Recession and unrest blues loom

City talk | Susan Liang 18 Oct 2019

Zero interest rates on the horizon is the first sign that a recession is coming our way, and this time I predict it will be worse than the Lehman crisis for many reasons.

First, there is an ongoing trade war between China and the rest of the world.

Even America has run out of money to start a war with the country that it blames for the drone and missile strikes on Saudi oil installations - Iran.

It has even withdrawn its soldiers from Syria.

There is also the tension between Donald Trump and the Federal Reserve on interest rates.

The president wants them lower, and it seems that two more cuts are expected, which is also worrying plus the fact that there is even a repo market now.

In Hong Kong, it will get worse before it gets better because young protesters either have no sense of this danger looming on the horizon or they do not care.

The situation is that Hong Kong is difficult for the world to understand.

It was a place ruled by the British, where people in China opposed to communist rule came.

And when the British left, these same people expected to be given full British passports, which did not materialize.

Instead, they were given BNO passports, which to a cynic stands for British No.

Then we have one country, two systems, which was a novel idea of Deng Xiaoping.

It could have worked if we had strong leaders who could convince China that it would be beneficial to both places that the 50 years of autonomy be used to converge both cultures instead of making Hong Kong more like China.

In fact, there is talk of the possibility of an extension.

Even though certain members of the legal profession in Hong Kong have been appointed to the Chinese People's Political Consultative Conference and there have been exchanges with Tsinghua University, the mainland legal system remains backward.

That last perception triggered protests here against the extradition bill.

Then there are also foreign elements allegedly in play.

The United States failed to achieve regime change in Venezuela, so it seems it is trying to put pressure on China through Hong Kong.

Then there is the upcoming Taiwanese elections, with the incumbent president trying to prove that one country, two systems does not work.

At the same time, the Taiwanese president's rival party, Kuomintang, is promoting the One China Consensus, and it remains unclear which party will win.

Hong Kong also suffers from home-grown problems, which are exacerbated by poverty, a subject I wrote about last week.

The surprising thing is that the Hong Kong government is still reluctant to hold an independent inquiry into violence perpetrated by both sides of the ongoing unrest.

Most countries used an inquiry to pacify public anger whenever there is a disaster or a riot, but it seems Chief Executive Carrie Lam Cheng Yuet-ngor is not strong enough to push it through.

The inquiry should be in addition to the Independent Police Complaints Council's investigations into complaints made by victims of alleged police brutality.

They are different in nature, and the request for an independent inquiry should be acceded to, but not the other demands.

Finally, zero interest rates could be the nail in the coffin for Hong Kong as weaker banks may fail, especially with so many of their customers likely to be facing bankruptcy in the coming months.

HSBC saw the light and laid off 10,000 of its employees.

Guess the protesters should see the light before it is too late.

If the violence carries on, some of the protesters, according to University of Hong Kong law professor Simon Young, are looking at long jail sentences.

Susan Liang is a lawyer who likes to speak her mind on issues that concern the man on the street

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