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Ministry of Education & Training Foreign Trade University ==========000========== ESSAY SUBJECT: MACROECONOMICS THEME: REAL-ESATE BUBBLE IN AMERICAN 2007 - 2008 LESSON FOR VIETNAM Group Class Major Teacher Ho Chi Minh City, July 6th, 2022 Table of Contents TEAM INTRODUCTION PART 1: GENERAL REASONING ISSUES .6 Economic bubble phenomenon in general .6 The mechanism of the real estate bubble A few points about the real estate bubble in Vietnam in recent years .8 PART 2: THE U.S REAL ESTATE BUBBLE FROM 2007 TO 2008 .9 Causes of the real estate bubble in the US from 2007 to 2008 The evolution of the real estate bubble in the US from 2007 to 2008 11 Consequences of the U.S real estate bubble from 2007 to 2008 14 PART 3:VIETNAM'S REAL ESTATE MARKET IN 2007 - 2008 LESSONS LEARNED FOR VIETNAM AFTER THE REAL ESTATE BUBBLE IN THE US IN 2007 - 2008 17 The impact of the U.S real estate bubble on Vietnam 17 The situation of the bubble that created the fever in Vietnam's real estate market 18 The cause of Vietnam's real estate bubble 21 Lessons learned from the U.S real estate craze 23 Government's specific solution group 26 CONCLUSION 28 REFERENCE MATERIALS 29 TEAM Number of members: Name: Đinh Thanh Ngân o Student ID: 2115027112 Name: Võ Trương Ngọc Trâm o Student ID: 2115027121 Name: Vũ Trí Huy o Student ID: 21150271134 Name: Nguyễn Bùi Hoài Mỹ o Student ID: 2115027053 Name: Trần Thị Khánh Hân o Student ID: 2115027044 Name: Huỳnh Ngọc Quế Trân o Student ID: 2115027123 Name: Nguyễn Hoàng Huy o Student ID: 2115027139 Name: Phạm Gia Bảo o Student ID: 2115027133 INTRODUCTION The U.S economy is the largest in the world with powerful industrial development, modern agriculture and the center of trade and finance in the world Therefore, when the U.S economy changes, the entire world economy will be affected, directly affecting the stability of many countries The most negative impact of the U.S economy on the overall economy was followed by the Financial Crisis in the United States in 2007 The event quickly became an "Oil Spill", directly leading to the global economic crisis of 2008, pushing the world economy into a dark period, $10 trillion was washed away, 30 million people lost their jobs, 50 million people returned to the bottom of poverty and the collapse of one of america's largest investment banks , Lehman Brothers The most obvious, direct cause of this financial crisis is the collapse of the real estate market When real estate mortgage lenders no longer care about customers' affordability and the loan-to-value ratio of homes reaches 99%, this makes home buyers more willing to leave the property when they are no longer able to pay, leading to a rapid increase in the number of residential properties with debt forgiveness and reaching their children Millions, the real estate market freezes, the value of houses evaporates every day In addition, mortgage loans will be sold by lenders to investment banks These banks put their debts together into CDO's and sold them to the market The above series of jobs has caused the stagnation of capital flows, the "real estate bubble" bursting seriously affecting all sectors, causing serious damage to the world economy The world has paid a heavy price for the lesson of the "American real estate bubble" However, in recent times, vietnam's vibrant real estate market right from the end of 2020 has created an unprecedented bustling scene in localities across the country, land prices are still rising rapidly, many experts are worried that the "real estate bubble" is broken due to the price being pushed up quickly and at high levels can continue to continue As is the situation of 10 years ago, the risk of a future crisis persists, and certainly once it has happened, the scale can only be greater, not reduced Therefore, it is necessary to review the lessons of the past, draw experiences to have solutions to prevent and respond to bad cases Seeing the importance of the above work, the team chose to study the topic "Us real estate bubble in 2007-2008 and lessons for Vietnam Part 1: General overview of the state of the "real estate bubble" Part 2: US real estate bubble in 2007 - 2008 Part 3: The state of Vietnam's real estate market in 2007 - 2008 Lessons learned for Vietnam after the real estate bubble in the US in 2007 - 2008 In the essay, the team focused on making the "real estate bubble" and analyzing the development, causes and consequences of this problem, the extent to which the "burst bubble" caused the crisis for the economy and the world, thereby related to the fever in vietnam's real estate market, whether there is an impact from the crisis in Vietnam with the real estate market in Vietnam or not Finally, some lessons are learned and recommended solutions PART 1: GENERAL REASONING ISSUES Economic bubble phenomenon in general Recently we often hear the press mentioning phenomena such as: "stock bubble", "real estate bubble" In fact, there have been many economic bubbles in the world The South Sea Company (1720), the Great Depression (1929-1933), the Japanese Economic Bubble (1980s), the Dotcom Bubble (1995-2000), the Poseidon Bubble (1970) So why people call the horrors that have been happening to the name above? Economic bubbles can be understood as follows: Economic bubbles are the manifestation of a characteristic economic cycle, after a period of time the market is depressed will quickly expand The economic bubble will be manifested by the fact that the price of the asset increases and goes beyond the