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Hong Kong: Finance Tsunami

As a major financial center in the world, the financial tsunami triggered by Lehman Brothers’ bankruptcy hit the city badly. On sept 18, the Hang Seng Index (HIS) dived about 1,300 points in the morning and touched 16,283, but due to Chinese and Hong Kong government's joint intervention, it rebounded 1,566 points in the afternoon. Although the stock market seems to be stabilized, investors of mini bond issued by the Lethman Brothers were afraid that they might lose their saving forever.

During the weekend, more than 500 investors demonstrated in the street calling the government to intervene. CC wrote a letter to the Government Finance Secretary Tsang Chun Wah and posted it in his blog:

Like some five hundreds investors demonstrated on the street today, I am also one of the victims who bought the mini bonds and affected by the collapse of Lethman Brothers. We are terrified and in deep anger that our hard earned savings may be vanished and gone forever. No one seems to know what's going to happen to our money. SFC has requested Lethman Brother to provide Q&A to the investors but nothing so far is seen or heard from Lethman. I have asked my bank the same question all they can tell me is either don't know or ask me to wait. I can't imagine any world class finance infrastructure will allow potential high risk, hazardous and irresponsible company like Lehman to walk away and worse still no one seems can or know how to take any proactive remedial action.

We really appreciate if the government can offer more help and take a leading role to protect the mini bond investor's interest.

Wanszezit is in sympathy with the small investors and criticizes the finance institution which has misled their clients in the investment:

無何置疑,投資者自己也需付一定責任,跟風吹噓的媒體也有責任。不過,以上兩類人,到底是愚蠢,沒錯,他們被罰了,卻不是罪。反之,明知科網空殼風險甚高,還刻意隱瞞,誤導投資者購買的金融機構,那就是罪。

Without doubt, the investors have to pay responsibility for their investment, the media also play a role in it. They are silly and they are punished, but what they have done is not a crime. On the contrary, if finance companies knew the risk about the investment and they hid that or misled the investors, then it is a crime.

INFI connects the poisonous milk scandal with the finance tsunami and stresses the importance of corporate social responsibility.

這個多星期,不論是內地奶粉製造商或國家質檢部門,抑或是美國的財金機構或華府,不約而同都處於水深火熱之中,相同的是,它們的誠信都破產了,人們對它們都存在相當戒心。

含三聚氰胺的毒奶粉食死人,危害公眾健康,相關有問題食品越揭越多,弄致人心徨徨;而是次金融海嘯,繼早前次按問題,加上風險高沒保障的眾多投資衍生工具被不斷炒作,金融機構玩弄財技,最終泡沫爆破,有些企業甚至資不抵債,情況極為嚴峻;最後迫使一向奉行自由市場主義的華府,亦要動用千億公帑救市,荒謬是,企業虧損,最後卻由人民血汗錢找數,這到底是那門子道理?

建立良好信譽,可能需時數十年,但要摧毀它,一下子就成事;商家們追求利潤,天經地義,但妄顧社會道德責任,卻等同自毀長城,最後可能連老本也要輸掉。

In the past two weeks, the manufacturers of milk powder, the PRC General Administration of Quality Supervision, Inspection and Quarantine, the finance institutions in US and the Washington U.S government, all of them are in trouble. Moreover, all of them have lost their credibility, people are very skeptical of what they said.

The poisonous powder with melamine have put the public health at risk, more and more milk products have been affected. People are very anxious about the situation. The finance tsunami, together with the Subprime problem, indicated that there are too many risky investment tool being marketed and manipulated by investment banks. Now the bubbles burst out. The situation has worsen as many corporates cannot pay off their loan. In the end, the Washington government which has been upholding the free market principle has to use tax payers’ money to save the market. The most ridiculous thing is, the debt of corporates have to be shouldered by people's hard earned money. Is this reasonable?

To build a trusted relation takes more than a decade, to ruin it, just a click. It is absolutely ok for corporates to pursuit profit, but if they disregard their social responsibility, they will just ruin themselves.

Diumanpark noticed that economic liberals in local newspapers have shifted their opinions to support government intervention and he is frustrated with the double standard:

嘩,原來挽救弱勢社群,就會引發干預市場的惡果,但出動真金白銀入市出手挽救,干預私人公司運作以及證券市場,卻不能出手太遲,更不能不干預。換言之,資本家平時賺到仆街,少少嘢就嘈你干預市場,但當佢哋輸到仆街,又死死氣要你來打救,如果你說你不能打救他,那是干預市場,他又說:「不,你干預會引發惡果,但你救市太遲也會引發惡果。」

我真是經濟大鈍胎啊,我竟然毫不明白這種邏輯,完全不知道政府「救市」是不等於政府「干預」。

Well, so if we help the weak in our society, they said it would had bad impact to the market. Now that the government use cash to self the stock market, intervene private corporates’ businesses, they encouraged the government to act fast. In other words, when the capitalists gain profit, a small increase in public expense is condemned as market intervention, but when they lose, they ask for help. If you said you could help them because that's market intervention, they would then say: if you are late in saving the market, the result would be disastrous.

I am such an economic dummy, how can I not understand such logic? How can I not understand “saving the market” is not equal to “market intervention”.

The substantial effect of the Finance Tsunami on the economy is yet to come. Charles mok anticipated that the negative impact would be more serious than the attack of SARS (Severe acute respiratory syndrome) in 2003 and he urged the government to develop I.T public service and prepare for the future.

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