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[01 Weekly Editorial] "Perfect Storm" can be traced

2022-05-15T12:13:50.696Z


Since the beginning of this year, a "perfect storm" composed of finance and economy is gradually forming. Multiple unfavorable factors erupted together, causing the worst market panic since the financial tsunami. On the surface, it's all good


Since the beginning of this year, a "perfect storm" composed of finance and economy is gradually forming.

Multiple unfavorable factors erupted together, causing the worst market panic since the financial tsunami.

On the surface, all of this seems to be sudden, a "perfect storm" intertwined by "black swans".

However, if you look closely, you will find that many of these problems are not accidental, but the "gray rhino" that has always existed under our noses. It is just that people are overly optimistic about these problems, so that their destructive power is underestimated or ignored.

In the end, when these problems are getting closer and closer, and even "needle bites the flesh", it seems like waking up from a dream.


Financial markets around the world have plummeted this year, entering a bear market one after another, as if everyone suddenly fell into a pessimistic expectation.

First of all, the economic stimulus policies of various countries in the early stage of the new crown pandemic began to cause widespread high inflation. In order to suppress inflation, the central banks of advanced countries, including the United States, had to enter a monetary tightening cycle, which made the global economy that has not fully recovered from the pandemic. hit hard.

By the end of February, Russia had invaded Ukraine on the grounds that NATO's eastward expansion threatened its national security. The war not only threatened the economy of Europe, but the strong economic sanctions imposed by the West on Russia severely disrupted commodities such as energy, food, metals, and fertilizers. The supply chain of commodities has accelerated inflation and spilled over to the world.

On the other hand, the COVID-19 pandemic has not yet subsided. The Omicron BA.2 sub-variant started to rage in Hong Kong at the beginning of the year, causing a major outbreak; the mainland was also broken, causing major cities including Shenzhen and Shanghai to be closed successively. The market is worried about China's economic growth this year. will be severely delayed by the epidemic.

Russia invaded Ukraine on the grounds that the eastward expansion of NATO threatened its national security. The war not only threatened the economy of Europe, but also accelerated inflation and spilled over to the world.

(Associated Press)

The perfect storm has early warning, blind optimism leads to tragedy

Take inflation as an example. Last week, the U.S. just released inflation data for April, with a year-on-year increase of 8.3%. Although the growth rate has slowed down from the previous month, it is still at a fairly high level.

To this end, Fed officials vowed to do whatever it takes to control high inflation, emphasizing the need to speed up the pace of interest rate hikes.

In fact, the United States and other advanced countries have put more stimulus money into the market in response to the new crown epidemic than they were in response to the financial tsunami. For example, since the outbreak of the new crown epidemic in the United States in March 2020, the Federal Reserve's balance sheet was in just 15 days. Doubled from $4 trillion to $8 trillion within a month, and the Biden administration launched a huge government budget such as money distribution, many economists and Wall Street analysts have warned last year that inflation will soon rise. to levels not seen in decades.

However, officials from the Federal Reserve and the U.S. Treasury Department ignored these warnings, insisting that inflation is only slightly above the 2% policy target, and that it is only temporary, and will return to normal in time, as a way to continue to maintain ultra-loose Monetary policy justification.

However, the Fed has no evidence to support its so-called "inflation is only temporary" statement, that the huge amount of money poured into the market will not cause inflation is largely just blind optimism.

As for the Russian-Ukrainian conflict, it is not a random accident.

After years of NATO's eastward expansion, Russia has long expressed strong opposition to Ukraine's possible membership in NATO.

As early as 2014, when Russia annexed Crimea and supported pro-Russian armed forces in eastern Ukraine, the war had already begun. The Minsk Agreement, which prompted a ceasefire in eastern Ukraine, did not fundamentally resolve the conflict between Russia and Ukraine.

The fact that the fire of war is rekindling now is actually the re-intensification of existing contradictions, but the international community has previously underestimated the possibility of Russia using force to solve the problem.

Similarly, although the virulence of the new coronavirus has gradually weakened in the past two years, the spread of new variants such as Omicron is amazing, and the possible damage is still huge. It is just that the world is tired of fighting the epidemic, and it is optimistic that the new crown pandemic will soon. In the end, some people even actively promoted it as just "big flu".