safe limits of the underlying financial coefficients This phenomenon only occurs in certain economic sectors After the phenomenon of sudden price increase will be the phenomenon of rapid and sharp price declines leading to massive selling The economic bubble is a theory that describes the phenomenon of rising stock prices beyond its core value, the price continues to escalate to a certain extent, then stops and falls freely without stopping and falling freely without a stop and is called a "bubble burst" It can be summarized about the economic bubble is the sudden increase in the price of a product or economic sector in a certain period of time causing the phenomenon of "fever" Many people are fooled with this virtual price and after the price has risen at a certain level, it is called an economic bubble phenomenon Then the price suddenly overlaps and falls uncontrollably, it is called a "bubble burst" Economists associate the concept of bubbles with collapse The explanation for this relationship is that once the bubble has burst, investors who own stocks will try to sell quickly, selling massively just to recover money without losing money While the demand for selling is extremely large, the demand for acquisitions is extremely small, leading to serious losses After the panic sold in a massive, the economic market went down rapidly and collapsed, affecting everyone and leading to an economic recession Thus it can be understood that when a bubble bursts the economic market there is a great risk of collapse The mechanism of the real estate bubble The mechanism of the real estate bubble is often explained by a theory called the "Greater Fool Theory" The theory of behavioral psychology argues that there are always "idiots" in the market who are willing to buy overvalued goods without regard to quality He expects to sell it to another greedy speculator who is "the dumber." The ball is becoming more and more bulging when there are other "idiots" who bring with them the purpose of profiting quickly And when the bubble bursts, there are no more "fools" because no one else will buy that commodity at the highest price In the real estate market, there are more "idiots" pouring money into the land due to pushing the virtual price too high compared to the real value of real estate for the purpose of profiteering, making quick profits, stimulating the psychology of surfing investment Vietnam's economy with GDP growth exceeds the threshold, leading many individuals and businesses to want to participate in investment In particular, real estate is a very popular investment channel, which can be used as assets for storage, transmission, business, including speculation Some commercial banks have very high credit growth due to lending at subprime interest rates At the same time, instead of controlling credit loans, commercial banks let loose, creating conditions for loans to misuse The appearance of many brokers, investors in secondary real estate business, "stork land" has caused real estate prices to skyrocket with dizzying frequency The competent authorities not timely use tools on taxes, planning, credit, land use plans, urban development so that the regulation of the market does not result in a bubble that balloons to one day will burst Economists see the economic bubble, especially the real estate bubble, as a phenomenon that has a negative impact on the economy, because it represents the instability of the economy When the bubble bursts, it can damage a huge amount of wealth while also being accompanied by a prolonged period of economic uncertainty The consequences not only devastate a country's economy, but its influence can sometimes spread beyond its borders A few points about the real estate bubble in Vietnam in recent years Back in recent years, along with strong economic growth in Vietnam, the real estate market retained its attraction in the land fever on a large scale Land property prices in many areas are racing to skyrocket Shows unusual signs of a growing real estate bubble People flocked to real estate, despite the epidemic, despite rising prices day by day Vietnam's real estate market, which has been around for more than 30 years, is a very young market Vietnam as a country is increasingly deeply integrated and the world economy will certainly not be inevitable if the crisis caused by the real estate bubble from other countries affects Reducing the bubble's rise is essential Currently, the Government has controlled credit into real estate very well, investors borrow to buy real estate is not simple, deposit interest rates are low, lending interest rates are not negative The market is more mature than before Buyers are also wiser and the information is more transparent That's why Matthew Powell, director of Savills Hanoi, said he doesn't believe in the real estate bubble theory "We are confident that Vietnam's real estate market has maintained a steady growth rate The real estate bubble is created by uncontrolled lending and speculation activities This growth is not at a dangerous or out-of-control level, but entirely in a safe zone." PART 2: THE U.S REAL ESTATE BUBBLE FROM 2007 TO 2008 Causes of the real estate bubble in the US from 2007 to 2008 1.1 Some terms Subprime lending is a very popular form of mortgage lending, especially in the United States The term "subprime" here refers to the borrower's credit position "Subprime borrowers often have a poor credit history, as there are often overdue payments and there may be serious problems such as going to court or bankruptcy They