The Economy Cannot be Saved with the Wrong Medicine
China Times editorial
A Translation
December 10, 2008

In order to revitalize their nations' economies, many governments are prescribing strong medicine. U.S. President-elect Barack Obama has warned that the U.S. economy may deteriorate further. President Ma Ying-jeou has warned that our economy may not improve until the second quarter of next year. To rescue the economy, the newly installed Financial Supervisory Commission (FSC) Chairman Chen Chung has asked that 4.2 trillion NT from the Postal Savings Fund be transferred to small and medium banks, to increase their credibility. This is an innovative idea, but it may alarm depositors.

The financial crisis of the century has left a bitter taste in many investors and depositors mouths. The S&P 500 fell to its lowest level in 11 years. The Nikkei fell to its lowest level in 26 years. Investors have lost any profits they made over the past few years. The financial crisis has victimized retirees who depend on their pensions. In the past investment risks could be diversified. But this time it's different. Stocks, real estate, commodities, hedge funds, and private equity funds have all suffered heavy losses. Even investors who have adopted the most conservative approach, and deposited their money in savings accounts, must worry about bank failures.

The global financial crisis has gone on for over a year. The market remains volatile. The outlook for the coming year remains negative. Governments are prescribing strong medicine. On December 4, the traditionally conservative Bank of England slashed interest rates a second time, by 1%, bringing the rate down to 2%, the lowest level in half a century. Sweden's central bank was even more aggressive. It slashed the rate by 1.75% to 2%, the lowest level in 16 years. The European Central Bank also lowered its rates 0.75%, to 2.5%. This is the Eurozone's largest drop in 10 years. The situation is even worse in the United States. The fed rate has fallen to a record low 1%. The expectation is that the Fed's policy-making committee will cut the rate another 0.5% this month, bringing interest rates close to zero.

Amidst this new wave of global interest rate cuts, our own central bank has moved quickly. It has slashed interest rates four times since September, lowering them a total of 0.875%. These cuts are smaller than those in Europe and the United States. The economy is deteriorating rapidly. The central bank is expected to cut interest rates slightly more than in the past. At this week's upcoming board meeting, it may prescribe strong medicine, and cut rates more drastically. It may also lower the NT Dollar exchange rate. But economists are worried. Monetary policy has limits. Large interest rate cuts imply a severe economic downturn, and undermine market confidence. Meanwhile, lowering interest rates to near zero, may lead to a liquidity trap, greately reducing the rate cuts' effectiveness.

Taiwan's economy has traditionally been export driven. In the face of frozen U.S. and European markets, Taiwan's exports have fallen even more rapidly. Growth has been negative for three consecutive months. In November Taiwan's exports to the mainland declined nearly 39% over the same period last year. Flat panel displays and electrical products experienced the largest decline in the calendar year. Under the circumstances, the central bank has no excuse not to lower interest rates. But such a move has a huge impact on retirees who depend upon earned interest to survive.

But what concerns depositors the most is the FSC. It is calling for nearly 4.2 trillion NT in postal savings deposits to be transferred to small and medium banks. The FSC is implementing the previous administration's policy of government support for banks, and bank support for industry. The FSC has yet to offer a detailed explanation of its foreign policy objectives and risk assessment. Does the FSC really have the right to order the Post Office to transfer depositors' savings into to small and medium banks? Isn't this a disguised form of wealth redistribution?

During the Democratic Progressive Party's rule, the Executive Yuan ordered the Post Office to deposit 10 billion NT into the Sunny Trust Bank's vaults. This caused quite a stir. Not surprisingly, everyone smelled political patronage.

In the wake of ruling party change, the Postal Savings Fund became a coveted prize. When the National Development Fund wanted to increase its fund to one trillion NT, it asked the Postal Savings Fund for a handout. The FSC also treats the Postal Savings Fund as a tool for relief. Nobody seems to feel they need the approval of the depositors. The government has declared that deposits are fully protected. Doesn't the fact that small and medium banks are experiencing bank runs reflect a lack of confidence? That being the case, what right do these banks have to transfer funds from the Postal Savings Funds into their vaults?

