Local Goverment Debt with Chinese Characteristics | 中國特色地方債

“The historical development of financial markets shows: private merchant networks matured before the state, not in reverse order.”

金融市場發育的意思就是，商人私人網絡先於國家而成熟。如果順序顛倒，金融市場永遠無法產生。

For its local government debt (LGD: bond issuance by local government financing vehicles, or LGFVs), neither has China pledged its government receipts as collateral, nor issued any promissary notes truly payable on demand. These so-called LGD cannot be litigated nor claimed; the notes are not tradable for tax-deduction, foreign currencies nor gold. The collateral are, rather than state assets, municipal authority of some sort that cannot be repossessed by the creditors. According to the Code Napoléon, the issuers (LGFVs) and broker-dealers (mainly state-owned banks) have both committed fraud, for they cannot defend themselves by claiming unaware of selling bonds without credible collateral. Such an appalling trade would never have been accepted by the French royals or bankers in Lyon, for there was no right to claim in case of default. It is property rights, rather than various financial instruments, that underlie financial markets.

中共所謂地方債，一開始就沒有稅收抵押和可變現單據。無法訴訟，無法保險。債權人無法用單據抵稅，無法用單據交易外幣或黃金。抵押品甚至不是國有財產，而是債權人不能扣押的某種行政管轄權。依據拿破侖法典，這種票據的發行者和認購者都犯有欺詐罪。他們不可能自我辯護，說自己不知道無權出售沒有合格抵押的債務。金融工具不是證券市場的基礎，財產權才是。這種駭人聽聞的交易方式，法蘭西王室和里昂銀行家是絕對不會接受的。如果債務完全作廢，沒有人擁有正當的聲索權利。

The Mississippi Company’s business in North America, for example, was initially profitable, but its shares became wildly speculated which led to its demise. In contrast, China’s balances depend on the LGFVs nominally collateralised by assets that do not belong to the municipal authorities and cannot be seized by creditors. The issuers and dealer-brokers, both aware of the deal’s fraudulent nature, conspire to hype up the market and pass the debt on to ordinary people: a textbook conspiracy to defraud.

密西西比公司開發美洲貿易，是可以盈利的，只是當時炒熱後週轉不靈（即歷史上著名的「密西西比股災」）。中共的預算全靠融資公司，沒有任何資產，拿黃鶴樓之類做名義抵押，實際上債主沒有辦法扣押黃鶴樓，黃鶴樓又不屬於中共地方當局的財產。這種交易當中，雙方都明知是詐騙，卻合謀炒熱債券，希望擊鼓傳花給不知情的老百姓接盤，所以在拿破侖法典上屬於共謀犯罪。 抵押不能用不屬於自己的東西，如果你把曾侯乙編鐘抵押了，肯定算詐騙，除非中共說這叫bbb什麼的。

Before the Bank Restriction Act 1797, the Bank of England kept enough gold to pay the treasury notes (collateralised by land tax and customs duties) on demand; the notes could also replace gold and be used at any time to pay tax. These instruments were then circulated widely, if not worldwide, through Lloyd’s of London. At the time of Robinson Crusoe, it was nothing novel for someone to cash his notes upon returning from years of drifting overseas, though such practice had become unimaginable after the Great War. Such was the credit foundation capitalism was built upon; the credibility could also largely be attributed to the long-established custom of people like Lord Chief Justice John Holt and London’s Protestant merchants: they were not used to repudiating debt by operating the Italian’s complex financing instruments.

英格蘭銀行一開始就對財政部單據實現二十四小時見票兌現。票據以土地稅和海關抵押，持有人隨時能夠以票面價值用票據代替黃金納稅。票據在全世界範圍流通，倫敦保險公司憑票給付。《魯賓遜漂流記》描繪持有人漂流海外多年，國內單據隨時變現，在當時不足為奇的事情，在第一次世界大戰以後卻變成了難以想象的怪事。資本主義就是建立在這種信用基礎上的，主要歸功於霍爾特大法官（John Holt）和倫敦新教徒商人的長期習慣。他們不會操作意大利習以為常的金融工具，而這些工具的用途主要就是賴賬。

Secondary markets are, instead of resulting from any intentional design, natural by-products of the ever more complex private networks of merchants, debtors and creditors. Such network could not live without the judgements of Lord John Holt and his peers which upheld common commercial practices, and Parliament’s safeguarding of judges’ tenure. The whole system would have collapsed if the judges had been intimidated to sacrifice those merchants who financed the government. Financial instruments without judicial independence and the protection and enforcement of property rights have no credibility; even in France, a country not particularly famed for the rule of law, the judges of the commercial courts are not career judges but elected traders.

二級市場是商人和票據持有人的私人圈子複雜化的結果，不是建立起來的。這樣的網絡能夠存在，關鍵在於霍爾特大法官規定法庭依據商業慣例判決商務案件，國會保證法官職位安全。如果法官奉命犧牲代理政府集資的商人，整個系統就瓦解了。沒有獨立法官和財產權保護的票據象金元券一樣難以週轉，即使法國的商務裁判也是由商人自己擔任的。

The historical development of financial markets shows that private merchant networks matured before the state; financial markets could never arise in reverse order. If financial markets already existed outside the territory of a state so arbitrary as to be a threat to property rights, the outflow of capital — which would otherwise develop endogenously into a domestic capital market — would be unstoppable. Intentional design mars credit and inhibits such network from further development.

金融市場發育的意思就是，商人私人網絡先於國家而成熟。如果順序顛倒，金融市場永遠無法產生。如果金融市場已經在境外產生，境內的武斷之治足以破壞財產權，則無法阻止本來可以內生發育的資本外流。設計是破壞信用的主要原因，導致網絡無法自我深化。

Financial markets should never be understood simply as financial instruments. Learning how to borrow and spend money is easier than building a financial system known for long-term credit-worthiness, as the latter derives from long-established commercial practices. Most of those who merely learns the techniques of financial instruments got bankcrupt. Their fallacies, in plain English, is as follows: his grandpa smoked cigarettes and was rich; mine smoked opium and became bankcrupt; cigarettes are therefore good for health; since his grandpa smoked two a day, I will smoke 20 everyday from now on.

不要把票據工具和市場資金混為一談。花錢的方式可以學，遺產是幾百年留下的。學了金融工具而破產的，佔絕大多數。有些歪理邪說翻譯成白話文，其實是這樣的：他爺爺抽香煙發達，我爺爺抽鴉片敗家。說明香煙有益健康；他爺爺當年每天抽兩根，我今後每天二十根。