谢国忠

运气用完了     (查看译文)

Out of luck /谢国忠

A fung shui master told me: "We have offended '8', always putting so much pressure on it to deliver. It's fed up and is taking revenge on us. This is why 2008 is so bad." This must be the most creative explanation for this annus horribilis. It will be remembered as the year that rich people become poor, en masse; US$50 trillion of paper wealth has vanished, often in unusually creative ways.

With the benefit of hindsight, it seemed that the rich and famous were competing to see who could lose money faster. A bewildering array of derivatives exploded violently before investment banks could make margin calls, to turn billionaires into negative billionaires.

Take the accumulator - also known as the "I'll kill you later" - financial derivative. It is merely a long volatility contract. So many poured borrowed money into the product that the volatility price collapsed - that is, buyers were sucked into a bubble of their own. Most of the Hong Kong upper crust may have lost big bucks in this folly. They are known for being stingy and not trusting even blood relatives with their money. So why did they fall for accumulators? Maybe they felt lucky in 2008.

Take the accumulator - also known as the "I'll kill you later" - financial derivative. It is merely a long volatility contract. So many poured borrowed money into the product that the volatility price collapsed - that is, buyers were sucked into a bubble of their own. Most of the Hong Kong upper crust may have lost big bucks in this folly. They are known for being stingy and not trusting even blood relatives with their money. So why did they fall for accumulators? Maybe they felt lucky in 2008.

The performance of shares lately appears to have an inverse correlation to the number of eights in the tickers. Last year's initial public offerings tried to squeeze as many eights into their tickers as possible. They were marketed like Prada bags. With famous chief executives and other big-name financial figures backing them, the IPOs came with an aura that one "couldn't lose". Unfortunately, if you bought into them, your wealth will be smaller now. The stock offerings made only the chief executives and their financial backers rich. And yes, their bankers got bonuses, too.

You may think cheating investors is the most immoral path to wealth. Actually, bribing government officials, not repaying bank loans or selling poisonous food seem equally bad. I am sure there are many eights in the amounts of bribes and loans. Even the prices of poisonous milk products may have had a few eights in them. But the lucky numbers didn't stop children dying.

Casinos are more honourable: they at least give better odds. Macau blasted past Las Vegas in gambling revenue last year. The market capitalisation of one casino was bigger than the gross domestic product of Macau itself. The good times kept rolling - until 2008 hit.

Casinos have used the number eight most liberally; it is plastered on walls and gaming tables. Maybe eight is especially angry with them. But at least Macau had it good for a while. Poor Singapore is stuck with unfinished casinos; all cost and no revenue. Even so, the unfinished casinos are still there, and they may pay something back, in the next bubble, better than shares in investment banks.

Now 2008 is going out with a big bang in the form of the Bernard Madoff US$50 billion scam. It seems the best and the brightest are among the victims, as are some of the most august financial institutions. This is more spectacular than the failures of Bear Sterns, Lehman Brothers and the like. Those eminent financial institutions needed elaborate theories, models, whizz kids and tens of thousands of MBAs. Mr Madoff did it all by himself, and he's an old man, too. Indeed, he outsmarted the Wall Street whizz kids who conned people all over the world to get their bonuses; Mr Madoff got their bonuses. But, in the end, eight got him.

A big shadow was once cast by US Federal Reserve chairman Alan Greenspan - so big that many crooks thrived under it. After he walked away, they have been busy finding new shade. But they ran out of time in 2008; eight got them, too. Well, not all of them: I still see many struggling to hold on, waiting for government bailouts.

But there is a silver lining here, too: all the eights at the Beijing Olympics paid off. China won the most gold medals. That is a huge thing, and it gives China a lot of face. If the nation doesn't win as many golds in the next Games, it's OK - we will always have 2008. Maybe eight shouldn't retire, after all.

What about nine? Will 2009 bring better luck? Historically, the number nine carries an unusual significance in Chinese culture. Lucky eight is a Cantonese fixation that has gone national and overwhelmed nine. Maybe nine can stage a comeback. Heaven, they say, has nine levels. But hell is supposed to have 18 levels - or nine times two - which takes some steam out of it. I suppose nine needs to be tested.

If 2009 turns out to be a good year, nine will gain prominence: Macau's casinos may plaster the number all over their walls and gaming tables, replacing eight.

I think the first quarter of 2009 will be very chilly. Companies will report horrific earnings for the fourth quarter of 2008. The current euphoria over the effectiveness of government stimulus packages may cool, and the second quarter may not be much better. The global economy will still be contracting in the first quarter, and the news then won't be that good.

It may feel much better by the middle of next year. The impact of government stimulus, especially in China and the United States, will be felt palpably. Inflation is not yet a serious issue. Central banks could still keep their super-low interest rates. The euphoria may return, but only temporarily. By late 2009, we will be worrying about inflation and rising interest rates in a still-weak global economy. Pessimism will return.

The world has caught a chronic disease. It feels better from time to time after taking medicine, but lapses back into pain soon after. The real recovery will occur only when all the excesses have been washed away with time, and structural reforms have established a new growth model for the global economy. That won't happen in 2009. If nine doesn't succeed, which number will volunteer to try next?

Andy Xie is an independent economist

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