Issuing 50 trillion special government bonds over 10 years to boost the stock ma
Issuing 50 trillion special government bonds over 10 years to boost the stock market, is it reliable?
In the past two days, the chief economist of China Tai International, Li Xunlei, has been trending on search engines, primarily due to a proposal he made. He believes that for the stock market to truly improve, fiscal policy is essential. His suggestion is to issue 5 trillion yuan worth of super long-term special government bonds annually for 10 consecutive years, totaling 50 trillion yuan. If such government bonds could be introduced, then there is no doubt that the A-share market would rise significantly.
This proposal sounds very exciting to investors. However, the significance of its implementation is minimal and should be considered as a beautiful fantasy. Not to mention issuing 5 trillion yuan in special government bonds each year, I recall that more than a decade ago, a 4 trillion yuan fund was introduced to stimulate the economy, which we have been digesting for many years, and the side effects were quite severe. Now, the idea of issuing 50 trillion yuan in special government bonds over 10 years for the stock market is almost impossible.
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I believe the fundamental reason for the stock market not rising is not a lack of funds, but whether regulators are willing to take a firm stance to push the market upward. The current A-share market can be said to have become extremely polarized, especially with short sellers moving towards an extreme, with a level of rampant behavior that is much worse than imagined. At this time, it's not that short selling cannot be curbed; the key is whether there is a determination to do so.
Since some people want to maliciously short the Chinese stock market, why can't regulators take some heavy measures? Looking at the stock market trends in some countries, when the market fell sharply, a direct ban on short selling was imposed, allowing only long positions. This method may seem mechanical, but it can demonstrate the power of regulators, and the impact on short sellers is predictable. The market is like a child; when a child is disobedient to the point of being uncontrollable, extreme and effective measures must be taken to correct rational behavior, and thus expectations can be completely changed.
When the stock market was rising, if only long positions were allowed, just look at whether the funds waiting outside the market would come in. I think the funds coming in would be continuous, because only long positions can create a wealth effect. Since short selling is no longer possible, and if savings continue to move, it is estimated that the 5 trillion yuan of liquidity that Li Xunlei mentioned annually would be fully available.
From this perspective, it is not that 5 trillion yuan per year or 50 trillion yuan over 10 years can solve the problem of the stock market rising. This special government bond should not be issued casually, and the most important issue is the side effects. There is no case of a country issuing special government bonds to maintain the stock market. In fact, everyone knows that the fundamental issue of the stock market not rising is whether you have the determination to let the market rise and whether you dare to take extreme measures to combat short sellers. As long as there is determination, there are no unsolvable problems.
The current market situation gives people the strongest feeling of the unbridled short sellers. Since no one can do anything about my short selling, I just keep selling every day. If regulators dare to say no to short sellers, or take strong measures to resolutely crack down on short sellers and vigorously prevent short selling behavior, just see if the market can stop falling. Therefore, from this perspective, the rise of the stock market is not a matter of how much money, but whether you want the market to rise and what kind of extreme measures you will take. The key is that the measures give the market hope and confidence, and that is the focus.
Disclaimer: The content in the article is for reference only and does not constitute any investment advice or tips. The stock market is risky, and investment should be cautious!