What Typhoon Mangkhut could teach Donald Trump about the brewing global economic storm
David Dodwell says while Hong Kong’s long-term investment in infrastructure helped limit the damage to the city from the super typhoon, the global economy is less prepared for the inevitable coming crash
But as I recalled the clear skies and fierce heat in Hong Kong for the two days before Mangkhut arrived, I was reminded of the calm that comes before storms and the beguiling and seemingly unstoppable present strength of US equity markets, now at all-time record levels.
I am concerned that it is this unsustainable bubble that has given Trump’s administration the facile confidence to engage in such a reckless assault on a global trading system that has driven growth and built wealth for most countries worldwide over the past seven decades – foremost among them the US.
The cost of disruption at work is also unlikely to be measured. For a day, my route to work – Clear Water Bay Road up in Sai Kung – was blocked by hundreds of fallen trees. For most of this week, it has been a tree-strewn slalom for everyone crawling to work by bus or car. The cost of those lost hours will never be tallied.
Watch: Streets littered with trees and debris in the wake of Typhoon Mangkhut
The contrast is clear. Hong Kong’s relative resilience, and likely rapid recovery, contrasts sharply with the dreadful failure to anticipate the 2008 crash, and the slew of emergency measures that had to be thrown into place in almost-panic circumstances – measures that together almost certainly sowed the seeds of the crash that many are saying may soon be repeated.
The decision to bail out the banks, whose frenzied Ponzi trading of collateralised debt instruments based on unsupported mortgages was the immediate cause of the crisis, rather than the families that lost their homes, has contributed directly to the widening inequality and to political disaffection that have so warped and endangered democracies across the Western world.
Surely these changes should be stimulating innovation, not stifling it? Surely they should be driving growth among small companies, rather than coinciding with market concentration around a smaller number of massive, mainly IT-driven, companies?
As Diane Coyle at the University of Cambridge asked in a Financial Times column last month: “Set against the evidence, should we see the promise of artificial intelligence, synthetic biology, graphene, cheap clean energy and other emerging technologies as mere hype? Some of these innovations must surely contribute to productivity and economic growth?”
This all seems to point to the likelihood that we sit in a calm before a storm. It suggests we have a new and potentially large crisis close ahead that few are preparing for.
If this is indeed a Mangkhut in the making, then I am concerned at our lack of preparation. Hong Kong’s long-term investment in strong infrastructure allowed us to weather Mangkhut and recover quickly and well. Is our global economy so well prepared?
David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view