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>Gregory P. Nowell
>Associate Professor
>Department of Political Science, Milne 100
>State University of New York
A very helpful note.
This morning I was interested in the calm way the CNBC reporter on Hong Kong discussed the suggestion that HSBC shorting itself was a scandal.
He denied it was a scandal and explained that as HNBC provides a dealing service in Hong Kong which has included the ability to short (sell something you don't have on the expectation of buying it cheaper before you have to deliver - yes?) it had indeed been shorting its own shares.
He pointed out that HSBC (formerly HongKong and Shanhai Banking Corporation which I believe is about 20% of the total value of the Hong Kong stock market) sometimes acts as an arm of government. He sounded relaxed as he said he was sure that there would be discussions between HSBC and the government to eliminate this practice.
And although the Hang Seng had fallen over 3% yesterday he attributed none of the fall to this issue, which was analysed as being solely a response to the falls on New York.
Why I think this is interesting is that the degree of intervention by Hong Kong (and Taiwan) is being accepted by the markets as not impairing credit-worthiness but is some ways as being rather sensible. The overall picture probably needs to be reviewed at the end of the year, but it looks to me as if such interventions will be regarded as on balance having maintained the total capital at a higher level than in countries which were completely laissez faire.
This will be an important example of resisting the surging tides of short term financial movements in the name of capitalist freedom.
This defeat of neo-liberalism is a step in learning how to manage the global economy, and will not fundamentally be opposed by capitalism because capitalism tends to monopoly.
Chris Buford
London.