may also have low solvency on indicators such as credit scores, debt-to-income ratios, or some other criteria And of course, the interest rate on loans in this form will be higher than standard lending " There is no official document that specifically regulates subprime borrowers, but in the U.S most of these borrowers have a credit score lower than 620, which makes up nearly 25 percent of the U.S population Subprime housing mortgage is one of the subprime housing mortgages that is one of substandard loan and especially thrives in the early 21st century, becoming an American industry This means that the form of real estate mortgage is a profitable type of business not only with the lending bank but also with the real estate speculator Most banks and credit institutions lending in this form accept collateralized assets formed from loans, which can see that the risk is very high because its object is real estate – capital often falls and the cycle is frozen 1.2 Causes The real estate bubble was determined to be caused by commercial banks lending "substandard" home loans on a large scale The large number of people flocking to bank loans (paying interest and capital for a long time) is due to the low-interest rate and ease of borrowing in the US that the Us Federal Reserve (FED) implemented to encourage production and consumption, saving the US economy from recession after the crisis of 2000 - 2001 (only from May 2001 to 2001) In December 2002, the Fed cut the lending rate 11 times from 6.5% to 1.75% per year Between 2004 and 2006, subprime mortgage lending accounted for 21 percent of all mortgage loans, up percent from 1996 to 2004, with the total value of subprime mortgages reaching $600 billion in 2006 alone, a fifth of the U.S home loan market a The change in the policy rate in the United States (blue line) Housing market activity has been buoyant thanks to rising personal incomes, low mortgage lending rates, and abundant credit This has made all market participants want to take advantage of the profit People rush to buy houses to make a profit because firstly they believe that house prices will rise higher, secondly during this period, buying a house in the US is quite easy, buyers only need to immediately tea 20% of the value of the house, the rest will pay in installments within 20 years or longer The interest rate at that time was very low, so just buy than rent to pay the bank interest, when the price is sold to make a profit According to statistics, in 2005, up to 28% of the homes purchased were for speculative purposes and 12% were bought just to zero Homebuyers don't feel the risk because the constant rise in house prices allows them to repay their debts very easily by borrowing more Lenders feel safe because the risk of default is decreasing over time as house prices continue to rise The property value of homeowners also increased accordingly Commercial banks can lend to people with "substandard" home loans on a large scale due to the investment of financial companies and banks, especially Fannie Mae and Freddie Mac, which the US government sponsors "financing" by acquiring loans from Commercial Banks, complications into documents secured by mortgage loans to sell to other large companies and investment banks such as Bear Stearns, Merrill Lynch These financial companies and investment banks issue bonds on the basis of such 10 PART 3:VIETNAM'S REAL ESTATE MARKET IN 2007 - 2008 LESSONS LEARNED FOR VIETNAM AFTER THE REAL ESTATE BUBBLE IN THE US IN 2007 2008 The impact of the U.S real estate bubble on Vietnam In the short term, the direct impact of this crisis on Vietnam will be limited and lighter than in other economies That's because Vietnam's banking system is not within the direct influence of the world's financial centers and international money flows On the other hand, Vietnam has minimal risk of subprime investment and a low rate of reliance on financial leverage Meanwhile, Vietnam's financial services industry and stock market are still young However, in the long run, if the U.S housing crisis persists and intensifies, Vietnam will also suffer far-reaching economic and financial impacts The current crisis could turn into a credit breakup in the U.S economy, where banks fear lending to other banks because the scope of risk is unclear; banks' low cash solvency leads to less business lending; The bank's low solvency leads to fewer household sector loans such as mortgage lending or other consumer loans The reasons mentioned above will create deflationary pressure on the world economy as commodity prices continue to fall Falling consumer demand in the U.S will eventually hurt all export economies such as ASEAN, including Vietnam For the Vietnamese currency market, there is no indication that banks involved in subprime real estate mortgage lending in the US have branches in Vietnam withdrawing capital, no Vietnamese bank has any Vietnamese banks with real estate mortgage lending activities in the US market so the impact of this crisis on Vietnam is currently less likely Vietnam's currency market has not been affected, as Vietnam's commercial banks have always been in a state of the surplus of available capital since the end of 2005 The deposit interest rates of VND of commercial banks tended to decrease in the first months of 2007, down about 0.06% per year - 0.44% per year The USD deposit interest rate increased but mainly due to the increased demand for imports, not the influence of foreign banks withdrawing money home The level of Vietnam's 17 integration in the world