Archive for November, 2008

Why does Chinatown stink?

A friend posed the question to me a while back.  Why does Chinatown stink so bad?  Is it something inherant to Chinese (not to care about hygiene)?  Is it bad habit?  Is it selfishness?  Do they have higher tolerance?

Being Chinese myself, the question bothered me a little.  And I probably won’t ever come to a good conclusion.  But my intuition is that it is a combination of habit and selfishness.  Habit because if you grew up in a less hygeinic environment, you will adapt to it.  The same way you adapt to foul smell after being immersed for a few minutes.  And selfishness because if no one else is keeping the street clean, why should I?  It is more convenient to litter. 

I recall the “Keep Hong Kong Clean campaign”, which spanned acrossed multiple decades.  There was the “don’t litter campaign”, the “don’t spit” campaign, the “don’t buy hawker food campaign”, and then “clean up Hong Kong campaign”.  They were succesful.  So no, I don’t believe this is anything genetic or culturally related.  Just a matter of the environment one grew up in. 

Here are some posters from the HK campaign:



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Parallel to the downturn of hedge funds in the US, Hong Kong’s most weathly and not-so-wealthy have been hit hard by a couple of structured products: the “accumulator” and the “mini-bonds”. 

The accumulators are sold to wealthy individuals and are defined here by an earlier article in the WSJ:

Called an “accumulator,” it is essentially a contract that obliges investors to purchase a security, currency or commodity at a fixed price — often set at a discount to prevailing market rates — at regular intervals. When the market price is above the fixed purchase price, the investor makes money. When it falls below the fixed price, the investor loses, sometimes quite a lot. Contract terms typically last a year.

It is a structured derivative product that was originally conceived in the UK for corporate use (so companies can acquire shares in another without moving stock price up significantly).  Similarly to the Hedge Funds, these accumulators ar losely regulated by the HK SEC-equivalent as long as they are sold to people with HKD8mn+ in assets, which is equivalent to US$1mn.  Approximately $25bn have been poured into these risky products, according to various sources.  Investors can reap up to 31% ROI, but risking losses of more than 100%. 

The mini-bonds, on the other hand, were sold to the masses.  The Economist has a nice summary here with the definition:


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Worldwide “depression”

The mood is really somber these days…  everyone has recession on their minds; news media is making pink slips a spectator sport.  Recently, a friend from China visited and told me that 12,000 factories have already been shut down in southern China since there are almost no xmas orders from the US.  Think about all those lives that have been affected.  Last night, prime time news reported that the number of children in the US going hungry has increased from ~400k to ~700k from 2006 to 2007.   That’s a 75% increase in a relatively good year (compared to 2008). 

It is one bad news after another.  To top this out, many economists are comparing this to the Great Depression – I certainly hope they are wrong, but with all these talk, it is difficult not to become emotionally depressed.   

Here’s the cycle of acceptance used to illustrate clinical depression generally.  I think we are somewhere in transition between anger/aggression and depression.  Half-way point to happiness!

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The New Deal for China?

Everyone has their opinion on what China’s new stimulas package means.  Some believe it will lift the global economy, while others think it is an indication of how terrible the economy must be in China.  As always, the announcement is vague and lacks clarify – is this rmb 4 trillion in addition to what has been planned before?  What will the split be between infrastructure vs. social security and other benefits?  No one knows. 

This is, however, a smart move for the Chinese government.  For one, it conveys the government’s priority: to build infrastructe and social security system domestically.  And secondarily, it puts chips on the table when heading into those global economic summits. 

Or, if I contain my own cynicsim, perhaps this is China’s New Deal.  It might not be enough to help relieve the current economic crisis, but it should certainly benefit future generations to come.

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