Since the end of the week was declared mid-Friday, the world has been a busy place.
Within a couple of days of giving an apparently unsolicited press interview about his innocence, the third of Sun Hung Kai Property’s Kwok brothers, Walter, is arrested by the Independent Commission Against Corruption, as were his two siblings and ex-Chief Secretary Rafael Hui around a month before. It sort of looks as if he was offered immunity in return for testifying, and refused – so inevitably a rumour to that effect is going round.
What are the chances that the whole thing will fizzle out with the ICAC failing to make a case or at least get convictions? The thought that we won’t see billionaire tycoons and a pompous ex-bureaucrat marched off to a dungeon in chains is intensely disappointing. But it would be in keeping with the ICAC’s lack of noteworthy action in years past and Hong Kong law enforcement agencies’ general tendency to create nagging doubts of some sort in high-profile cases. One obvious nagging doubt here: what’s keeping the super-sleuths from charging the (alleged) rascals? Get on with it, please.
On the other hand, it could be that timing forced the ICAC’s hand during this window. These people were involved in the small-circle quasi-election for Chief Executive, and moving in on them before end-March could have been seen as blatant interference, which as we all know is somebody else’s job. Wait for June-July to roll round, and it would look as if new Chief Executive CY Leung was personally ordering our friendly local property developers to be rounded up and herded onto cattle trucks. Patience is a virtue and will be rewarded. I’d love to see the look on Thomas Kwok’s face when realizes his 90-square foot cell at Stanley is really only 70-square feet, with the other 20 being in the exercise yard. Schadenfreude squared. Cubed.
Meanwhile, the media invite us to find it interesting that Chief Secretary Stephen Lam will be leaving for England to study theology (or “delve into The Bible,” as the print edition of the Standard puts it, italicizing the book’s name as if it were something knocked out by JK Rowling). As Secretary for Constitutional Affairs, Lam was a paid liar, insisting that public opinion wanted/agreed with/accepted policies and measures designed specifically to deprive Hong Kong of representative government, when it was plainly untrue. “Should thy lies make men hold their peace? and when thou mockest, shall no man make thee ashamed?” (Job 11:3).
The third big excitement of the weekend was of course Financial Secretary John Tsang’s speech on the property market, which began with embarrassing Brit-speak on cricket and boat races.
My main memory of the Oxford-Cambridge boat race was when I was aged seven or so. A friend and I were exploring the local haunted house, heard a creaking noise from upstairs exactly like that of a malevolent ghoul, and ran from the place in terror – I of course falling over and getting a nasty gash in my hand. Back home, my mother phoned the doctor and drove me round to his house. At his living-room table, he washed, injected, stitched and bandaged the wound, all the while listening intently to live coverage of the action-packed event on the Thames on the radio. The scar remains.
Tiresome sports analogies out of the way, Tsang proceeds to present some surprising claims. Did you realize, for example, that the shortage of land supply and strong demand for homes are but a ‘market perception’, no more real than the ghost a kid hears while trespassing in a dilapidated building? Did you know that the government’s strenuous efforts in the last three budgets have kept the property market on ‘an even keel’? (To be fair, he defines ‘even keel’: “As of March this year, prices were 82 percent higher than late 2008 levels.” You ought to see his uneven keels.) He then recounts the various measures the government has introduced, like small boosts in land supply and hikes in stamp duty; they are largely token and symbolic, or virtually irrelevant – but why not, if the problem is simply a perception?
The truth is that Chief Executive Donald Tsang’s property policy since assuming office seven years ago was to push prices up by starving supply. (Although perverse in the eyes of most sentient beings, such an approach does have some logic to our zombie-like bureaucrats, and it, um, coincidentally serves the tycoons very well.)
In all fairness to the government, they were not to know at first that we were going to be stuck in an ultra-low interest-rate environment in the early 2010s, or that Mainlanders would enter the local residential market in such numbers. They belatedly realized that they had not released enough land but also became gripped by fear that over-reaction would cause a crash, hence the nominal measures aimed mainly at mollifying the public while waiting for a (or ‘the’) correction. The higher prices went, the more petrified they became about taking serious action.
The Economist calculates that Hong Kong property is 58% overvalued. Bulls (speculators/investors who generally have the upper hand on the world’s longest-ever chat room thread on the subject) cite our low direct taxes and even our low car ownership, along with the ever-popular ‘fiat currencies’, as evidence that prices have further to rise. Will a euro-printing anti-austerity backlash led by President Francois Hollande push global inflation up? Will a Mainland property crash drag Hong Kong down? All we really know is that prices cannot get infinitely pricier, but we have no idea where the limit is.
CY Leung is inheriting a situation where his housing policies coincide with the inevitable reverse, and he gets the blame when all the suckers who bought at the peak start committing suicide – it would be the second time in his political career. If I were him, I would put it in my first speech in office. “Housing prices must, one way or another, become more affordable for the mainstream middle class. An ordinary end-user on an average income buying at today’s prices is stupid. At worst, he could end in bankruptcy. At best, he will miss the chance of waiting and getting cheaper options, which I will ensure are coming on-stream by the next CE election in 2017. I will have no sympathy for anyone whining about negative equity this time round. You have been warned.”