currency market is still small, moreover, banks are always ready to meet liquidity in the interbank market and open the market with an offer/week so the lack of capital has not happened in the past time The situation of the bubble that created the fever in Vietnam's real estate market The housing bubble of 2008 is a period of historical shock when in just a short year but the real estate industry witnessed a rapid increase in land prices and then decreased rapidly of a sudden It is said that real estate in 2008 had distinct seasons It's the beginning of the year with a hot summer and a cold winter at the end of the year At the beginning of the year, the rapid increase in real estate prices was calculated by the hour, by the minute with a recorded increase of several hundred percent At the end of the year, the bubble burst, and the price of land returned to its true price, causing those who followed the bubble to embrace the bitter end At the end of 2007 and early 2008, the real estate market in Ho Chi Minh City and the whole Southeast region fell into an unprecedented price fever Land prices increase by the hour, every minute, not every day, every month as before Investors and real estate speculators reaped a large profit from the real estate market between the end of December 2007 and February 2008 The peak was December 2007 - February 2008, only short months but land prices increased by an average of 300% There are even places that increase by 500% That's the price increase, but the sellers of buyers are extremely busy Apartment projects at that time also fell into a state of "fire", there were no goods to sell The "economic bubbles" in the real estate market have brought a lot of unreasonable profits to investors At this time, many people have likened: Investors are "enjoying the fall of the sky", the additional profit from the price increase is too high in the market has been 3-4 times the calculated profit from the investment project In the market, housing prices in many areas in these two major cities have reached the threshold of billion VND / 1m2 The number of people registering to buy a project house always exceeds 7-10 times the number of apartments sold by the project According to the market price review of some projects in the two largest cities in the country (Hanoi and Ho Chi Minh City), the price 18 of housing in early 2008 was to times higher than in early 2007 The scene of queues to buy apartments of The Vista project, Sky Garden3, River View, Phu Hoang Anh In Ho Chi Minh City are testaments to this unusual supply-demand relationship The unusual price increase in the housing market has been the cause of the "virtual demand" from the expectation of profitability when buying apartments and when reselling housing registration slips The rapid increase in high-end housing prices has stimulated "affordable" housing prices and agricultural land prices have also increased Land prices belong to "affordable" projects, which were previously less favorable only about 2-3 million VND/1 m2 after the price increase also reached 8-10 million VND/1 m2 The price of garden land before the price increase was only about 400-500 thousand VND / m2, then increased to 3-4 million / m2 The last month of 2007 and the first month of 2008 were the peak of the phenomenon of housing price fever during this period in our country With such a price increase, it is as easy for them to pocket at least 50 million after buying and selling again and again There are even cases where a bold win can bring in a profit of up to $ 10,000 The high price of housing during this period caused most domestic and foreign investors to transfer investment capital into the real estate market At that time, many investors were optimistic that Vietnam was starting to approach the development phase with a high urbanization rate, and great potential, and that 2008 was really the time of stronger development of the real estate market The housing bubble 2007 - 2008 took place from South Saigon to neighboring areas such as Nhon Trach, Long Thanh (Dong Nai) and Ben Cat, Thu Dau Mot (Binh Duong) Any area where land prices increase at least times the market law, when demand increases, it will increase supply However, the demand from the real estate market is a "virtual bridge" Therefore, when commodity prices rose at the end of February 2008, accompanied by the "symptoms" of the economy showing rising inflation indicators, the State Bank immediately "jumped" to adjust the currency market by issuing mandatory bills Commercial banks also immediately "adapted" to the policy by stopping new lending to new real estate projects due to concerns that the growing market was too "hot" to lead to instability in the currency market This has pushed investors as well as real estate 19 speculators into capital difficulties Projects that are about to start implementation are forced to stop, ongoing projects must be reduced in progress, some projects must be transferred to other investors, and projects nearing completion must soon end for sale in order to recover capital Housing prices in the market have leveled off and tend to fall Not stopping there, at the end of the second quarter, the State Bank of Vietnam had to adjust the credit interest rates of commercial banks to improve the reserve capacity of these banks Immediately, the previous capital raising ceiling rate of 12% per year was broken and credit institutions were rumbling to raise interest rates At this point, the real estate market is completely incapable of accessing loans to