555 Wassenaar Agreement
Therefore, even though his political qualifications are still relatively young, George W. Bush still firmly became the 43rd president.
American people hope that he can recreate the low tax rates, freedom and prosperity of the 1980s.
It is a pity that during his eight years in office, he created a prosperity and brewed a new crisis. After eight years, everything seemed to be back to where it was.
After George W. Bush came to power, he fulfilled his promise.
The first is massive tax cuts.
From 2001 to 2003, George W. Bush introduced tax cuts one after another, with a total tax cut of US$1.35 trillion, one of the largest tax cuts in American history.
These tax cuts have reduced taxes for almost all taxpayers, including tax cuts for the lowest-income groups, increased tax credits for research and development investments, lower capital gains taxes, elimination of stock dividend taxes, and reductions in inheritance taxes ,etc.
The tax cut policy does have immediate effects in the short term.
Beginning in 2003, GDP growth returned to above 2%, and the unemployment rate peaked and fell. Everyone was happy.
But the problem is that the tax cuts in the Reagan era were able to create extraordinary results because the tax rates at that time were very high and the social burden was extremely heavy.
When Reagan took office, the maximum personal income tax was 70% and the maximum corporate income tax was 46%, which was a source of social distress. Therefore, the power of tax cuts is long-lasting and huge.
But the situation in the George W. Bush era was different.
The maximum personal income tax is 39%, and the maximum corporate income tax is 34%. The tax rates themselves are not high, and they are not the main contradiction in society.
Therefore, the marginal dividend of tax cuts is very small, and it will be over in three or four years.
But the problem is long-term. The government's fiscal deficit worsens rapidly and gradually becomes a serious problem during the next few presidential terms.
Secondly, there is the relaxation of financial regulation.
As early as the Reagan and Bush administrations, promoting financial liberalization was an important agenda.
For example, the "Garn-Saint-Germain Savings Institutions Law" in 1982, the "Fair Competition Banking Law" in 1987, and the "Financial Institutions Reform, Revitalization and Implementation Plan" in 1989, etc., the core issues are all It is the loosening of financial institutions.
Although these policies also caused the lack of financial supervision and the prevalence of speculation during the Reagan era.
But overall, in that rigid and conservative era, these policies still did more good than harm in unleashing competition and activating the market.
But now, in an era when financial regulation itself is very loose, George W. Bush has lit another "fire".
The government even took it upon itself to ignore the rules of the game.
Bush Jr. believes that the fastest way to save the economy is to leverage real estate.
Because real estate is the mother of all industries and the source of demand for hundreds of industries including steel, cement, furniture and home appliances, heavy industry, light industry, and service industries.
Stimulating real estate will make the recovery of the US economy twice the result with half the effort.
So he proposed an "American Dream", a grand dream of "everyone has a house to live in".
But the real problem is: rich people have already bought houses, and those who cannot afford to buy houses are poor.
The poor have little savings and unstable income. How can we help them realize their dream of "owning a house"?
After George W. Bush thought hard.
A sizzling "American Dream Down Payment Act" is released.
The bill clearly stipulates.
Provides up to $200 million in annual assistance to low-income families who are first-time homebuyers to help them with down payments and loan processing fees.
After a gap of one year, another naked "Zero Down Payment Method" was produced.
The loan threshold and asset review requirements for home buyers have been significantly reduced.
As long as you are an American, no, as long as you are a human being, you can get a loan to buy a house.
Do you think these are all Bush’s methods?
NO.
In order to further stimulate the housing market, he also asked the government to provide long-term subsidies to the two largest residential mortgage companies, Fannie Mae and Freddie Mac, in the secondary market, and asked them to increase their support to low-income people. loan support ratio.
The literal meaning is. Not only those who don’t own a house want to buy a house, but also those who own a house want to buy a house.
As long as you are human, as long as you are in the United States, you have to buy a fucking house.
No money?
Zero down payment.
Have a house but no money?
One-stop service for mortgage loan and house purchase.
Under this situation, the subprime loan market for low-income people boomed rapidly, stimulating the expansion of real estate demand.
From 2004 to 2006, subprime loans accounted for more than 20% of the loan market for three consecutive years, significantly higher than the level of about 10% before 2002.
The short-term effects are also quite eye-catching. The homeownership rate in the United States reached a record high of 69% in 2006, and the homeownership rate of all classes increased by more than 5-10 percentage points.
At this time, the old American real estate market is really simmering with fire and blooming.
How do you say that?
Watch him build a tall building, watch him entertain guests, watch his building collapse!
After years of seeking death, the United States has entered the subprime mortgage crisis.
The crisis lasted more than two years and not only caused the $2 trillion subprime loan market to collapse, Fannie Mae and Freddie Mac were taken over by the government, and three of the five major investment banks (Lehman Brothers , Bear Stearns and Merrill Lynch) disappeared.
It has also profoundly affected the global political and economic landscape.
That's a bit far.
Hearing that Xu Liang was going to enter the real estate market, George W. Bush had a smile on his face.
Now an idea came to his mind.
The guy is very smart and can handle it!
Xu Liang couldn't help but laugh when he saw it.
The reason why he said he wanted to invest in the U.S. real estate bond market was to do what he liked.
For George W. Bush, making money is of course important, but being re-elected is equally important.
If top financial institutions like Hanhua support his real estate business, his policies will be more successful and his chances of re-election will be greater.
"Mr. Xu is indeed the famous 'Caesar' on Wall Street, and his investment vision is admirable."
"Mr. President, you are overly praised. Without your active promotion, Hanhua would not be the same. Invest heavily in U.S. real estate ”
The two of them were smiling, and they felt like close friends for a while.
"Mr. Xu, I agree in principle with your acquisition of Hynix, but I also ask you to abide by the Wassenaar Agreement, otherwise the US government will punish your company in accordance with the content of the agreement."
Xu Liangliang was overjoyed.
As long as the acquisition is successful, the so-called Wassenaar Agreement is not so important.
With Hanhua’s connections, it is not difficult to smoothen the relationship.
"Mr. President, please rest assured that both myself and my companies will strictly abide by the Wassenaar Agreement."
Bush Jr. smiled and nodded.
“When Pacific 1 Fund raises funds, remember to give me a call.”
“Of course. Mr. President and the Bush family will be Hanhua’s closest investors, as well as us. "
After talking about the business, Xu Liang took the opportunity to say goodbye.
After walking out of the White House, Xu Liang became confident and relaxed.
The thing he had been planning for a long time finally came to an end.
(End of this chapter)