In the face of tough global economic circumstances, President Ma has warned that we face three consecutive quarters of negative economic growth. Times are going to be tough. The Ma administration intends to prescribe some strong medicine. But it must first evaluate the pros and cons of its policies, some of which may lead to controversy. It must "measure twice, cut once." Otherwise it will merely dig up the east wall to shore up the west wall, leading to even more side effects. That is hardly what the public hopes to see.

中時電子報
中國時報 　2008.12.10
救經濟不能病急亂投醫
中時社論

為了振興經濟，各國政府紛紛下猛藥。美國總統當選人歐巴馬警告，美國經濟可能進一步惡化；馬英九總統也提醒，台灣經濟最快明年第二季才可能好轉。為了拚經 濟，最近新任金管會主委陳?要求四．二兆元郵政儲金轉存中小型銀行，以擴大銀行授信的能量，這項作法頗有創意，卻可能會令不少存款人感到害怕。

百年罕見的金融風暴讓投資人、存款人都嘗到痛苦的滋味。美國標準普爾五百指數跌到十一年新低，日經指數更跌到廿六年新低，股市投資人過去幾年的獲利全部賠 光，更害慘許多靠退休基金過日子的老人。以往談投資理財要分散風險，這回不論投資股市、房地產、原物料、對沖基金或私募基金都損失慘重；連最保守的把錢存 進銀行，都要擔心銀行會不會倒。

金融海嘯持續一年多，迄今金融市場波動性仍然非常大，眼見明年景氣持續走向衰退，各國政府無不下猛藥。向來保守的英格蘭銀行十二月四日再次大降息四碼，把 利率降到二％，為半世紀以來最低水準；瑞典央行更猛，利率大降七碼至二％，為十六年來最低水準；歐洲央行亦大降三碼至二．五％，這是歐元區十年來最大的降 幅。美國的情況更慘，聯邦基金利率已降至一％的歷史新低，市場預期，聯準會本月中決策會議將會進一步降息二碼，逼近零利率的水準。

在新一波全球的降息風潮，我國央行動作非常迅速，自九月以來連續降息四次，總計降幅共○．八七五個百分點，這樣的降幅比歐美來得小，由於景氣急轉直下，市 場預期，央行將改變以往微幅的降息措施，本周即將召開的央行理監事會議可能下猛藥，擴大降息幅度，同時放手讓新台幣匯率走貶。不過，經濟學家也擔憂，貨幣 政策有其極限，大幅度降息暗示經濟衰退更加嚴重，打擊市場信心，而利率降到逼近零，更將陷入流動性陷阱，效果將大打折扣。

台灣的經濟向來依賴出口，面對歐美市場急凍，台灣的出口更是急速下滑，連三月負成長，十一月份台灣對大陸出口比去年同期衰退近三成九，其中，面板、電機產 品衰退幅度為歷年最大。在這樣慘淡的情況下，央行似乎找不到不降息救經濟的理由。然而，此舉對於依賴微薄存款利息過活的退休族，利息大幅縮水，影響同樣非 常大。

不過，真正令存款戶擔心的是，金管會要求總額高達四．二兆元的郵政儲金轉存中小型銀行，這是金管會落實先前政府挺銀行、銀行挺企業的重要措施。然而，這項 如此重大的政策，迄今未看到金管會詳細對外說明政策目標與風險評估。難道僅憑金管會一句話就可以指揮郵政總局把錢轉存到中小型銀行？這是不是變相紓困？

民進黨執政期間，行政院指揮郵儲金轉存一百億元至陽信銀行，引發軒然大波，各界質疑其中有利益輸送之嫌。

如今政黨輪替之後，郵政儲金變成各方覬覦的標的，國發基金想擴大規模至一兆元，要向郵政儲金伸手；金管會亦把郵政儲金當作紓困的工具，難道不必取得存款大 眾的同意？在政府宣布存款全額保障下，中小型銀行仍發生存款流失情形，不正好反應出存款人對他們較缺乏信心。那麼，這些銀行為何可以在無條件下取得郵政儲 金的轉存呢？

面對全球嚴峻的經濟情勢，馬總統明白警告大家，經濟連續三季負成長，大家要很拚，不過，馬政府下猛藥拚經濟之際，更必須審慎評估各項政策的利弊，某些可能引發後續爭議的措施，絕對要三思而後行，否則挖東牆補西牆的結果，可能引發更大的後遺症，這可不是民眾所樂見。