operate In principle, in the situation of the market lack of capital, goods will be scarce, and the price of goods must increase But in reality, housing prices are starting to level off and fall Thus, it can only be explained that a large part of the loans to the real estate market was previously the source of capital for speculation of real estate, apartments of completed projects Limiting loans to the real estate market has directly cut off the source for real estate speculation By the end of June 2008, real estate had become very difficult to sell and prices had dropped at a significant rate Over the next months, housing prices in places far from the center fell by 20-30% Many experts believe that the real estate market has fallen to the bottom, and can not fall further In August and September, consumer prices began to level off, and the State Bank of Vietnam officially adjusted to reduce the credit rate Commercial banks have begun to reduce lending rates However, even if the credit interest rate decreases, it is not the right interest rate for the real estate market In theory, the bank interest rate of 14-15% can not be a driving force for the French real estate market (in developed countries this interest rate is only 5%) In October and November, housing prices actually fell in many cities Most speculators are gradually leaving the market with prolonged depression, which has stagnated, and bank debt is strained Investors in new urban areas in Ha Tay (old) were also disappointed because the expectation of welcoming the price increase when Ha Tay was imported into Hanoi did not come to fruition The pressure to repay bank debt has caused housing prices to once again plummet At this time, the total outstanding loans for real estate investment loans at credit institutions in the country is over VND 115,000 billion (accounting for 9.5% of the total 20 outstanding debt of the whole economy), of which the two largest cities, Hanoi and Ho Chi Minh City, have a total outstanding debt accounting for about 75% of the total outstanding real estate loans in the country According to many experts, it is estimated that the total amount of bad debts in real estate loan balances will reach nearly 5% of the total outstanding debt, reaching the threshold of the worrying bad debt ratio in banking activities In addition, the upcoming time is the time to move from 2008 to 2009, many real estate investment loan contracts to the term must repay both principal and interest Meanwhile, real estate prices are falling by 30-40%, even some places are down by 50-60% After six months of continuous price declines, by the end of 2008, housing prices had fallen by an average of 50% compared to the peak of the fever Some projects lose 70% of their value For example, the project in District or Nha Be district of Ho Chi Minh City, when the fever cost about 30 million / m2, and when the housing bubble in 2008 burst, the price was only 8-12 million / m2 This is the year that is considered the most contrary to the law when in previous years, the price movement of real estate has only stood still or gone up, not as in 2008, the price increased suddenly and then decreased dramatically as seen The cause of Vietnam's real estate bubble The flow of money from the credit system continuously pumped into the economy since the early 2000s has created a real estate price boom The land fever only stopped when the Land Law of 2003 was born with stricter regulations on the distribution of plots for sale Soon after, the market froze for a while but once again the overly permissive cash flow from the booming credit system in terms of the number of banks quickly pushed the economy into a new wave of land price galloping increases With credit growth of 41.5% or 53.9% in 2004 and 2007, the largest asset bubble ever formed and swept the economy with it The rapid increase in land prices to a few hundred percent in the short term has created too much attraction, causing all sectors of society to participate in speculation This speculative market attracts a huge portion of capital from individual investors to private enterprises, even state-owned corporations, and corporations A very common phenomenon during this period is that many businesses give up production and business 21 activities, focusing on real estate speculative capital Financial leverage is also used to the maximum when bank credit capital is disbursed for production and business purposes that are then drawn up for real estate speculation The market is so hot that businesses race to develop real estate projects with loans When credit capital was tightened in 2008 and deposit rates soared from 9-10% to 1718%, a series of projects were unable to be completed, causing a period of serious crisis in consumer confidence That pushed the market to a deep bottom that took years to recover Looking back at the causes of the 2008 real estate crisis, five main factors can be seen Firstly, GDP growth in 2007 reached 8.48% which is very high; 2007 is considered the year when Vietnam's economy grew comprehensively; Ho Chi Minh City GRDP growth in 2007 reached 12.6%, which is also the highest growth rate in 10 years since 1997, leading to the fact that many businesses and people are easy to make money and real estate is the investment channel of choice for storage, For business, including speculation Secondly, the direct cause stems from the policy of credit easing, even subprime lending, showing that credit growth in 2007 was very high up to more than 37%, of which, a very large part poured