Financial and Economic Authorities Must Now Learn to Stay Ahead of Speculative Capital, Instead of Perpetually "Running Behind the Horse"

[A Girl Who Loves Math] posted on 2005-07-03 21:49:55

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Financial and economic authorities must now learn to stay ahead of speculative capital, instead of perpetually "running behind the horse."

The market economy has always been a place where humans, gods, and demons coexist. Any assumption of moral bottom lines only becomes a weight to be exploited. Speculative capital is probably classified as the demon variety, but the situation worldwide is the same: large-scale speculative capital has become a massive force that dominates markets, and our financial and economic authorities know very little about this, perpetually "running behind the horse" and ending up as the ones who foot the bill for speculative capital.

Financial and economic authorities must now learn to stay ahead of speculative capital, instead of perpetually "running behind the horse." For example, the speculative capital that made a comprehensive retreat when A-shares peaked and B-shares opened in 2001—some fled abroad or to Hong Kong, while others rushed into real estate and other industries to stir up a frenzy. And with this round of government regulation on real estate, the nimble speculative capital had long since fled. Those still trapped inside are either long-term holdouts or natural-born suckers. The reason speculative capital can escape is simple: first, they have insiders within government decision-making bodies; second, the relevant authorities' policies are hesitant and indecisive, giving speculative capital with its keen sense of smell plenty of time to retreat. By the time the real hammer comes down, only the leftovers remain.

Based on my 10-plus years of market experience, truly major speculative capital has never once failed, and the subtleties involved are not convenient to discuss. But the principle can be stated: it's similar to the sector rotation technique in stock trading. Moreover, speculative capital within China basically all came out of the capital markets, and for those who have been involved, the stories within could fill N bestselling books.

Though I am not old, in 10-plus years I have experienced everything in this business. My biggest worry right now is the fatal impact on China's national security from the strategic infiltration of foreign speculative capital. What I most hope to see is the day when our relevant authorities truly learn to be smarter—when they can learn to mobilize speculative capital to serve the nation's strategic arrangements. I hope that day truly comes.