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  • <The sick-leave paradox>

    I saw this piece in mpinews

    “女教師協會的調查發現，八成受訪教師即使身體不適也沒有告假”

    This phenomenon, I guarantee, is not a monopoly of female teachers : Many people will apply sick leave NOT because of being sick; many people will still go to work EVEN they are sick.

  • <Snap your dad’s face>

    When HKMA, on behalf of government, is trying to cool down the property market – tightening the loan-to-value ratio from a maximum 70% to 60%, HKMC – the son of HKMA – has just extended its fixed mortgage loan program.

    As both plans are ineffective anyway – banks are not lending 70% anyway and fixed mortgage program is not popular, the net-net both impact will be negligible.

    But the symbolic meaning is more interesting. – your father is trying to tighten the purse; but your son just bought a psp, Wii and iPhone.

    By the way, we all understand Mainland buyers do not need much mortgage for purchasing flats – they are cash-abundant. If the restriction on loan-to-value ratio is effective, particularly for curbing buying interests for local buyers, wouldn’t it be a policy that promotes the further “monetary invasion” of Mainland in Hong Kong?

  • <More than Joke>

    After years of flamboyant advertisement, our local property sector has left too little surprising. So, I bet most will treat the 88-story 天匯 – which actually has only 40-some or 30-some stories – as a joke.

    Why? Because

    (1) the top is 88th floor, then 68th floor, and followed by 66th (no 70+ floor)

    (2) it does not have floors ending with 4 (no 4, 14, 24 and 34)

    (source)

    Why no 4? That is not difficult to understand (whether you accept it is a totally different issue). Cantonese pronunciation of 4 is similar to dead.

    But why no 70+ floor? Maybe they try to avoid reminding residents, especially those on 70+ floor, that how 柒 they are.

    So I believe these are all jokes. Who will take that seriously?

    Yes, our honorary LegCo member


    市民投訴天匯樓層編排誤導

    民主黨立法會議員李永達表示，收到市民投訴，恒基干德道樓盤天匯的樓層編排，涉誤導消費者。

    李永達表示，天匯最高一層是88樓，對下層就是68樓，而40至59樓是沒有的。他表示，他們正向屋宇署及地政署了解，如何更好地保障消費者。

    據報道，一名內地買家以5.6億元，購買68樓單位，平均呎價為88000元，但該樓層實際為44樓，而全幢天匯為46層高。

    I am not speaking for anyone. But let me say this : Traditionally, we should expect floors are followed by floors (i.e. 1 followed by 2 etc.). Over time, we skip “4″ floors – if you go to new estates, just like this, most increasingly accept it. 天匯 is just a great step forward, in skipping all unlucky numbers.

    At least, it does not mix the floors just that they are not sequential / out of order.

    What’s the point of complaining?

    What I really worry : 3 is also an unlucky number is western culture. 0 means nothing. Probably we should skip them as well. No discrimination

    All left is 1, 2, 5, 6, 8 and 9.

  • <Anti trend; more important, anti-simple rationality>

    In general, this is how our government puts forward any policy :

    (1) Say something is good in a hard-sell manner; no alternative given

    (2) Without providing concrete evidence (leaving alone convincing one)

    (3) Only give AO-style rhetorics. It just loves quoting international examples whenever it is in favor of their policies.

    (4) Impermeable to all commentaries and critics, which are considered as noise

    (5) The more heavily the policy is criticized, the more reluctant the government to change its policy

    (6) If public resentment elevates to an unacceptable level, the government will retreat somewhat but this only gives further elevation in resentment (our government really has expertise in making people infurious

    (7) Finally, the government all along abondones the policy, which, if subject to some refinement, may be worthwhile to purse. But i admit for most polices, they should not be pursued. Of course, no apology for wasting time and effort.

    From WKCD, Value-added Tax, rule-23 to mother-tongue language, 高鐵, anything-you-name-it, you can see more or less than same route.

    And the latest one is CFL (慳電膽). It is in the fourth/ fifth stage, and public resentment is still lifting. Reportedly, even environmental group is against it.

    So why?

