Last weekend was so unusual. Liu Shiyu, chairman of the China Securities Regulatory Commission, stirred up a pool of spring water.

On December 3, Liu Shiyu, chairman of the China Securities Regulatory Commission, denounced the "brutal takeovers" of certain asset managers in a speech at the second congress of the Asset Management Association of China. "I hope that asset managers should not be extravagant local tyrants, goblins who make waves, and harming the people. If you have money, it's okay to raise a card and make an offer to buy a listed company. However, you can't use the money you used to do the wrong way to engage in leveraged buyouts, and you go from being a stranger at the door to a barbarian, and finally to a robber in the industry. This is a challenge to the bottom line of national financial laws and regulations, and it is also a bottom line to challenge professional ethics, which is a regression and degradation of human nature and business ethics, and is not a financial innovation at all. ”

Local tyrants, goblins, bad spirits, barbarians, industry robbers, a series of qualitative terms are thrown at certain "asset managers" like javelins.

Since becoming chairman of the Securities Regulatory Commission, Liu Shiyu has kept a low profile and rarely expressed his position publicly. However, Chairman Liu did not make a sound, and it was a blockbuster. His remarks can be called "bombardment", which has changed the color of the market, and it is estimated that some asset managers have been unable to sleep.

What is interesting is that on the same day that Chairman Liu "bombarded" some asset managers on December 3, Chen Wenhui, vice chairman of the China Insurance Regulatory Commission, also publicly "burned" insurance funds on another occasion: if insurance companies bypass supervision through various financial products, solvency supervision and capital supervision will become the "Maginot Line", and it will be useless to repair it well.

Vice Chairman Chen also said, "As an insurance industry, risk management should be the core competitiveness, and some companies rely more on asset management whether they can operate sustainably and profitably. This view is incorrect. Because the core competitiveness of insurance companies is risk management, it is not that asset management is not important, it is also important, but it should not be regarded as the core competitiveness of insurance companies. It is also difficult to expect an insurance company to have stronger asset management capabilities than other professional asset management institutions. ”

Compared with Chairman Liu's call for "asset manager", this is somewhat more to make people guess, Vice Chairman Chen bluntly refers to "insurance companies", that is, "insurance capital" as the market calls it. Vice Chairman Chen has been suspicious of the asset management capabilities of insurance companies from the root, believing that they cannot be better than professional institutions. In Vice Chairman Chen's view, insurance companies should return to their functional standards, that is, "improving risk management capabilities" to take the right path.

The regulator's bad "asset management" was preliminarily characterized

With regard to Chairman Liu's "bombardment" and Vice Chairman Chen's "burning", the author has the following preliminary observations and judgments:

After the long-term controversy over the "Baowan incident", the continued operation and observation of insurance funds in the capital market, and the extensive solicitation and listening to opinions from all walks of life, perhaps the top government level has already made a preliminary and clear qualitative judgment and policy handling conclusion on the so-called "asset management" of insurance funds.

This qualitative judgment has been embodied in what Chairman Liu and Vice Chairman Chen talked about in their conversations, which can be summed up in the following aspects: first, its funds are not properly sourced; second, its leveraged buyout practices are inappropriate; third, its asset management is too risky; fourth, it is unfair, unjust, and opaque to the majority of investors; fifth, it is disloyal, unjust, and inconsistent with government supervision; sixth, it is unclear, inconsistent, and improper about its own positioning, functions, and responsibilities; and seventh, its ultimate consequence is that it is unclear, inconsistent, and inappropriate to entities, listed companies, and The industry, the national economy, and the development of the country are very harmful.

In a word, it can be summed up as a "banditry" practice in a series of so-called "asset management" operations by insurance companies such as Vanke.

Is it a coincidence that officials of the China Securities Regulatory Commission and the China Insurance Regulatory Commission (CIRC) have spoken out at the same time? As early as March this year, Xiang Junbo, chairman of the China Insurance Regulatory Commission, also openly stated: "When it comes to the issue of raising cards, in fact, raising cards is an ordinary stock investment behavior in the secondary market, and insurance funds are important institutional investors in the world. However, judging from the recent high-level statements, the policy may be more finely regulated and adjusted.

Be wary of Wall Street crises

When China's economy is financialized and securitized, the government's improvement and innovation in systems and rules will become crucial. One of the lessons of the subprime mortgage crisis in the United States is that government institutional innovation cannot keep pace with financial innovation, and therefore regulation is out of control. As a result, the U.S. government was tricked by the brutal robbers of Wall Street into counting money for them, and was forced to pay for them after the financial crisis. In order to cook one of their own eggs, the "wolf of Wall Street" not only plunged the United States itself into the "subprime mortgage crisis" and the financial crisis, but also pulled the world into an economic crisis, the consequences of which the world is still suffering today.

