Is it fair to let Lehman fail?

Again this is a question for the US administration and Wall Street to answer. The US government bailed out Bear Stearns with a speed faster than light and now if after 6 months, they decide they will not bail out Lehman, then they have to explain why they behave so differently this time. Yes, they may avoid criticisms that they are using public money to help Wall Street but they can't avoid defending why a different approach or a different standard is applied to Lehman's case.

As for the market impact next week, I believe we will see another extremely volatile world. Not only will the Financials go up and down to the extremes but confidence in the US financial conditions and the strength of the US dollar will also fly between heaven and hell. Remember last year the Fed cut interest rate by 0.5% in mid-Sep? It was done immediately after global stock markets tumbled further in response to the housing and credit crises. Now, one year later, the situation has become worse and it has been proved that all the rescue measures adopted by the Fed and US Treasury so far cannot withhold the fall of the financial and housing sectors.

I am not pessimistic but rather I want to look at reality as it is. In Hong Kong, we have experienced the painful Asian financial crisis beginning in 1997 and we knew very well how bad things could be like. What the US is facing and in many ways, the whole world is facing is an unprecedented financial crisis created by a long period of over-speculations, leveraging, inflation, misuse of credits and securities, asset bubbles, and decadent culture of non-productivity and pure consumerism!

If the present crisis demands a restoration of traditional values and culture, then I would vote for it. This is not a question of conservatism, my dear guys. We must be practical and when the circumstances demand to restore our traditional values like hard-work, savings, productivity, less credits and consumerism, etc., we should embrace the CHANGES! Yes, they are changes to something NEW instead of going backwards to something OLD something conservative.

The same happened to Hong Kong after the financial crisis in 1997. Many started to cry for going back to the BASICs meaning that Hong Kong must work hard, be productive, avoid relying on speculations and asset inflation, stop misusing credits and securities, and emphasize on developing competence, talents, knowledge, skills and technology, etc. The pity was that such attempt to restore traditional values in Hong Kong failed owing to immense oppositions and obstacles from the corrupted culture of the decadent society generated in Hong Kong before the re-unification in 1997.

Whether the situation in US now is more hopeful, I really don't know. The problems behind the current crises facing the world appear to be something latent in human nature. Who does not want to inflate assets so that your balance sheet will swell everyday without any work or productivity? Who does not want to spend without having to repay? Who does not want to win in the casino and become rich overnight? The richer you are, the more money you want and the more you want, the greater your leveraging will become and the bigger will be the bubbles.

Ultimately, how our world will develop is a question of human nature. I may be simplifying the picture but history and culture are, in short, records and reflections of human nature. Human beings seek for ideals and at the same time create their own destruction. I must say that the crises that the world is seeing fit very well into this truth.

Traditional Chinese wisdom believes in cyclical movements and developments. You know the concepts of "Yin and Yang", the image of the "snake" in a circle, the concept of universal chaos and then restoration of order and then chaos and then order, etc. This is what I think will happen in our 21st century too. We will all undergo a period of pain, suffering, chaos and death before regeneration, rebirth, etc.