    No policy is perfect; and our government always fails to give comparison with alternative. In this CFL case, perhaps, our government should compare CFL pros and cons against ILB (鎢絲燈泡), and also against LED lights. Then the government should evaluate the costs and benefits associated. Maybe maintaining the status quo is more economical because of the non-recycle-nature of CFL and our already-full-landfill?

    Such exercise inevitably involves judgements. Consensus on the assumptions for estimating the costs and benefits are not easy to arrive. But being difficult does not mean being insurmountable. This takes time; This takes efforts.

    But unless we have sort of qualitative comparison/ quantitative estimates, there is little basis for the public and the government to have rational policy discussion. All you get is I say sth is important; but you say sth else is. Discussions or public opinion are all wrong-target.

    So…

    — We have India considering to substitute CFL with LED lights, but we are still encouraging CFL.

    — We just announced to raise wages for disciplinary civil servants, but Japan said to cut for all civil servants

    — Concession is made for 菜園村居民, but they are still upset.

    No considerations for alternative.

    No unfavorable international trends considered.

    Concession elevates resentment.

  • <More on Compact fluorescent lamps (CFL, 慳電膽)>

    There has been fervent discussions on the impact of the $100 cash voucher for CFL on electricity tariff. See Kursk and Fongyun.

    I quickly note my thoughts on this subject.

    Due to time constraint, I can only write in English. I may translate it into Chinese in a couple of days. I collect the facts on this cash voucher program on a piecemeal basis (source 1, 2)

    1. Could the voucher induce a more widespread substitution of 鎢絲燈泡 with CFL?

    My tentative answer is, NO.

    Existing evidence of degree of popularity of CFL is scarce in HK. One thing really perplex me is, if these estimations are correct (e.g. this one by greenpeace), the existing monetary benefits for households’ switching to CFL from incandescent light bulbs (i called ILB for simplicity, 鎢絲燈泡) has been tremendous, even without the $100 voucher.

    The purpose of this CFL program is to induce people to substitute ILB with CFL. You simply do not want people to install more CFL lighting with the voucher since CFL is less, but not totally free of, environmental pollution. For that, the program already fails to meet this criteria, since it does not discriminate a substitution from ILB to CFL (which is pro-environment) and additional CFL (which is against-environment). So instead of protecting our environment, the program gives a bad incentive for polluting our environment.

    In this estimation by EMSD (government department, so their estimates are the most reliable), the savings for 8,000 hours of lighting is $2,800 (100 watts bulb, $0.9 per/ kwh). I have no idea on whether 8,000 hours are large or small, but in most of our time at home (5 hours per day excluding sleeping, 365 days per year), you can save about $2,800 for each 5 years for each bulb which is not very small.


    So I guess for those who are not using CFL instead of ILB, given such large existing benefits, the additional $100 voucher is not going to induce them to switch. Unless, these people are not known of this monetary benefits. But then, if people are not informed for this fact, is cash voucher (instead of education, publicity etc.) be a more effective way?

    For those existing user of CFL, this cash voucher is purely a transfer from whoever – I have no idea whether it is electricity company or electricity user themselves – to these users. They will use these CFL anyway, and the voucher is a gift of $100 without changing their behavior or achieving the purpose of a switch from ILB to CFL. Unless they install additional CFL, which is counter-productive to environment (as explained above).

    I understand most commercial users have switch to CFL (because of greater sensitivity to monetary return), but they are not given the subsidy. I see little reason why they should be given the same incentive for non-users or same gift for existing users, given that they have been heavy user of HK’s electricity and hence be responsible for a lion share of the carbon emission.


    So in a nutshell, I am a bit pessimistic and skeptical that the program could induce a widespread substitution of ILB with CFL. Possibly, the program could instead induce more lighting to be installed, that could be counter-environment.


    2. What about the impact on tariff? And what  about electricity companies charge back the users?

    I have elaborated here that as long as the permitted return and the assets of the electricity companies remained unchanged, the whole return to the companies will also remain unchanged. That means, the net income they receive (permitted return) which is closely related to the total tariff (i.e. tariff per unit X electricity consumed) will remain unchanged.

    Permit return unchanged;
    Asset unchanged;
    Total revenue (what CLP and HEC receive) ~ total electricity tariff (what you pay) unchanged

    At best what electricity users get will be a over-time (intertemporal) substitution of tariff per unit and electricity units consumed. No significant change in total money paid. For individual household they could pay more or pay less, but all households as a whole, they pay more or less the same.