If the United States exposes huge loopholes in the formulation of rules and the improvement of supervision of finance and securities, then China, as a rising star, must be even more careful. We still lack a sense of rules and a mature financial culture, and we are more accustomed to a product economy than a financial economy, and more accustomed to regulation than service. When the financial tide hits, how can we avoid the mistakes of Wall Street? Seek truth from facts, do what we can, and appropriately slow down the pace of financialization, securitization, and the internationalization of the renminbi.

Therefore, combining the words of Chairman Liu and Vice Chairman Chen, we might as well make a bolder judgment and foresight:

The financialization in the previous period went too fast, just like the price of housing rose too fiercely, and now it must enter the stage of regulation, just like the regulation of real estate;

The financial sector now needs to slow down, and China's economy must first ensure the development of real and industrial sectors;

Wang Shi, Dong Mingzhu and other industrial entrepreneurs won completely, they are the treasures of the country and the nation, compared with them, Yao Zhenhua and other financial predators are barbarians;

China's economy has not yet reached the point where it has been completely hijacked by financial groups. Therefore, in the future, China will still adhere to the path of building a country by industry and rejuvenating the country through hard work.

After the war, the United States used to be the world's largest manufacturing country and the largest real economy, but because of the hegemony of the dollar, the US economy has changed to finance and service industry in the past 30 years. The United States has the largest economy in the world, but 70% of its total economy is contributed by financial and other service industries, becoming an out-and-out financial country and virtual economy.

Americans can make quick money in the form of a virtual economy dominated by the dollar, and who still has the interest and patience to work hard in the real economy? As a result of the virtualization of the economy, the interests of Wall Street have finally become the supreme national interests of the United States, and the entities of the United States have been constantly suppressed. At least in the short term, it is difficult for Wall Street to have a fundamental change in its grip on the United States, and the return of manufacturing to the United States is not optimistic.

Today's China is like a young and vigorous young man, and when he thinks about the dividends of finance and the virtual economy, he might as well ask himself: Is this the road we must take? Is this the road we are going to take now? After we embark on this road, will the hard-working and down-to-earth "teenager" still be able to come back?

I once reminded us that at this critical moment, the strategists must act step by step and be cautious! Now it seems that China's high-level policymakers have made the right choice.

Led by the development of the real economy, with new urbanization and innovation as the main line, with "common prosperity pulling" to stimulate consumption and services, and the release of domestic demand potential as the traction, it is truly the right road and bright road for China's economic development in the future.

Fortunately, the stock market has stabilized, real estate has been regulated, and now the "financial hunting" is about to stop. China's big ship is moving forward in a balanced and steady manner.

Did Dong Mingzhu and Wang Shi win?

Did Dong Mingzhu and Wang Shi win? The people who said this were either too stupid and naïve, or they did not understand the game, and underestimated the difficulty of entering the deep-water area of reform.

After Mr. Liu Shiyu warned the "goblins", some funds were reined in, and the CIRC made its attitude clear. On December 5, according to the official website of the China Insurance Regulatory Commission, recently, the China Insurance Regulatory Commission issued a regulatory letter to take regulatory measures to stop the development of new universal insurance business in view of the problems in the operation of the universal insurance business and the rectification is not in place. For other companies that have similar problems in the operation of universal insurance, the CIRC is paying close attention to their rectification and improvement, and taking further regulatory measures as appropriate. On December 6, Sina Finance learned from the customer service of Qianhai Life Insurance that its universal insurance sales had been suspended and would have to wait for a notice when it would resume.

Some companies have some varieties that are restricted. Some people believe that Dong Mingzhu and Wang Shi have won a victory, and call this a "political victory", and even think that Wang Shi has used the largest shareholder of state-owned enterprises to crack down on private enterprises.

That's not the case at all, what does Wang Shi think with the help of the current China Resources? The current enterprises can be divided into goblin enterprises with backgrounds and private enterprises without backgrounds. The game process will be long, and the goblins will not be so quick not to eat human flesh.

In fact, the attitude of the parties concerned is not clear. On December 6, China Insurance News published an article entitled "Insurance Capital Is Not a Goblin! A Stable Capital Market Must Have Insurance Capital as the Cornerstone!", and a long article with two exclamation marks appeared in a newspaper representing the will of the industry's regulators, and the meaning can be imagined.

