Where Things Turned South For Hong Kong

How Hong Kong Protesters Screwed The Pooch 

The following is a comment from R.S. who wanted to tell me a few things about the subsequent developments since the handover. I will put it here without editorialising it. It's well worth the read because it comes from the heartland of HK politics, if HK could said to have a heartland in its polity.  

There are links at the bottom which are well worth a check.

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Gday mate. I tried to post a comment in your blog but it only allows me 4000 characters! Where to start?

Interesting post but like all things in life, things are usually a bit more complicated than what you normally see and there are many shades of grey in between.

I guess since the ‘97 Handover, Hong Kongers, particularly its youth, have had a hard time accepting that they were in fact now under the guise of the Chinese motherland. It’s still pretty weird to me now, more than 20 years later, that they play the Chinese national anthem every night after the News on TV and on the radio. I cannot imagine what it is like for a child born after 1997 to hear this Communist patriotic anthem and try and relate this to life in HK. In the last few years at sporting events in HK, where the HK national team were competing against another team, they would play the Chinese national anthem and spectators would stand up and turn their backs to the sporting arena and hold up their middle finger! What patriots! Go team! 

What really pushed HK to where we are now, were the “pro-Democracy” demonstrations of 2019 where the city descended into sheer utter madness for months on end as hordes of black clad boys and girls in hard hats, goggles and umbrellas, would wander particular areas of HK and cause unbelievable chaos under the banner of “democracy”. This was totally different to the Occupy Central Student protests in 2014 which was mainly non-violent and had a totally different vibe. The 2019 protests had no “leaders” and caused utter destruction to public property, trash businesses that they “believed” were pro-government, mainland banking offices and any business that had the slightest leaning towards being Pro-Government. They would stop traffic and blockade public roads. Anyone that dared to confront them were quickly backed up by other angry hordes of protesters. When the police finally arrived after 30mins, they’d all disappear within minutes. And since they were all wearing black, you weren’t able to tell who were the troublemakers and who were there just standing by.

There were 3 things that really pissed off a lot of people that were initially sympathetic to the Democratic cause.

1. The storming and defacing of the Hong Kong Legislative building - This would be the equivalent to storming of Parliament House in Canberra or the Capitol Building in Washington. The HK Riot police eventually gave up trying to defend the building from the inside as it was inevitable from the number of protesters outside that they would eventually break through. The police eventually fully retreated, hoping that the angry mob would just leave after they broke in. It eventually turnout out to be a PR disaster for the pro democracy movement as nothing was achieved except for the filming and documentation of those that did the violent storming (who were later arrested or who were afraid of being arrested, eventually fled HK). Government offices and equipment were mindlessly trashed and the legislative chamber was occupied and defaced and graffitied. Even that didn’t happen in The Capitol Building! Millions of taxpayers dollars were spent afterwards on the damaged property. The Proud Boys would have been….well “Proud”.  

2. The shutdown of the Hong Kong International Airport for 2days by anti-government protesters - This was sad sad day for the symbol of the free wheeling economy of HK. Named the busiest Airport in the world since 1996, it handled around 70million passengers in 2019. For it to be completely shut down for two days in the name of “democracy” was just outrageous. Protesters blocked departing non HK passengers that were leaving to go home or to other destinations and argued that it was to draw attention to their cause. ie cause as much chaos to Hong Kong and to the image of Hong Kong so that the government will back down and accede to their demands. Yeah right. What they did do was cause economic pain and inconvenience to everyone including international travellers. You could tell in the days before the standoff that things were going to descend into something ugly, when they occupied the Arrivals Hall for several days and handed out fliers and took to beating up anyone (mainly mainlanders coming back to HK) that disagreed with their demands to the Government.

3. The siege and standoff of PolyTechnic University  - This is the equivalent to UTS in Sydney, where students and high schoolers literally took to the grounds surrounding the university campus and occupied it for a week while battling riot police. Not only did they trash the University completely, but they trashed the surrounding areas to the university by digging up bricks and laying them around the outside so that the Riot police would not be able to approach them in armoured vehicles. They lobbed Molotov cocktails off the roof of the campus and used giant catapaults to attack the police on the ground. Sporting equipment from the university were used as weapons and real bow and arrows were fired into the the police. It was completely insane and scenes were like something out of Beirut. The police eventually starved the students out as they had no food or water, as one by one they walked out of the only entrance that was not blocked. Some protesters tried to escape by going into the underground sewerage system. (Not a good idea in HK!) When the police eventually moved in, they found thousands of unused Molotov cocktails that were piled up in the student courtyard and the Chemistry Department has been completely raided of its most toxic chemicals. After the siege, the university was boarded up and sealed off for 6months as they cleaned up the defaced halls and damaged rooms. Again all paid for by the taxpayer. 

So after much social upheaval and constant rioting that became increasing violent (on both sides), the CCP introduced the National Security Law to quell and prevent crimes of secession, subversion, sedition and collusion with foreign forces, carrying a maximum sentence of life imprisonment. After this law was passed, all political demonstrations and any rioting immediately stopped. It was like switching on a light.

