The region's conflagration was made worse by the tinder of speculative capital that preceded the explosion.
That would allow a bit more flexibility against the dollar and help to discourage speculative capital inflows.
But raising rates could break China's brittle state enterprises and lure in more speculative capital from abroad.
Drug development has been absorbing speculative capital since Genentech went public in 1980.
Chinese officials have said that money-smuggling rings like the one in Chongqing have become a "popular" channel for speculative capital flows.
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Foreign direct investment (FDI) is less volatile than speculative capital inflows.
The increase in reserves, he argues, partly reflects speculative capital inflows.
The snag is that a small revaluation is likely to increase expectations of another future appreciation, attracting yet more speculative capital and swelling foreign reserves further.
A-share volatility is exacerbated by erratic inflows of speculative capital.
The strongest argument for a revaluation now is not that the yuan is undervalued, but that an adjustment would halt speculative capital inflows and so mop up the excess liquidity.
China, for instance, has some of the strictest controls among large emerging economies, partly insulating itself from global capital markets, but the controls needed to deter speculative capital are becoming ever more intrusive.
The central bank, which has kept interest rates high to offset lax fiscal policy, is in a policy bind: even higher rates might attract a destabilising amount of speculative capital, while lower rates would fuel domestic demand and imports, pushing the current-account deficit higher.
The Volcker Rule prohibits banks from owning a division (like prop trading) that makes speculative bets with the banks own capital.
By providing some security for the most speculative exposure, it would decrease capital costs for needy member states, allowing them to return to capital markets more quickly.
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Barclays Capital noted the rise in speculative gold positions and said they, too, favor the yellow metal.
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Barclays Capital calls the drop in speculative positions primarily profit-taking and some establishing of fresh short positions.
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Barclays Capital said the rise in the speculative position comes on a combination of new longs and short covering activity.
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Barclays Capital noted this is the highest speculative long since April, while Commerzbank said the big bump in gross longs was also the sharpest rise in positions in four and one-half months.
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Although the data show a rise in the speculative long positions overall, analysts at Barclays Capital warn that since the cutoff date for the information was June 5, before the market sold off on Thursday.
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"To me, many of these projects are a result of easy access to capital and a combination of wishful thinking and speculative behavior rather than rational business calculations, " said Victor Teo, assistant professor at the University of Hong Kong.
Opening up the capital account would attract a lot of hot, speculative money, just as it did in the rest of Asia in the early 1990s.
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He should now look at the capital-gains tax regime: investors who make speculative bets and hit the jackpot should be able to keep and reinvest more of their winnings.
While China keeps tight control on flows of capital in and out of the economy, short-term speculative investments often take place under the radar, and the central bank typically soaks up extra cash by using so-called liquidity operations.
These activities shift capital into projects that have little or no long-term value, such as speculative real-estate developments in the swamps of Florida.
Barclays Capital noted that in the legacy report specifically, across the precious metals complex, speculative length grew, with gold leading the net additions.
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But a good slice of the blame for the housing boom must go to the Howard government which, in effect, slashed the tax rate on capital gains to half the top rate of income tax, luring a mountain of speculative money into property.
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Which of the offering documents related to the hedge, venture capital and private equity funds in which the pension invests clearly indicate that these investments are highly speculative, illiquid and involve a high degree of risk?
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Commodity Futures Trading Commission data showed speculative buying, in one of its weekly commitment of traders reports, was at a record level and Barclays Capital said gold ETF holdings are at a record.
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