into real estate, besides the social capital also poured into real estate business investment; There may have been a phenomenon of not strictly controlling the source of credit loans that should have been used for the right purposes Easy monetary policy, and uncontrolled money supply has caused the real estate speculative bubble to bulge too quickly across all geographical areas, the crisis is inevitable and it is only a matter of time Thirdly, the banking system developed too hot leading to a loosening of credit risk management, and real estate lending capital sources are not strictly controlled risks The risk of real estate lending increases, leading to the policy of limiting credit issuance of management agencies has caused the financial plan of many real estate projects to collapse Fourth, the policy institutions in the field of real estate business are not completed leading to errors in project development The phenomenon of investors raising money from buyers but not completing the project as promised has lost the trust of consumers 22 This makes it impossible for the market to recover despite the efforts of the project owners to lower the selling price There appeared a lot of investors in secondary real estate business, brokers, land storks, and home storks, coupled with waves of rising real estate prices with dizzying frequency, and there are signs of real estate speculators leading the price fever; Fifth, the adverse developments of the global economic crisis of 2008 and the domestic macroeconomics play a role in catalyzing and exacerbating the internal problems of the real estate market Vietnam's accession to the WTO has had a great impact on the development of the real estate market, the demand for real estate for foreign investors in Vietnam is increasing, this is one of the factors for the development of the real estate market and also a great investment opportunity for investors Real estate with huge profits In summary, the phenomenon of housing price fever in the real estate market in recent years in Vietnam, the risk of causing a real estate bubble is due to the main cause of land speculation, however, the root cause of such land speculation is due to the regulations and land management of the State is still many limiting, making speculation not only unbridled but also at risk of increasing by the profits brought by land speculation is really huge for speculators, but brings great consequences to the entire economy and society of the country, Once the real estate bubble bursts, not only will many investors stand on the verge of bankruptcy, but the country's economy can also be paralyzed, crisis, for society, the speculation that causes land price fever as the past time will make many low- and middle-income people unable to afford to buy houses, reducing the quality of life of the general social ground, moreover, increasing the gap between rich and poor in society Therefore, the State needs to have tougher and more effective regulations to reduce land speculation as well as speculation of many other commodities, ensuring the stable and sustainable development of the country's economy Lessons learned from the U.S real estate craze a) Lessons learned for the State 23 Government must implement macro policies carefully to ensure that financial markets always operate stably and minimize risks in the operation of the whole system Macro measures include capital requirements, provision of future loss risks, liquidity ratio, and careful valuation The government's intervention must comply with market rules, not lose the stability of the macroeconomics, always ensure harmonization of interests between sectors and economic sectors as well as not put the burden of the crisis on people and consumers in the country It is necessary to build a strong and well-managed financial system, financial monitoring, and management tools such as the legal regime of supervision and supervision organization, the development of long-term investment institutions, and credit ratings, In an open economy like Vietnam, the competition is more intense, which means that Vietnamese businesses are at high risk of doing business losses with the risk of credit institutions, investors, and chova for that business In addition, in order for the financial system to thrive, it requires market information to be transparent and have effective coordination between agencies and functional sectors Along with socio-economic development and globalization, the information system is becoming more and more important All policies and decisions governing the macroeconomy need to be based on standard, transparent and timely sources of information Therefore, it is necessary to establish specialized agencies and departments to collect information, provide information when necessary, and avoid the situation of distributed and inaccurate information affecting decision-making The government needs to be transparent about the government bailouts The projects in the U.S stimulus package are very specific, and people can keep track of how the money has been disbursed through multiple channels, first of all, the government's public website, lists details of spending on projects on the state and on a federal scale This is extremely important in creating people's trust in the Government and stimulating the growth of the economy The central bank needs to perform well the function of state management of monetary decisions - banks on the basis of perfecting regulations and institutions in accordance with international standards, strengthening