International market flow rules.

First of all, the issue of financial market supervision is whether prudential supervision is insufficient or excessive in the current market.

Before the outbreak of the subprime mortgage crisis, speculation in hedge funds caused ups and downs in the international financial market, which has attracted international attention.

Germany and France advocated strict supervision, while the United States and Britain opposed it, which was not conducive to the development of the financial market. They also advocated relaxing the "Sachs Act" enacted after the Enron incident.

The result was that the crazy speculation of hedge funds was indulged and the subprime mortgage crisis was "achieved".

Cruel facts prove that financial liberalization is not arbitrary or laissez-faire.

The cost of inadequate supervision is very heavy.

Strict prudential regulation should go hand in hand with the development of financial liberalization.

Regulation is not intervention.

Moreover, there are recent views that CEOs of certain international financial institutions should be brought to justice.

The creators of the subprime mortgage bubble are no different from fraud. They sell virtual wealth as property to investors and should be held legally responsible.

If foam products are defined as "property", property rights must be protected.

When the bubble bursts and the "property" "disappears", someone should be responsible.

Investors should be responsible, and bubble makers should be even more responsible.

Relevant laws and systems need to be formulated to sanction and restrain those initiators.

Maintain fair financial and economic order.

Should the government strengthen forward-looking supervision of the bubble, instead of spending a huge price to save it after the bubble bursts, including regardless of huge moral hazard?

The impact of the subprime mortgage crisis on the U.S. economy and the global economy is still unclear.

Puncture the bubble during the formation process, instead of waiting for the bubble to expand to a huge explosion, so as to minimize the loss.

In the past, the old people advocated not paying attention to bubbles, and they never knew when bubbles would form.

The fact is that once the bubble forms, the situation becomes uncontrollable.

Should we think innovatively about regulatory ideas?

The rules of the game in the international financial market need to be revised.

Financial capital cannot finance commodity markets on a large scale based on supply and demand.

Otherwise, it will disrupt the economic order and disrupt the financial market.

The most important thing is that the large-scale financial commodity market with financial capital affects the basic price formation mechanism in which the supply and demand relationship of commodities determines the equilibrium price. It violates the basic principles of economics and greatly distorts the commodity price formation mechanism.

A survey conducted by the Chicago Mercantile Exchange at the request of the U.S. Congress showed that 70% of the recent increase in oil prices was due to speculative capital.

These financial securities capital neither have any demand for oil nor need oil supply, and purely make money by speculating on prices.

Therefore, speculative capital has a strong incentive to push up oil prices.

It was recently reported that the Chicago Mercantile Exchange survey reported upwards, with 81% of non-industry trading positions.

The market in which financial capital or speculative capital operates is an asset market, not a general commodity market.

In other words, this type of market does not have the utility characteristics of commodities at all, and it is impossible to achieve a balance between supply and demand by satisfying the utility of commodities, thereby forming an equilibrium price.

Speculative capital is not separated from the commodity market, and all the prerequisites of the basic price theory of economics are destroyed. The result is that speculative capital uses specious demand and supply relationships to continuously push up prices.

A breakthrough in the new global financial order may begin with the relative separation of commodity markets and asset markets.

Commodity markets, including bulk commodity markets, should be separated from purely investment markets and allow hedging funds to enter.

For example, if China wants to form an exchange rate mechanism based on supply and demand, it cannot be disturbed by NDF market expectations that there is no demand for RMB and no supply of RMB.

Financial capital does not participate in any actual economic activities, and the demand for monetary functions from financial activities belongs to "speculative demand."

Speculative demand is not like general commodity demand, the utility is limited and can reach the equilibrium level.

When the supply of goods increases to a certain level and fully meets the demand for maximizing utility, the market will reach equilibrium between supply and demand, and prices will stabilize at the equilibrium level of supply and demand.

Speculative demand is actually "the demand to make money", and the utility function of "the demand to make money" should tend to infinity, so there is no way to find the equilibrium price.

We have noticed that the "speculative demand", especially the "speculative demand" for RMB in the international market now, actually has no demand for RMB at all, and there is no need for the supply of RMB.

The NDF market ultimately conducts US dollar transactions, which is completely a "game" or "gamble" on the exchange rate price of RMB against the US dollar.

Therefore, the commodity market and exchange rate, which rely on supply and demand to determine prices, and financial capital to offset hedging needs, should restrict the entry of large-scale financial capital, otherwise it will seriously disrupt the market order.

A securitization product diversifies risks. A bank securitization product diversifies the risks of discounted banks. All loans of all banks are securitized. Thousands of institutions create trillions or tens of trillions of securitizations.

Products, if the product market value exceeds the total GDP, it is not diversifying risks.

Especially if the holders of all products end up being the same, this means that there is room for risk diversification.

It's just that the risks divided into each part are different.

The result is a systemic risk, a risk to the overall market.