It’s finally getting chilly in Toronto, and I decided to get shoes for my dog. Not so much because of the cold but more because of the defrosting agents on the paths. This morning, while walking along the Northern side of Lake Ontario, I heard some comments on the Index of Economic Freedom provided annually by the Heritage Foundation (click here) …
Malta’s economy has been growing steadily and at impressive rates in the last few years. Like so often, this has been orchestrated and facilitated by a few clever policy moves. And also, as it happens frequently, the phase where physical reconstruction sets in, is stressful to the inhabitants, and besides all the improvements and advantages, bears the risk of falling victim to the own success. There has been a discussion on a property bubble building up, and experts say, as long as the influx of well-paid buyers continues, things there will be a soft landing. Not quite sure, where we land though. But I hear the message. Currently, vast amounts of residential units are in the pipeline and will come to the market in the next few months or year. Asking prices jump up on the rumour that somewhere else the price was jacked up 20 %. Transaction prices are opaque because they are not published. Construction quality is generally low, and architectural finesse is often that of garages, which is painful to see in the otherwise charming heritage of Malta. Meanwhile, yes, companies are moving into Malta - still mainly for regulatory loopholes and tax purposes - and some as an effect of Brexit. Primarily these are service companies which do not need much technical talent. But still, it is hard to fill positions locally. Low education levels and inefficient unreliable work culture make Malta a tough hiring place. And then, beside the shortcomings in capabilities, Malta currently has a massive lack of infrastructure. It is worked upon that, but it will take time. Luckily, many Maltese buy their properties in cash and should there be a downturn this would not put the stress on the banks. But still, as there is not that much corporate lending in Malta, the books of banks are packed with mortgage loans and not very diversified. Should a property bubble burst, by people not coming anymore, or an otherwise induced economic downturn, then we would have all wished the economy of Malta would have had a few more dimensions. But luckily, so far, all is going well. Construction is a bit annoying. It changes the character of the island state, for the good and the bad. I also share the fear that the natural environment is suffering. In the end, a lot of the residential developments look a bit like there is not much oversight. And unfortunately, Malta seems to have not much of a vision, of what it wants to become. That may be why a lot of developments look somewhat inconsistent to me. But let me see what comes out. In the end ther is not much else we can do than folloing the bubbles.
Birgu is one of my favorite places. It is one of “The Three Cities” and it is mainly up to the local community that it is preserved and cultivated tastefull. That’s not the norm in Malta, unfortunately. This building is one of my favorites on my way home from the Birgu central square.
After six weeks, I am leaving Hong Kong as planned. Since five months the city is in the grip of mass ignorance, incompetence and is terrorised by a small number of violent rioters. Daily life is ruled by avoiding disruptions, adjusting to event cancellations and rescheduling. On the campus of The University of Hong Kong, students go on their nightly spray of "F-words" with no content, but just brainless anger. Since a student of HKUST suffered a fatal brain injury by falling down a parking deck, there is beside the mourning, another round of black-dressed mob rampaging streets, vandalising shops and more and more also performing racist violence against mainland Chinese citizens. Even the tragical death of the student is misused for blaming the police. But if anyone is to blame for this accident, then it is those who fuel these rampages by agitation and misinformation; domestically and from abroad. Overall, many people have probably forgotten why they went to the streets in the first place. It's a circus.
Being struck by significant economic losses, soon people will lose their jobs in large numbers. Frustrations will mount, living conditions will deteriorate, and the brain drain is already setting in. People who speak out reasonably are silenced. Democratic candidates for the local council elections are threatened or even attacked, just by those people who claim they want more democracy. There are all kinds of fractions now, of which the ridiculous one also asks Donald Trump to send troops. People who can do so leave. Companies rethink their Hong Kong exposure and start pulling out, partly because of uncertainty coming from the recent amendment of the US 1992 Hong Kong act. Should the decline continue, some economists believe the pegging of the Hong Kong Dollar against the US Dollar may not sustain. Others think a potential capital outflow could be curbed by rising interest rates. This would have devastating effects on the economy again and let the housing crisis spiral down further. Last but not least, Hong Kong is turning for China from being an asset to a liability. Obviously, there will be soon alternatives to the functions Hong Kong has for China. And as soon as these become available, Hong Kong may sink like a stone in a pool of ignorance, arrogance and self-pity.
During my stay, I had two escapes to Malaysia from Hong Kong. One to Kotakina Balu (for a rest), the other one to Kuala Lumpur. Both I enjoyed, and especially Kuala Lumpur seems a viable alternative to Hong Kong for businesses which operate in South East Asia. The other, even more, an obvious one, is Singapore. I still hear often that Hong Kong would be a "gateway to China". Perhaps it makes sense to adjust this claim to the realities of the 21st century. I lived and worked for many years since 2003 in Shanghai and Beijing. If you want to go to China, go to China. And if Hong Kong does not see itself as a part of that, then that's Hong Kong's problem.
I regret, I could not meet even some of my best friends in Hong Kong this time. And many planned glasses of something cheerful stayed untouchched. But I hope we will have the chance to catch up again soon, may it be in the fallen city or anywhere else on the planet. Keep well. I will be back.
This year I stayed again in the Robert Black College Guest House on the campus of The University of Hong Kong. It is a rustique but quiet place, secluded from the Buzz of Hong Kong.
Twin Towers in Kuala Lumpur and the KLCC. The city appears to be a viable alternative to Hong Kong when it comes to having a South East Asia headquarter. And it is much less cramped also.
Oyster farming in the mangroves close to Kotakina Balu.
In absence of electronic computers William Phillips used a hydraulic system to simulate national economy. Only 14 of such machines have been built, and the original design was meant to be a teaching aid. It was called MONIAC (Monetary National Income Analog Computer), and it is quite fascinating to watch. Even without seeing it operated, but just exhibited in the London Science Museum, it explained to me very well the principles and how the different factors of an economy work together. It is a system of tanks, valves and water represents money. The bottom tank is the National Income. Phillips demonstrated the machine to economists in the London School of Economics (LSE) first in 1949. Have a look by clicking here how it works.
MONIAC computer exhibited in the Science Museum London (2013).
Schematic description of the MONIAC.