the inspection and supervision, forecasting and hedging activities to ensure the safety of the domestic financial system 24 The government must effectively and thoroughly implement social security policies because when a crisis occurs, the number of people in difficulty will increase The near-poor will become poor, and the number of unemployed will increase, putting great pressure on jobs and social security The U.S case shows that the government needs to intervene early when the market shows signs of instability, the longer it takes, the more serious the losses will be and the greater the cost to handle In times of crisis, government intervention in financial markets is inevitable, Vietnam needs to have a sufficiently large reserve and be ready to intervene in financial markets in the event of a crisis b) Lessons learned for commercial banks Commercial banks must pay more attention to credit risk management, first of all, the control of risky lending sectors such as real estate, securities, and derivative credit products, combining credit activities with credit insurance to strengthen customer confidence in order to strengthen customer confidence Avoid the domino breakdown effect Enterprises implementing business diversification and market activities need to have a plan to check and review to classify the nature, manner, and extent of the impact of this crisis, thereby planning risk management to deal with worse situations in the future The issue of strengthening the trust of investors and state agencies for consumers is also a very important lesson Vietnam should come up with solutions to solve the real estate crisis to go from the cause of the real estate problem to finding effective solutions The cause of the real estate crisis in the U.S stemmed from banks lending subprime loans That is, for those who have a bad credit history, even those who not have a job to take out loans Therefore, the US has introduced economic stimulus solutions to create jobs, increase incomes, help people be able to repay debts and increase home sales, and reduce inventory, thereby, opening up the real estate market 25 Government's specific solution group The State Bank of Vietnam implements monetary tightening policies to limit inflation and adjust some taxes related to real estate to limit speculation, and reduce housing prices by 15% - 20% in some regions that are rising abnormally high so that the price gradually returns to its true value Reduce credit lending to real estate This is a very good solution to limit the speculation about real estate in order to increase its price too high compared to the real value itself The bank currently lends up to 70% of the value of real estate contracts, when speculation occurs, hot fever "real estate bubble", the State Bank may consider reducing the lending rate to 50%, even only 35%, to prevent speculation, control the investment "surfing" Add a number of taxes and fees related to the real estate market in the direction of encouraging the effective use of the real estate The government monitors and imposes more flexible tariffs, imposing high taxes on fast-buying, fast-selling "surfing" cases, that have more buy-to-let properties Taxing income with a very high tax rate for the act of selling, and transferring houses and land in a short time to eliminate the "speculation" of investors "surfing" Those who use the land to stay are subject to the lowest tax rate The person who owns many houses that are not used for housing, or not used for production or business but left empty, waiting for the land to increase in price for profit, shall be subject to progressive tax rates, depending on the number of real estates owned Perfecting the legal system, and policy mechanisms to ensure synchronously and remove difficulties, publicizing transaction transparency in the real estate market Forming a network of real estate exchanges, perfecting the structure of the real estate market in Vietnam It is recommended to remove the land price bracket issued by the Government and assign the People's Committees of provinces and reliable state agencies to know the local real estate situation to compare and promulgate land prices according to land use purposes, ensuring the implementation of land rights and obligations, compensation is okay when recovering land, developing reasonable projects In addition, the State needs to finalize the criminal code on speculative crimes, and have specific and severe penalty frameworks 26 The government strengthens and develops other investment channels such as the stock market When the stock market stabilizes, and the stock price increases steadily, then the real estate market will have a positive direction such as no more speculation about real estate Consider raising the interest rate on savings deposits at banks, causing people to reduce the amount of their money invested in real estate, the market has a high risk and lower liquidity than other investment channels Complete the process of unifying land settlement for investment projects, in order to accelerate the approval of real estate investment projects This will eliminate the fear and crowd effect of the lack of housing supply Plan appropriate land planning and use to decide on land supply, orient urban development areas, residential areas, and houses, to ensure a stable, balanced and healthy real estate market; Adjusting and orienting behavior in the real estate market with the goal of healthy and stable development, both meeting the real needs of consumers, while meeting the needs of