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CE's Policy Address - Echoes of 1998?; Lehman Brothers' Minibonds; Studio Discussion - Economic Crisis - What next? (17 Oct 2008)


The first section of this year's Policy Address after the introduction was entitled: "Turning crises into opportunities". It's a phrase the Chief Executive has also used since giving the address on Wednesday. And there's a major crisis to face. Mr Tsang pledged to undertake more public works, which would maintain employment, and to help maintain prices in the local property market. He also talked of political reform for 2012, promised a better working relationship between the Executive and Legislative Councils, and acknowledged that recent events had damaged the public trust in the government. In a Hong Kong university public opinion conducted on the day of the address, Donald Tsang had an approval rating of 53.9, 2.1 points lower than that of Tung Chee-hwa when he delivered a Policy Address in similar circumstances, during the Asian economic crisis in 1998. In that instance, the economy led to political unrest. Will history repeat itself? Locally this week, the government followed in the footsteps of many other governments by guaranteeing bank deposits, at least until 2010. That's increased confidence for many local depositors, but for those who invested their savings in the Lehman Brothers minibonds it offers little or no reassurance. On Monday, representatives of the Hong Kong Monetary Authority, the Securities ands Futures Commission, and local banks attended a Legco meeting to look at their plight. The Chief Executive has been firm in asking the banks to deal with the problem. On the day we went to air, the banks agreed to buy the bonds back - at market prices. Internationally the concerted action by governments of many countries may have staunched the losses on the markets a little. Now, they seem to be much more affected by economic news than blind panic than they were last week. But it has left some governments in an awkward position. Capitalist countries have nationalised banks. Champions of deregulation have found themselves faced with evidence that a tightening up of regulations is needed. So looking a little further ahead, what should the next steps be? And can China help the world out of this fix? With us in the studio are Jan Friederich of the Economist Intelligence Unit and Dr Mo Pak-hung of the Baptist University's Economics Department.

The Pulse
Publish Date: 
Friday, October 17, 2008
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