So yeah, here we are now. Yes they are putting people in jail now using the National Security Law and yes you can’t say shit about the Government now. But at least its back to business (or work from home) and there are no nightly reports of Molotov cocktails being tossed into the MTR stations and MTR station entrances being lit on fire. No mass acts of violence or major disruptions. Trying to impose a democratic system on HK now is further away than ever. Those students really did stuff things up for themselves. And hence that’s why most of them will leave eventually.

Some clips from those times:

https://youtu.be/QtsR5JpF5aU

https://youtu.be/m_0-x_2l3XE

https://youtu.be/YHCArqqE9rE

Cheers mate. Keep up with the posts!

Bloody Monday - 2015 Edition

Well, What Goes Up, Must Come Down

It's been this growing disquiet all year around China. The cracks were showing but maybe the market was in denial. Or maybe they convinced themselves all was well in the face of the share market rises in Shanghai. After all, if the shares are rocketing up, something must be going right in the market, people figured. But slowly we kept hearing things that belied that simple understanding. We heard that the growth figures were not something measured, but more like aspirational targets expressed by the Communist central government, which would prompt everybody to chip in and hit the target. We had read reports of ghost cities built on borrowed money with price tags too high; and then of course there was this notion that China would simply move to a consumer-consumption driven economy.

This must be the month where it all went out the window because fear has gripped international markets and everybody's selling out their positions. They're not even going to wait for October, they're going, getting right out. And so we're seeing the entire worlds' markets all retreating at once, one retreat feeding on to the next in the timezone domino of market collapses. It hasn't been quite like this since 2012, and quite honestly, it's sharing hallmarks of the 2007 collapse. It's all very ugly because the problems of 2007 haven't been solved enough to make us weather these moments better than 2007. And of course 2007 turned to the bailouts of 2008 and the rest fit has been about kicking cans down the road, which of course includes the Greek situation which is tethered to the rest of the PIIGS.

In short, we're on a clock of about 12 to 14 months before the Lehman Moment gets a sequel and people will scramble for bail outs - on the eve of a Presidential election. All the same, the most important notion is that this time, there's nowhere to go. They can't go below ZIRP to stimulate more credit growth; they can't cut taxes even more to stimulate consumption - that trick's already hit its limit; and none of the creditors can afford to let the debts go bad because it would blow up their own position - which last time prompted Quantitative Easing so people could get over the hump. "Moral Hazards" - and I say that with irony because you know it turned out that it was more important to save everybody's bacon than encouraging "Moral Hazards".

So depending on how badly this drop affects Australia and its consumer sentiment, you can count on the RBA to go to ZIRP, just to support asset prices. There's not much more they could do as the perfect storm hits for the second time in a decade.

AUD $60 Billion In A Day

Just how crappy was the All Ords today? Take a look at this:

Ouch. A few weeks ago, the ASX was hovering closer to 6000 than 5500. There was talk of a secular Bull Market forming, even though the earnings were not exactly like for what people had hoped. The splatting sounds you're hearing are leveraged investors leaping off the ledge. At least, it used to be in the 1929 crash. It's early days yet as investors will go on a big purge of companies carrying too much debt. The four major banks have beaten a retreat of 20% off their highs this year, just in this month, so this could transmogrify into something a bit scarier quickly. If you cast your mind back to 2008, when global credit totally seized up, there was talk that banks would fail and there would be a big run on banks. At the time Kevin Rudd stepped in by guaranteeing deposits and backing the banks to the hilt. He took lightning fast action to stave off the GFC induced collapse of banks.

This time, we're stuck with captain Snaily Failure in the Lodge, so we may not get a Decisive bit of action out of this idiot government until it's too late and even then it will likely be too little. Some ideologue - I'd guess Cory Bernardi or Eric Abetz - will bang on about moral hazard as Sydney and Melbourne property markets descend into carnage. Remember, we've got record private sector debt. A lot of positions are ready to burst if the margin calls are made. Hold on to your hats!

You Know What's Weird? Gold

Gold is a commodity as well as the metal by which currency used to be measured. Of course, none of the major currencies have the God Standard going, and it's been this way since Richard Nixon shocked the world and took the US Dollar of the gold standard. You'd think with this crisis brewing for the last few weeks that Gold would go up as people lost faith in equities and bonds and fiat currency notes. But no - it's been going down.

...which is weird.
So, in 2008, they start QE and you can understand the impulse to buy gold because, hey, they're "printing money". We would expect to see the sort of inflation that broke out in Germany between the war as it printed money to pay off the reparations for World War I. Now, inflation an the measurement thereof is a separate bugbear, but there simply hasn't been that kind of inflation going on. Instead the Central Banks have worried about deflationary pressures and so interest rates have plummeted to zero or near-zero in many advanced economies. Gold peaked at 2011, but has been sliding ever since - which I suppose suggests the inflation expectation is less than zero, and has been for a long time.

When you include the fact that gold actually has commercial uses beyond just being precious, then it makes sense that the Commodities collapse as well as the ongoing deflationary pressures has pushed gold down to this level we see today. What's weird is that if fear was really running around the globe, you would expect that gold price to jump.