In the above article, Mr. Wang Guojun of the University of International Business and Economics believes that "at present, the capital market does not have a detailed rules and access system for the capital that holds cards. In the event of an event that affects the capital environment, business ethics cannot be used as a shield, but needs stronger institutional support. "The implication is very clear, your system is not well designed, what is the matter with insurance funds, you have tied your own fence well.

Under my article "Supporting Liu Shiyu", nearly half of the opposing voices were opposed, and some directly insulted them, and they greeted the ancestors when they came up, and the indecent words were breathtaking. The decline in the stock market in the past two days has made those who follow the trend suffer heavy losses, and abuse has become the best way for some gamblers to find scapegoats.

In the process of shirking responsibility, the market's leverage fire is getting stronger and stronger, and those who have lost their interests will be scolded if they stop it before the crash, and if it has collapsed, the regulator will be scolded as a dog. From last year to the first half of this year, the stock market has allowed us to see the turbulence of hot money and the turbulence of public opinion.

Let's learn from Trump, bypass the imaginary, and get to the root.

This discussion avoids the crucial issue - from last year's stock market crash to this year's insurance capital entering the market, that is, the income of the entity is poor, the capital does not enter the entity, the asset side deteriorates, and the leveraged market is formed.

The current M2 is 150 trillion, and the rate of return on the real economy has not been improved, which means that most of the funds continue to enter the virtual economy, not real estate, or the stock market, not the stock market, or the futures market, as long as these markets have short-term returns, it is the goal of capital competition.

Channels have the Internet, banks, brokers, etc., graded funds, umbrella trusts are readily available, short-term funds for one channel after another to try to do the bank, as long as there is no big waves, but also to be able to play the rules of the edge ball, the funds will enter. If the current 150 trillion yuan of broad money rises at a rate of 11%, everyone will make up for what kind of "grand occasion" will occur in the financial market after the doubling of broad money in about six years.

Universal insurance, dividend insurance, investment-linked insurance, especially the universal insurance that is now popular in the market, is basically hot money that cannot find a way out in the society, and "flows" around in various ways. The reason why universal insurance is used to enter the stock market is simply because universal insurance is a policy ambiguity zone, and the stock market has an opportunity to take advantage of it.

It is recommended to read an article by Chen Wenhui, vice chairman of the Insurance Regulatory Commission, "Soberly Understanding the Risks of the Use of Insurance Funds", published on August 29 this year, Chen Wenhui directly pointed out the risks of universal insurance. The first is the risk of spread loss. The rapid growth of premiums for life insurers is very worrying. With the growth of scale is the high cost of debt, some universal insurance settlement interest rate of 6%, plus handling fees and commissions, the cost of capital at 8%, or even higher to 10%, such a high cost of capital, has far exceeded the level of income from fixed income assets such as bonds. Insurers are bound to seek aggressive short-term investment opportunities to cover costs, but this creates a series of chaos, maturity mismatches, etc.

In the last century, the process of crisis of life insurance companies in the United States, Japan and other countries basically developed and changed along the law of "scale expansion, cost increase, aggressive investment, bubble bursting, liquidity or solvency crisis, bankruptcy and bankruptcy".

If we do not realize this huge risk as soon as possible and try our best to cover up the risk, it will not be a problem of stock market risk, but a financial risk like a burning company.

If entrepreneurs like Dong Mingzhu and Wang Shi win, it will be the luck of China's economy and Chinese investors, who will improve their capital outlook and form a benign ecology. If we now hold on to financial textbooks and virtualize China's economy at a rapid pace, it will be the biggest misfortune for China's economy and investors.

In the second part, we have a date with the financial devil

The devil whispers in our ears. It's teaching us economics. In Goethe's Faust, the emperor encounters a financial deficit, and the devil Mephistopheles makes a move. It induced the emperor to issue paper money, falsely claiming that there was enough gold and silver treasure buried in the ground for reserves. It says: "This kind of banknote, instead of gold and pearls, is very convenient and can make people's minds know." "Incredibly, a miracle happened, the city that used to be lifeless is now bustling and vibrant. The banknote "flies away and cannot be recovered; ”

There is a great deal of magic in money and finance. They are what we set free from the bottle, come at our beckon, and become our slaves. Once out of control, money and finance will run rampant, bringing disaster to the world. Mervyn King, former governor of the Bank of England, said: "The use of financial alchemy as the basis of the financial system shows that this society is not rational. ”

Mervyn King is one of the captains who has weathered the global financial turmoil, and his new book, The End of Financial Alchemy, is a reflection on the global financial crisis. There have been many books about the global financial crisis, especially during the crisis, almost all of the big names who served as senior financial officials wrote their own memoirs. In Mervyn King's view, most of these books could be subtitled: How I Saved the World. What sets "The End of Financial Alchemy" apart is that it is a profound critique of monetary and financial theory, and it is a book that can trigger a revolution in economics.

