That weekend in full

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.”

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21 Responses to That weekend in full

  1. maugrim says:

    The irony, Stephen Lam taking time off to study theology. I wonder if he ever ponders the rights Mainlanders have to practice openly the religion of their choice. Yet he had no problem with Mainland style directives being issued here. Hypocrite.

  2. Probably says:

    The works of JK Rowling, The Bible and the utterances of Stephen Lame are all grand pieces of fiction are they not?

  3. Time-delayed Bela Lugosi says:

    Stop reading the Economist. It’s not only 958% overpriced but written by people who get turned down for The Oldie. And by people like Jonathan Fenby, a ‘China expert’ because he lived in Hong Kong a few years. And by people who got chucked out of MI6.

    I thought it was going to be interesting today but the old stuff about property took over. CY has two measures to solve the housing problem and he’s already started acting on them There will be more public housing and shorter queues. He said it. What he hasn’t told us yet is that there will be a residency requirement for owning property. He can be as Draconian as that because he has solved the Mainland mothers issue at a stroke in much the same way. If they rub him up the wrong way, he will slap lease forfeiture on unoccupied flats too.

    And socialists don’t give a tinker’s curse for the whingeing bourgeoisie. They find it stimulating. As M Hollande might put: Si on ne peut pas epater les bourgeois, on peut quand meme les lancer un pet au visage.

  4. Probably says:

    And is it a surprise that Walter has now been arrested given his recent claims to one third of SHK and threats to grass on his brothers? With all this animosity around one suspects that maybe another little bird sang into the ears of the ICAC?

  5. Revolution says:

    Hopefully a course in advanced bible study will finally allow Lam to discover that the Ten Commandments expressly forbid lying. Just as well he’s retiring.

  6. Faery says:

    So we are finally rid of the slimy and duplicitous Stephen Lam, but we are stuck with John Tsang, surely the territory’s least competent financial comptroller. The parade of freaks, losers and/or bastards goes on.

    I suppose Beijing is working to the assumption that providing us with local leadership in the bottom 5% of the global standard will condition us to welcome the eventual saviour/s of their choosing with open arms.

    Meanwhile, behold, the Hand of Hemlock!

  7. Stephen says:

    Stephen Lam was an odious man who had the ability to get up everyones nose. He might well have got up CY’s nose as well. Hence he knew the writing was on the wall and jumped rather than waiting to be pushed. Saint Carrie will be a fine replacement.

    But isn’t there someone out there in this city of seven million who can do take over the post of Financial Secretary ? Wasn’t the Hang Seng Bank lady being touted? At least we’ll have his hilarious inaccurate budget predictions to amuse us in the coming years.

  8. PropertyDeveloper says:

    Bela,

    You’ve got 2 direct objects for “lancer”, which can’t be right. But you may be correct in hypothesising that banning property sales to non-HKers would be in line with CY’s sort of thinking.

  9. Probably says:

    After losing Henry I’m sure the Hong Kong Association of Satarists are at least comforted by the knowledge that CY has given them Whiskers Tsang to sate their appetites.

  10. Real Tax Payer says:

    Wish I had kept up to date with the activities of the Oxbridge Society. I would have loved to have attended that meeting and then ask at the end: ” Mr Tsang, if by keeping the property market on an even keel means an 82% increase in 4 years, does this explain why your budgets have an average error of around $60 Billion? Or is the fact that that your budgets have always be hopelessly wrong better explained by the fact you studied architecture instead of accounting ? ”

    ( I was trying to compose a suitable limerick but I could not find enough suitable words to rhyme with ” (John o’) whiskers” except “discuss” and “frisk us” which I have yet to find a way to work into a high-class ditty as befits the noble blog of Hemlock)

  11. Dr. Ruth says:

    Rather than a ban on non-residents purchasing property, I would prefer to see a stiff tax on non-utilization of residential units, with the proceeds going to plain vanilla HOS flats for the unwashed. To make such a tax work, there would have to be periodic census-style visits to homes and/or a household registration system designed in a way that reveals who is living where and what places are empty. The tax could be a percentage of ratable value, and if properly set, would bring rents and purchase prices down. It would be a totally socialist way of handling Hong Kong’s long-term property problem, but I have yet to hear of any market mechanisms that could be brought into play to accomplish the same aims.