    The widespread use of CFL and any kind of energy-efficient measures cannot change this mechanism.

    That the companies charge back is just an illustration of my answer above : No change in the 2 key variables (permitted return; assets), no effective change in total tariff over time. But instead of a substitution of unit tariff and electricity consume that is done over years, they want to recoup the subsidy immediately.

    So let me say this, when Donald Tsang says in his policy address that

    “慳電膽較同等照明效果的鎢絲燈泡耗電量少七成。為鼓勵市民以慳電膽取代鎢絲燈泡，兩家電力公司會向住宅用戶派發慳電膽現金券“

    Actually, he is saying the phase I have been saying over and over recently, i.e.

    “加錢送”

  • <After 3 years, and what?>

    June 18, 2007, Financial Times

    “I do believe that we have the fundamentals like New York and London to create a global financial centre and a reasonably good living for 10m people here at the end of the day. We’re at seven. I think we can do well for 10… in the long term. The optimum level city we look at the size of Manhattan and New York and London, for instance.”

    Oct-17, 2009, 香港家書

    “這六十多年間，由商埠變成工業城市，再蛻變成金融中心，但單靠金融業不能養活七百多萬人。“

    I think it is useless to criticize Donald Tsang for his inconsistency. Indeed, I think government can at best talk about economic development – they have a good job of destructing it.

    Anyway, this is just to illustrate that, government is usually short-sighted. You cannot depend on it for long-term development.

  • <Treasury Department on status of US Dollar as global reserve currency>

    “Most of these factors suggest that the dollar and the euro would account for equal shares of global reserves. The size of the euro area economy is only slightly smaller than the U.S. economy. The economy of the euro area is only slightly smaller than the U.S. economy. “

    I don’t understand why, in this report by Treasury Department of US, they have two similar statements in the same paragraph.

    ————–

    Anyway, according to Treasury Department, there are 6 criteria for a reserve currencies

    1. The size of the domestic economy

    2. The importance of the economy in international trade
    3. The size, depth, and openness of financial markets
    4. The convertibility of the currency
    5. The use of the currency as a currency peg, and
    6. Domestic macroeconomic policies

    My take away for Renminbi : Mainland’s domestic economy is big (2nd after US, but the overall size is only 25% of US), it’s important in international trade and fair domestic macroeconomic policies

    But financial markets remained shallow, basically RMB is not freely convertible, no currency is pegged to it (HKD and Macao $ will be amongst the first, but in decade time)

    So RMB as the reserve currency? We need pull and push factors. RMB has to be freely convertible and its financial markets have to be well developed. Some currencies will have to link to it. On the push-side, we have to wait until another huge financial crisis in US. Recall that Pound did not lose its global reserve currency status until the 2 World Wars.

  • <HK Home Price – Quick facts>

    1. “4,000蚊一呎嘅 (樓宇) 仲有好多”

    According to 中原地產, there are a couple of observations

    — Don’t expect to get a flat on Hong Kong Island (the cheapest is 香港仔中心, $4,900 sq. ft)

    — Only 2nd tier estate in Kowloon (黃埔新村 – NOT 黃埔花園; 九龍灣得寶花園; 將軍澳新都城)

    — Marginally, you can also get some large but old estate in Kowloon (about $4,200 in 美孚新村 and 淘大花園)

    — If you go north into the NT, you get more choices (from 銀禧花園 to 元朗 YoHo Town). Indeed, if you choose 綜援山莊 嘉湖山莊, it’s only $2,000 or 50% of $4,000

    2. Bubble of high-end flats

    This is a very risky subject, because no one ever gives a concluding definition of bubble. A bubble, I think, can at best be observed after it bursts. This is miserable.