What is financial alchemy? People believe that paper money can be preserved and exchanged for purchasing power at any time, and people believe that money stored in banks can be withdrawn at any time. This is a kind of alchemy that makes something out of nothing, turning stones into gold. The foundation of financial alchemy is people's trust in money and finance, but this foundation is extremely fragile. As Walter Birchett, author of Lombardy Street, put it: "The essence of our financial system is the unprecedented trust between people." But if that trust is weakened by underlying factors, a small thing can damage mutual trust, and a big thing can almost destroy it. ”

Maintaining the stability of the currency is a very difficult task. There has been no shortage of cases of hyperinflation in history. The hyperinflation in Germany in the twenties of the twentieth century largely contributed to the rise of Nazi extremism. Many developing countries have suffered from hyperinflation. The entire 20th century is almost a history of inflation.

It is also extremely difficult to ensure the smooth functioning of the banking system. When we put money in the bank, the money is not sitting quietly in the safe, the bank has to lend the money. When banks lend money out, the original deposits become longer-term, riskier assets. Unless factories, machinery, homes and offices can be converted into cash in an instant, unless only a small percentage of depositors withdraw cash from the bank at any given point in time, our trust in the bank is nothing more than blind faith.

It is crucial to maintain the stability of the currency and the smooth functioning of the banking system. We need currency not only to facilitate transactions, but more importantly to deal with the uncertainty of the future. This requires money to be able to preserve and cash in on purchasing power in the future. Unfortunately, money doesn't do what we want it to do.

This is because the future is full of uncertainty and is inherently unpredictable, and this is precisely the blind spot of economics. Ironically, as the study of economics has become more sophisticated, there has been less and less discussion of money. As the economist Frank Hahn has said, there is no place for money in the most perfect economic models. In economics textbooks, Walras's general equilibrium theory is used to describe the market economic system. In Walras's general equilibrium system, the market is cleared everywhere, and money as a medium of exchange is dispensable. But this model has very harsh assumptions, you have to assume that from the moment you are born, you can see all the potential trading needs of the day of death, and you have to assume that you can also see all the potential trading needs of all other people from birth to death. You are someone else, someone else is you, and in economic theory, you are both representative rational people, and you can all make the best choice. As a result, market prices reflect all supply and demand without omission.

Unfortunately, this is not the case. How can we predict the price of oil in 50 years? In addition to the spot market for oil, you also need a futures market for oil, but the futures price of oil is likely to be very different from the real price in the future, because it misses a lot of information about supply and demand. For example, airlines need to buy fuel, and they are big customers in the oil market. But can airlines know how much oil they will need to buy in the next 50 years? Theoretically, it would require a futures market for airline tickets. But why is there no futures market for airfares? Because no one can predict where they will need to fly on a plane one day in the future. No matter how perfect a market is, it's impossible to price in the uncertainty of the future, so households and businesses can't use the market to coordinate their future spending plans. Households and businesses face neither "hard budget constraints" nor "soft budget constraints", but "fuzzy budget constraints". People tend to drift between blind optimism and blind pessimism, and there is a high risk of under- or over-demand.

In Mervyn King's view, the resulting imbalance between global consumption and savings was the most fundamental factor leading to the financial crisis. People don't know exactly how much their future income will be, so it's difficult to set a ceiling on what they can spend, and as a result, households' spending behavior can deviate from sustainable levels over the long term. The global financial crisis was preceded by a climax of globalization. China, India, and Russia opened their doors to join the global division of labor, the number of workers producing for globalization skyrocketed, and global trade surged, resulting in depressed prices in developed countries and ultra-low interest rates. China and Germany are typical examples of underconsumption, while the United States is a representative of overconsumption.

Low interest rates have led to higher asset prices and increased debt pressures. When interest rates are too low, financial institutions and investors begin to chase higher yields, which is known as "looking for yield by lantern". To this end, banks continue to create increasingly complex financial products. When banks lend to companies, they are limited by the total amount of money that companies want to borrow, but financial derivatives do not reflect real economic activities, and most derivatives are bought and sold as counterparty transactions between large banks and hedge funds, with no restrictions on the size of transactions, no upper limit on the size of risk exposure, and no upper limit on potential losses. When the subprime mortgage crisis first erupted, central banks didn't think it was a big deal. The total stock of subprime mortgages is about $1 trillion, and the size of the dot-com bubble is eight times higher than that of subprime mortgages. However, they all looked away. The scale of derivatives created on the basis of subordinated loans is much larger. It's like two old men playing chess in the square, and whoever wins gets 10 yuan, but behind them is surrounded by a large number of rich and bored spectators, who bet on who will win, and the bet is far more than the initial 10 yuan.

