Wednesday, March 2, 2011

Hong Kong Budget Backlash Prompts Cash Handouts

China's galloping price inflation is an impact even in Hon Kong. Reuters reports:
Hong Kong’s financial secretary scrapped plans to bolster residents’ pension funds, opting to hand out cash and tax rebates after lawmakers’ protests.

John Tsang said the government will give HK$6,000 ($770) to permanent residents aged 18 or above, abandoning a plan announced Feb. 23 to inject the same amount into their mandatory pension fund accounts. It will also give a 75 percent income-tax rebate capped at HK$6,000, the same as in the previous budget, he said...

Tsang last week said battling inflation and getting ahead of a property bubble are his government’s main tasks this year when he unveiled a budget that included HK$42.4 billion in one- off handouts. The Democratic Alliance for the Betterment and Progress of Hong Kong and other political parties said Tsang should have done more, including giving cash to help residents cope with rising prices.

So he finally went along with the money handout scheme, which I'm sure will be paid for by printing even more money. In other words, economic understanding in China as about the same as the rest of the world, near zero. China looks like it is very close to hyper-inflation.

1 comment:

  1. I keep picturing a globe with holes. The Ben Bernank keeps shoving fiat marsh-mellows in on one side - and now that it's full - on the other side one pops out and into the hands of a spender.

    Or something like that.