  12. Real Tax Payer says:

    An FS called John Tsang (JP)
    Has a way to make budgets for free
    Take one lucky draw
    And one monkey’s paw
    “Dans le budget expert je sui !”

    (The last line was in deference to Bela’s froggie trolls)

  13. Dopey says:

    While not immediately solving the perceived housing problem. A ground rent increase on new and renewing leaseholds (as proposed by David Webb and others no doubt) would significantly increase the carry cost of holding an empty property.

    As much as I would enjoy hearing multiple empty apartment holders squeal over a Dr Ruth style tax. I hate the thought of adding to the HKCS even more.

  14. Walter De Havilland says:

    Religion is such a great thing and I understand why the likes of Steven LAM embrace it. You can lie, cheat and be a thoroughly nasty person … then be cleansed and absolved by religion. Of course, you could opt to be an honest person from the start but that would put Catholic Church out of business.

  15. Joe Blow says:

    Mainlanders buying over-priced property in HK is an absolute blessing. They are bringing in tons of money, creating wealth for all of us in the HK economy. Once the bubble bursts, their paper wealth whill evaporate while HK still has their money. Please spare me the Labour Party, semi-plan economy “measures”. We don’t have elections, so we don’t need ‘measures’ either to placate ‘ le peuple’. (and it is “je suis”)

  16. KC says:

    Not holding out any hopes on an organization that can’t get a conviction for Chan Chi Wan to do any better on frying actual big fish.

  17. Real Tax Payer says:

    It seems Laisee today ( tuesday) noticed J Tsang’s Oxbridge Soc address with some amusement , if not concern:

    “Our Financial Secretary John Tsang Chun-wah recently regaled the Oxford and Cambridge Society of Hong Kong with an account of how the Hong Kong property market works. Since we’ve been away for a while we’re grateful to Webb-site.com for drawing our attention to it. His opening was somewhat startling in that, among others, he addressed were “friends from the rest of the universe”. It would be interesting to know if Tsang believed he was addressing anyone other than fellow earthlings. But then again, his talk was somewhat otherworldly. What, we wonder, did his fellow earthlings make of his explanation that “under the natural laws of supply and demand, property prices have inevitably risen over time”. Expanding on the workings of these “natural laws”, he noted that property prices in March were 82 per cent higher than in late 2008. In the weird and wonderful world of Hong Kong, this is entirely normal, enabling Tsang to say the government “had kept the property sector on an even keel” and had “avoided a potentially dangerous housing bubble”. This mad talk appears to have gone unobserved by incoming chief executive C.Y. Leung, who is believed to have him in mind for another five years as financial secretary”

    Maybe the Oxbridge Soc should revise their membership rules if aliens from other planets are really eligible to join. ( Or else make stricter rules for the description of speakers, so that “FS” is not confused with ” comedian” in the agenda)

    Personally I go with Probably’s theory as to why CY is keeping on Tsang – at least until he gets yet another budget wrong by $60B (cause for more laughs)

    As an FS John Tsang is not bad
    Once you know he can’t subtract nor add
    So his budgets are fun
    They amuse everyone (!)
    But they certainly will drive CY mad

  18. Longtimenosee says:

    I recall Hemmers ranting about 6,000 per square foot prices in Centre Stage (SOHO) back in 2006.

    If only we could turn back the clock…

  19. Faery says:

    In yesterday’s comment I was on the verge of making a remark about our “leaders” seemingly being from outer space, but I decided that might be taking things too far and instead fell back upon various other uncomplimentary words. How silly of me!

    It really is hilarious that an 82% increase in housing prices over 3.5 years is seen as healthy and desirable, whereas “inflation” is the devil (and therefore a reason not to give out $6000, although not apparently a very robust one).

    It all stinks of grubby self-interest (I own multiple residential properties therefore the economy is good if I am getting richer) and kiasu (I don’t really want those grubby proles to get a taste of disposal income as that will make me feel momentarily less special).

    Hooray for those who tirelessly and selflessly Serve Hong Kong!

  20. Tiu Fu Fong says:

    Will Lam actually be doing a degree at Oxford as the press implies, or will he just be doing one of those week long courses that Oxbridge colleges run to milk cash from retired baby-boomers these days? I strongly suspect the latter.

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