At the same time, banks are becoming more and more leveraged. Banks used to rely on their own funds for borrowing, but now they are increasingly using leveraged funds to borrow less from their own funds. Whoever doesn't does it will be eliminated from the competition in the heat of competition. This further exacerbates banks' maturity mismatch: liabilities are maturing shorter and assets are maturing longer. Another consequence of wholesale financing is that the major banks become grasshoppers on a rope, and everyone is intertwined, and if one goes wrong, it will soon affect the whole system. Over the past two or three decades, the global banking sector has grown incredibly in size, concentration and risk, not only "too big to fail" but also "too connected to fail".

It's not too late to make amends. But have we found a way to prevent the next financial crisis?

In the wake of the global financial crisis, countries are tightening regulations on financial institutions. A popular idea is to ask banks to improve their capital adequacy ratios. This requires the calculation of the risk-weighted capital adequacy ratio, that is, the assets are scored differently according to their degree of risk, and finally the number of safe assets is weighted. This approach is not only cumbersome, complex, but also misleading. How do we judge the degree of risk of various types of assets? But how can we assert that assets that seem safe today will not fail tomorrow?

In the midst of the global financial crisis, a century-old British store, North Rock Bank, was run on and went bankrupt. If you calculate the risk-weighted capital adequacy ratio, Northern Rock is the highest among the major banks in the United Kingdom, so high that it wants to lend money to others, but it is the North Rock bank that has problems. This is because, historically, residential mortgages have been considered a highly safe asset, and Northern Rock Bank's primary business is to issue residential mortgages. Mervyn King suggested that simple and intuitive indicators are more effective, and that leverage should be looked at rather than risk-weighted capital adequacy. Leverage is the ratio of capital to unweighted total assets, which may seem crude but is more accurate. If you look at the leverage ratio, the leverage ratio of Northern Rock Bank at that time was as high as 60-80 times, which should have attracted the attention of regulators. The methodology behind Mervyn King's advice is not to think about accurately calculating the uncertainty of the future, not to think that everything is fine with the results of a clever model, but to be more humble, to see the big picture, and to value experience and common sense.

Why, nearly a decade after the global financial crisis, is the world economy still weak? Because global imbalances inhibit the growth of demand, and global imbalances are accumulated over a long period of time and cannot be resolved spontaneously in the short term. The current unusually loose monetary policy is in a dilemma. In the short term, interest rates are not low enough to stimulate economic growth, but in the long run, interest rates are not high enough to prompt people to return to normal consumption and savings. Keynes was right, a society's demand for mobility can go up and down. When there is a recession, the demand for liquidity is too high, and further central bank injections are quickly hoarded, and we have fallen into the interest rate trap. In this case, lower interest rates may not necessarily encourage people to move forward their future consumption to the present, but on the contrary, people may become more anxious and lower their expectations about the future economic outlook, leading to lower investment.

Many of the policies we use to address the current dilemma are actually digging a big hole for the future. It is conceivable that debt levels will continue to increase under ultra-low interest rates, but the day the central bank raises interest rates, the time bomb of debt default will be detonated. Of course, this may create good conditions for the reopening of the economy, but it is also possible that the world economy will fall into a financial crisis for the second time. It is also conceivable that ultra-low interest rates will lead to higher housing prices, and the next generation of young people will be forced to borrow more money than the previous generation, and the debt burden will be heavier, and the contradictions between generations and between rich and poor will become increasingly prominent. Money is a kind of "social contract", and once this contract is nothing more than fulfillment, it will inevitably lead to more serious social problems.

When will these crises erupt? We don't know. Mervyn King said that the first law of financial crises is that unsustainable momentum can last longer than anyone expects, and the second law of financial crises is that when unsustainable momentum is broken, it occurs much faster than people expect.

That's why we know we're on the wrong path, but we don't want to stop or switch to another path. Mervyn King noted with concern that our current era resembles the situation between the two world wars. The old rules have lapsed, trust between nations has been shattered, and the shipping lanes ahead are full of reefs, but the helmsmen are hesitant to hope for a fool or a miracle. In "David Copperfield", there is a Mr. Micawber, who has repeatedly failed and is in debt, but always fantasizes about the favor of the goddess of fate. Just as he was about to be imprisoned in debt, he borrowed money from David to buy wine, and he was happy when he drank it.

The devil has not left us. We have another date with the financial devil in the future.