Does Politburo Really Want to Burst the Housing Bubble?

iFeng: 政治局会议首提抑制资产泡沫 真要刺破房地产泡沫吗？

Recently, the first meeting of the Political Bureau proposed curb asset bubbles, sparked outcry. As the stock market liquidity, the slightest sign of trouble began to adjust, so the A shares to become the first victim of this message, which is four trillion stimulus after China, overall economic bubble, the spectacle of the landscape: all industries and areas in addition the lever, only a shares deleveraging, of course, in 2014 and 2015 had a crazy, stocks staged a disaster. Although some small GEM stocks bubble is also serious, but after all, many large companies whose earnings are very low, reflecting the future of China's economic fundamentals.

In my opinion, the asset bubble must have two conditions, one is too much money, one demand is too great, the two together create frenzied speculation and the formation of asset bubbles. So if there is an asset bubbles in China, any fool knows, the most obvious, of course, is a real estate bubble .

The government doesn't want to burst the bubble because it will take the economy with it, instead it will opt for tightening measures designed to slow the ascent:

Many people see the Politburo this position, thought to pierce the real estate bubble, this view is not necessarily accurate. Indeed a great real estate bubble, but at the moment the real estate completely kidnapped economy, whenever the real estate in a downturn, the economy down, the sharp drop in financial income, described in China of economic downturn, indeed affect the whole body. And with the local land finance government operations tied together, if the real estate bubble burst, the consequences could be disastrous.

Therefore, high-rise brewing curb asset bubbles, real estate is certainly the ultimate goal, but do not pierce the current real estate bubble, but the government can be maintained, it is possible to prevent the bubble continues to expand, it is not a sudden burst is quite remarkable, It is also very easy. In fact, since last year the tax on real estate, financial liberalization, until this year introduced again on individual real estate prices rose too fast to suppress policy areas, have shown this.

According to the author, financial constraints will be used this time:

In fact, from all indications, the financial bubble punctured or inhibit the action has already begun. Recently, the securities system is in a heated discussion "securities and futures business institutions of private asset management operations management Interim Provisions", whose aim is to compress the asset management industry widespread channel business; and China Banking Regulatory Commission is working on a "commercial bank financial services supervision and management approach ", the bank financial services regulatory focus include: bank financial services category management, wealth management business is divided into basic and comprehensive wealth management services; prohibit the distribution grade product; wealth management business of restrictive investment; bank financial provision for risk reserves and other whose purpose is financial capital of banks through various add leverage to enter the stock market, bond market and other markets arbitrage.

Risk will land on the currency:

Once the end of the income can not cover the cost of the asset and liabilities side, if the currency of the water dried up, and continues, it will lead to liquidity risk if the currency continues to print, it can only be the exchange rate automatically depreciates, these issues will eventually form to crisis the outbreak of the financial markets.

Of course, the financial sector is the final link of the real economy, such as the financial bubble in the form of many corporate bonds squeezed into the local financing platform for state-owned companies and real estate industry, the financial bubble burst the bubble inevitably corresponds to an entity, but, after all, separated by a layer is suppressed bubble is in need of technical content.