Massive Capital Exit May Lead to 20-Year Recession in Vietnam
As the United States, which holds financial hegemony, is in the current global economic downturn, is the Federal Reserve's economic manipulation continuously infiltrating and changing the global financial landscape? And could this lead to our Southeast Asian neighbor, Vietnam, facing an unprecedented economic predicament? Why is it said that if the US debt crisis erupts, Vietnam will at least experience a recession for ten years?
The Federal Reserve's interest rate cut, in reality, is a feint.
With the increasingly complex international situation, the United States, which holds the dominant position of the US dollar, has the Federal Reserve's every move under the scrutiny of people around the world.
Earlier this month, the United States finally revealed that it would start to cut interest rates in April of this year, but the timing is uncertain, only suggesting that it might happen. In reality, the interest rate cut has not been seen yet, while the interest rate hike was strengthened in February this year.
What is the reason for such an ambiguous statement from the United States? Generally, there are two reasons for this kind of situation: either the economic situation in the United States is too dire, similar to the global financial storm triggered by the United States in 2008.
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Another possibility is that the United States deliberately keeps things vague, intentionally scheming to make some money from around the world.
According to the data released by the US government itself, the debt they owe has exceeded an astonishing $34 trillion, and this number continues to rise. They do not have enough funds to handle affairs, so they can only try to find some other money.
Faced with the thorny issue of debt, the United States often sells second-hand government bonds to other countries. Their purpose for doing so is very clear: first, to avoid the risk of default, and second, to maintain their dominant position through continuous interest rate hikes.The pressures faced by the United States now are far from limited to these issues. For instance, the ongoing conflict between Ukraine and Russia has caused them considerable headaches. The U.S. needs to find ways to secure more funds.
At this juncture, raising and lowering interest rates have become very effective tools of power in the hands of the Wall Street magnates. The former can create a scarcity of currency, plunging other nations into the whirlpool of a debt crisis, while the latter presents the perfect opportunity for them to plunder the wealth of others.
Which countries might the U.S. sacrifice as their lifeline? Firstly, China and several European Union countries have ample funds. However, whether the U.S. has the capability to take a bite out of China's wealth remains a significant unknown.
The European Union and Japan have both been severely battered by the current international situation.
Thus, India and Vietnam might be targeted next by the U.S. In the context of the intense competition between China and the U.S., both Vietnam and India have actually been the biggest winners.
Vietnam's export volume to the U.S. has surged significantly, enabling it to successfully enter the ranks of the world's top 20 trading economies. As wealth has grown, Vietnam has also begun to emerge.
But for the U.S. at present, even the slightest benefits are extremely valuable. Their common tactics include instigating trade disputes, increasing loan interest rates, and various forms of capital inflow.
For example, last year's trade transactions between the U.S. and Vietnam demonstrate that the U.S. is implementing this strategy.
Why does Vietnam take the medicine when the U.S. is sick?Last year, by examining the export data for the entire year that Vietnam made public, it was evident that Vietnam's exports to the United States showed a significant downward trend, with a decrease of as much as 12.4%. Exports to the European continent also experienced a considerable contraction, with a drop of 6.7%. As a result, Vietnam's Gross Domestic Product (GDP) was predicted to decline by 8.02%, but in reality, it only grew by 5.05%.
During the previous year, President Biden visited Vietnam in an attempt to mend the divided relationship between the two countries. However, things did not go as smoothly as hoped. In terms of trade relations between the United States and Vietnam, not only did the relationship fail to improve, but it also seemed to drift further apart due to Vietnam's insistence on maintaining an independent stance on the South China Sea issue.
Recently, in an interview, Secretary Blinken stated that smaller nations should learn how to choose sides, and he promoted the "table and menu" jungle rule. Such irresponsible remarks undoubtedly exacerbated global tensions.
As early as last year, there was a sudden change in the U.S. interest rate cut plan scheduled for 2023, which caused anxiety among all market participants at the time. It was originally thought that by 2024, the U.S. interest rate cut plan would drive a global economic recovery. However, the current situation feels as if the entire world has been drawn into an impending large-scale sweep.
Particularly suspicious is the fact that the United States and Europe quietly seized $300 billion worth of Russia's reserve assets. Coupled with the sudden change in the U.S. interest rate cut plan and Blinken's advocacy of such a robber logic, it is hard not to question the true power of the dollar tide.
In the midst of this tornado-like storm, the Asian region has undoubtedly become the focus of the United States. India was the first to face threats and warnings from the United States, and then the American elite began to exert pressure on our country, hoping to open up our financial market.Nowadays, Vietnam has also joined the list of countries targeted by the United States, leading people to wonder: Will Vietnam become the next victim to be feasted upon by the United States?
U.S. Capital Harvests Vietnam
The U.S. dollar interest rates are continuously rising like hot air balloons, and there is no sign of this trend stopping.
As a result, Vietnam, as a country, will have to pay a huge price for their dollar debts - the interest burden has suddenly increased, making the already fragile Vietnamese financial system's risk of debt default accumulate like piles of dry firewood.
In this way, the Vietnamese stock market, bond, and currency markets are instantly shrouded in heavy clouds of doubt, causing people to become tense and uneasy.
Particularly worth noting is that since a few years ago, Vietnam's real estate industry suddenly became very hot, with people flocking to join the housing speculation army. The proportion of short-term debt is astonishingly high, even reaching 21%, which is unique in the entire Southeast Asian region.
A large research institution called FocusEconomics has made an analysis and forecast on this, and they found that Vietnam encounters a major economic crisis on average every 10 years.
Starting from 2010, although Vietnam has achieved absolute rapid economic growth in recent years, this so-called "economic miracle" is more or less built on risky lending and desperate borrowing.
In other words, Vietnam's economic growth is actually mostly driven by huge dollar debts.In response to such circumstances, multiple industry insiders have expressed deep concern. They believe that amidst the current global economic turmoil and against the backdrop of the upcoming era of artificial intelligence, Vietnam's development model seems to have reached its end. Its sustainability is truly questionable.
The vice president of a company called Bain Consulting directly and frankly pointed out that due to obvious shortcomings in various infrastructure constructions, many factories are struggling to operate. For Vietnam to truly become a world manufacturing powerhouse, there is likely a long way to go.
He even warned that Vietnam's economy may be stepping into a crisis of exploitation by American capital.
Even the former director of the Price Market Research Institute of Vietnam's Ministry of Finance, Wu Zhilong, also came forward to express the same view.
He believes that there are many instances of ineffective growth in Vietnam's current economic development process. They overemphasize the quantity of investment while neglecting the returns and quality of investment.
This imbalance in the development model has plunged Vietnam deep into a dollar debt trap, pushing some enterprises with poor credibility to the brink of a critical situation.
Especially in Vietnam's real estate industry, if global market demand continues to be sluggish, Vietnam's economy may face a recession that could last up to 20 years, particularly in industries that heavily rely on exports.
This also explains why, according to data from Vietnam's statistical departments, last year's public investment in Vietnam only reached 33% of the annual target.
Overall, Vietnam's economy is currently facing a number of formidable challenges, such as soaring interest rates on dollar debts leading to increased debt servicing costs, debt default risks that are not decreasing but increasing, and economic imbalances brought about by ineffective development models, among others.
These issues are intertwined, making the future and fate of Vietnam's economy extremely uncertain. And once a crisis breaks out, Vietnam's economy may regress by at least 20 years.In the context of the increasingly complex and volatile global economic environment, how should Vietnam respond to these risks and find a development path that suits its own situation? This is undoubtedly a major challenge facing them.
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