These factors detonated at the same time at the beginning of this year. Although there are accidental elements, the far-reaching causes already exist, such as the elephant in the room. Many people choose to despise its threat, and even accuse them of being alarmist when others raise warnings.

So this "perfect storm" is largely man-made.

The Omicron BA.2 subvariant started to rage in Hong Kong at the beginning of the year, causing a major outbreak.

(File photo/Getty Images)

Social reform is not yet in place, don't forget the problem is still unresolved

Putting this principle into Hong Kong society, we will easily find many commonalities.

Looking back now, we have to be amazed at the blind optimism of Hong Kong officials, politicians, opinion leaders and other political stakeholders.

The turmoil against the amendment bill in 2019 exceeded the original expectations. Many people admitted that they never thought that Hong Kong would become such a day.

But just like the "perfect storm" of the world economy today, the problem is not sudden but exists, it just happened at that point in time.

Even if there is no outbreak in 2019, as long as the underlying problem remains, there will still be another fuse in the future.

Since the return of Hong Kong in 1997, effective social and economic reforms have not been advanced with the times, leading to social problems such as the solidification of class mobility and the inequitable distribution of the fruits of economic development.

On the other hand, the central government and Hong Kong have been politically separated for a long time, and the "one country, two systems" principle of "water does not violate well water" has been one-sidedly distorted. Coupled with the failure of the legislation of Article 23 of the Basic Law in 2003, the land and Hong Kong have been separated. The political and cultural confrontation and misunderstanding deepened, laying a political landmine in Hong Kong.

These deep-seated contradictions have existed in Hong Kong for many years, but not many people took it seriously when the issue was not yet turbulent.

But by the time the Occupy Central movement took place in 2014, problems that had accumulated over the years had surfaced.

"Hong Kong 01" was established right after the Occupy Central Movement. At that time, we called on all stakeholders in the society to stop underestimating the deep-seated contradictions in Hong Kong, and to implement reforms as soon as possible to avoid even greater disasters.

However, many people did not take it seriously and scoffed at the call for reform.

In the past, the government and the establishment were optimistic. They believed that the problem was just a matter of impulsive young people, convinced that Hong Kong only needed to continue to pursue the laissez-faire economic policy that "worked" in their minds to be stable and prosperous enough.

Some people underestimate that social conflicts will become a hotbed of conflicts between land and Hong Kong, and choose to believe that it is just that those young people are unwilling to work hard.

Democrats also oversimplify the issue of reunification, arguing that as long as there is universal suffrage, all problems in Hong Kong can be solved.

Some radicals began to break away from "harmony and non-discrimination", leading the pro-democracy movement to violent protests, naively believing that "Hong Kong independence" could lead to a way out for Hong Kong, and scolding those who sincerely persuaded them with a friend-or-enemy mentality.

In 2021, more than 226,000 people in Hong Kong will live in subdivided housing, which reflects the serious disparity between the rich and the poor and housing problems in Hong Kong.

(File photo/Xinhua News Agency)

Unfortunately, as we said, the serious political crisis triggered by the anti-amendment turmoil in 2019 occurred against a backdrop of various stakeholders ignoring warnings and optimistic that the problem would not develop for the worse.

After 2019, the central government recognized the seriousness of the deep-seated contradictions in Hong Kong, and resolutely carried out earth-shaking changes to Hong Kong's political issues.

However, politicians must also bear in mind that the actions of the central government are only to stabilize the society and provide the necessary environment for change. Hong Kong's problems have not been completely solved by the quelling of social events or the central government's rectification of Hong Kong affairs.

At present, there are still many Hong Kong people who are unable to find a place to live and are forced to live in subdivided housing or have to endure extremely high living costs; the problem of inequitable distribution of economic development has not been alleviated, and the grassroots of society are still living an insecure life ; There is a lack of new impetus for economic development, social classes are solidified, and the younger generation is desperate for the flu.

If politicians still choose the ostrich policy, are blindly optimistic that problems will be buried deep in history with the end of social movements, and are unwilling to face up to and vigorously reform and deal with deep-seated contradictions, then even if we cannot predict when the crisis will appear again , but it is certain that the social events of 2019 will definitely not be the last "perfect storm" in Hong Kong.

Source: hk1

All news articles on 2022-05-15

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