Leverage-leverage is really a good social fortune Gearbox

First, we must acknowledge that financial innovation and the technological revolution have accelerated the flow of social resources. For example, in a feudal society, if a poor farmer wants to become a landlord, it may take several generations of accumulation by legal means to become a reality with a certain probability, in today's society, if you are smart enough in the futures market with low leverage, you can use 20 trading days to change yourself from 100,000 to 10 million.

Financial innovation gives humans more tools to use. Technological Innovation, especially IT technology, allows more people to use this tool. From this perspective, leverage is undoubtedly accelerating social operation.

For the economic crisis caused by financial derivatives and the loss of domestic enterprises, leverage only plays the role of gearbox. Risks in society and finance will not disappear, but will only be transferred. When risk accumulation reaches a certain level, crisis will erupt. This is an inevitable rule of society. The greed and fear of human nature are inherent. The sales power of foreign investment banks and the power of "soft dollar" cannot be ignored, the "self-confidence" of Chinese enterprise executives is not an estimate. As the saying goes, "Don't play if you don't understand it. If you play, you have to admit defeat ". If the "soft dollar" clause does not exist, when the contract is re-signed, both parties believe that their judgment is correct, regardless of the result, you can't say that the other party has cheated you after losing!

"Soft dollar ":

Soft dollarsIs a term used in finance to describe the Commission generated from a trade or other financial transaction between a client and an investment manager. [1] A soft dollar arrangement is one in which the investment manager directs the Commission generated by the transaction towards a third party or in-house party in exchange for services that are for the benefit the client but are not client directed. [2] Soft dollars in to contrast hard dollars (actual cash), which have to be reported, are ininitialized into brokerage fees and paid expenses, which may not be reported directly. registered Investment Companies generally comply with the limitations detailed in section 28 (e) buthedge funds, which are generally not registered, are not subject to the limitations of 28 (e) and thus the client commissions are not necessarily used for the direct benefit of the client.