    With reference to wiki, I think the “bubble” in general has several characteristics

    — Bubble can develop over a long period of time; i.e. this is not necessarily a short-term phenomenon (e.g. Irish housing bubble in 2000-2006; HK’s real estate bubble during 1990-1997)

    — In the late stage of bubble, price could surge rapidly in a relatively short period of time (e.g. in the famous Tulip Mania, the price for Tulip rose more than 1000% in a month time)

    — Apparent fundamentals has no strong support for the price; prices are realistically high (Reportedly, Paul Krugman said land price for a small piece of land in front of imperial palace in Tokyo = land price for whole California; see other about land price in Japan here)

    — Not only large trading volume, bubble involves the active participation of the general public (e.g. the global tech-bubble in 2000s)

    — People purchase the asset, mostly in expectation of further price increase (like the ponzi scheme, or 接火棒遊戲). This is the difficult part to ascertain because expectations are not observable.

    Note that all these 5 points are interrelated.

    Another related point about bubble is, retrospectively, maybe those burst bubble has these common characteristics; but there are other un-burst bubble that have the same characteristics but are never burst. This, I think, is the most difficult part of identifying bubble.

    (this is just like after earthquake, people will say dogs and cats running around before that; but there are instances where dogs and cats running around, but there is no subsequent earthquake)

    Basing on the above 5 criteria, I tried to look for the evidence for any bubble in high-end market

    1. Magitude and duration of increase : According to rating and valuation department, luxury flat (class D and E) registered a 26% rise in home price in 8-month time (up to Aug-09). Other relevant history : in 1996-97 (a bubble) and in 2003-04 (not a bubble).

    So the time span for price surge is relatively short so far; price increase is not substantial.

    2. Fundamental : Surprisingly, in 1996 price has been on the rise but rent was stagnant; in 2003 (no a bubble), price rose but rent dropped.

    This time? Price rise, but rent fell sharply. (it’s like the stock where price goes up but earnings go down, you have higher P/E ratio). Rent for high-end flat is off some 40% from the peak, but showed signs of pick-up.

    3. Participation for large portion of general public. Yes, but the general public is not only HK residents but Mainland ones.

    I look for other signs of speculation.

    4. Note : I don’t look that the affordability ratio, because, basically people purchasing luxury flats are mainland residents (HK income does not apply), they do little or even no mortgage (mortgage rate and payment does not matter).


    Bottom line : i don’t see any strong bubble in the luxury flat market.


    But there are signs that it is developing, their price increases lack of apparent rental rise to support (so far), and most investors are trying to invest in expectation of further increase.

  • <What a Shame>

    I have asked the liberty part to provide its survey on 中小企僱主對最低工資意見調查2009.

    So they replied me, attached a pdf document which is exactly its press release (here)

    Then I asked for the full report, and this is their reply :

    Dear Sir,
     
    We regret that the full report of the study is only available for internal circulation.
     
    Liberal Party

    Well, the right to release the report is on the hand of liberty party. My only guess to the report is their analysts and methodology are not up to standards for public scrutiny. That’s probably why 職工盟 also casted doubts on their findings.

    It’s one thing that you object to minimum wage; quite another you provide erroneous study to support your belief.

     

  • <Highlights of policy address>

    Government highlights are here.

    My comments

    - Fail to give broad, long-term aspiration i.e. short-sighted (which is actually not a bad thing)

    - Nothing new; nothing surprising. Policy very piecemeal

    - Continue to focus on 政績工程 (六大優勢產業) : From the very beginning I fail to see any comparative advantage or competitive advantage, for Hong Kong to develop these industries.

    - No concession measures. Finally our government is not disturbing my money to many ones NOT in need.

    - No controversial items

    - Further confirm the one country one system long-term hypothesis

    - Rebuilding Central. The very very position news. They are going to supply a hotel (Murray BLDG), office (existing government headquarter). Finally, we can possibly see more office supply in Central that address the “long-term” demand

    - Actually, I like government to do less rather than more, because, it is likely than no that it will do the things completely wrong.

    —————

    BTW, the last link on office demand comes from a 2030 Planning Study. Basically, this is a study conducted upon the request of CH Tung (董建華), back to his early days of being CE.

    — The whole exercise started in 2001, and ended in 2007 (almost 10 years if you count back the preparation work)

    — Planning department had at least 4 sub-sections to handle this exercise (i suspect this strategic planning section and its sub units, here 1, 2, 3 and 4, all did not exist before this 2030 exercise). Of course, this section is still here after the exercise ended

    If you take these into account, the study, in a nutshell, is really funny. It just repeats mothers-are-all-female statements again and again.

scimonoce

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