We must draw up the worst picture so as to survive

This is a question that I have in mind for many days. Do we have the worst situation in mind? I mean we can't sit here and wait for the worst to come! We must project the worst picture and try to find some ways to avoid it or mitigate our potential damages and losses!

The financial and housing crises have been with us for too long and they are not getting any better! I don't know who are hit hardest by the turmoils and crises but what is very clear is that the value of our wealth (if any) is becoming less and less everyday. This unending value depreciation or value evaporation is what I believe to be the worst picture.

The consequences of such value evaporation are hard to predict. In Hong Kong, we are seeing a number of business failures starting from the beginning of 2008. Unemployment is definitely rising very quickly and so is social discontent.

But what is most deadly is that hyperinflation has in no way been curbed. All prices in supermarkets have been rising despite all the bad economic developments and downturn. Fruits, can foods, instant noodles, dairy products, meat, eggs, toilet papers, water, ... whatever are sold at prices higher and higher every week. It seems the operators are not worried about the inability of consumers to pay for high prices at all!

Maybe many people are still very well-off despite the economic crises. I think or hope this might be the case in Hong Kong. So there is really no urgency or need for anyone to lower prices.

Perhaps the clever ones have also learnt an important lesson from the financial turmoils of 1997. As long as you hold on to hyperinflation and high prices, people have no choice but to give you the money to buy your goods and services. There is no such thing as rebellion in Hong Kong; people in Hong Kong never dare to protest or resort to violence! So keep hyperinflation and high prices and if you want to earn more, increase the prices!

This is exactly what is happening in Hong Kong notwithstanding daily propaganda about how the local government is helping the common Hong Kong people. Hyperinflation and skyhigh prices are to stay in Hong Kong no matter how bad the world economy is or will become. This is another part of the worst picture that I have in mind now.

So for the time being the worst picture would include (1) value evaporation; and (2) hyperinflation and skyhigh prices. We will bump into additional pieces of this worst picture puzzle very soon.