business investment of investors and also addressing the need to store assets by home, People's land 27 CONCLUSION There are some views that real estate contributes very little to overall economic growth It is not a fundamental sector that the economy can rely on for long-term development, by contributing little to overall growth while greatly abusing land and credit resources In fact, the real estate sector is considered the beginning of a business chain, from construction, materials, tourism, and resort And is involved in most other economic sectors Real estate is a very important financial sector for countries all over the world in general and for Vietnam in particular Back in recent years, Vietnam's real estate has shown signs that the real estate bubble is ballooning as real estate prices in many regions race to skyrocket People flock to real estate, despite the Covid-19 epidemic, despite the rising prices every day The "land fever" that has occurred in some localities in the past time has not stopped many people to worry about whether the "real estate bubble" risks growing and causing a new crisis It can be concluded that the Vietnamese market remains stable and the "real estate bubble" remains under control But it also rings alarm bells for each of us Reducing the bubble's rise is essential Enterprises and individuals involved must actively coordinate with the State to have specific jobs to develop the economy in the most sustainable way The U.S financial crisis more than 10 years ago caused by the real estate bubble in 2007-2008 had severe consequences for many countries around the world, affecting the amount of capital circulating and impacting the global economy This is due to the decline in stock prices and the bank's lax lending policies For Vietnam at that time, in the short and long term, Vietnam was also more or less affected by the crisis in the economy as well as finance Although the cause of the recent land fever is not due to that crisis, the lessons learned from the US crisis will be a valuable experience, worth learning for not only Vietnam but also many other countries in the world to prevent the risk and risk of a "real estate bubble" 28 REFERENCE MATERIALS [1] (2009) National University Science Journal, Economics and Business No 25 [2] (2009) Asian Development Bank report: Global economic crisis and emerging economies: negative effects and losses [3] The real estate "bubble", where does it come from? (2021, June 10) Retrieved June 10, 2021, from Cafebiz: “Bong bóng” bất động sản, nguyên nhân từ đâu? (cafebiz.vn) [4] 20 lessons from the GFC (2021, June 10) Retrieved June 10, 2021, from Morningstar: Morningstar Stock, Mutual Fund, Investment Research, Qualitative Rankings, Portfolio Management [5] What is an economic bubble? The current state of the economic bubble in Vietnam (2021, June 10) Retrieved June 10, 2021, from TheBank: Bong bóng kinh tế gì? Hiện trạng bong bóng kinh tế Việt Nam : TheBankvnn (reddit.com) [6] Housing bubble 2008 (2021, June 10) Retrieved June 10, 2021, from: Tin tổng hợp | Thị trường Today (thitruong.today) [7] How to stop soil fever? (2021, June 10) Retrieved June 10, 2021, [8] Proposed the Government strong measures to treat land "fever" (2021, June) [9] The real estate bubble in the U.S between 2001 and 2005 (2021, June 10) Retrieved June 10, 2021, from 4REIN: Diễn biến bong bóng bất động sản Mỹ giai đoạn 2001 2005 - 4Rein [10] Real estate crisis 2008: five main causes (2021, June 10) Retrieved June 10, 2021, from Thesaigontimes [11 ] Crisis of confidence and the worst bank bankruptcies in history (2021, June 10) Retrieved June 10, 2021, from Vietnamfinance [12] The real estate credit crisis in the U.S and lessons for Vietnam (2021, June 10) Retrieved June 10, 2021, from AGRO:Khủng hoảng tín dụng BĐS Mỹ học với Việt Nam (agro.gov.vn) [13] Does the U.S housing credit crisis affect Vietnam? (2021, June 10) Retrieved June 10, 2021, from VIETNAM Bank [14] Experience handling the real estate bubble of the US and Japan (2021, June 10) Retrieved June 10, 2021, from: Tạp chí điện tử Tài (tapchitaichinh.vn) [15] How to cut the land fever? (2021, June 10) Retrieved June 10, 2021, from: Trị sốt đất: Phải đánh thuế nhà thứ 2! (viettimes.vn) [16] Will the real estate bubble scenario repeat itself? (2021, June 10) Retrieved June 10, 2021, from Tap chi tai chinh 29 [17] Explain the confusing price increase by the "more idiot" theory (2021, June 10) Retrieved June 10, 2021, from Du bao tien te [18] The impact of the U.S housing bubble and bust on employment, 2001–09 (2021, June 10).from:https://www.bls.gov/opub/ted/2011/ted_20110103.htm [19] Fannie and Freddie bank case: who was saved, who lost white? (2021, June 10) from: http://vietnamnet.vn/kinhte/2008/09/802693 [20] Dostaler, M B (2008) An Analysis of The Financial Crisis of 2008: Causes and Solution, Small Business Administration SBS Publication 30 ... US real estate bubble in 2007 - 2008 Part 3: The state of Vietnam'' s real estate market in 2007 - 2008 Lessons learned for Vietnam after the real estate bubble in the US in 2007 - 2008 In the essay, ... estate bubble in the US from 2007 to 2008 11 Consequences of the U.S real estate bubble from 2007 to 2008 14 PART 3 :VIETNAM'' S REAL ESTATE MARKET IN 2007 - 2008 LESSONS LEARNED FOR VIETNAM. .. reforms in order to receive a restructuring loan from the Government 16 PART 3 :VIETNAM'' S REAL ESTATE MARKET IN 2007 - 2008 LESSONS LEARNED FOR VIETNAM AFTER THE REAL ESTATE BUBBLE IN THE US IN
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