Hey Jessovereign citizens

If you haven't been living under a rock for the past year then you've probably heard about the Hong Kong protests, citizens have taken to the streets to voice their concerns over how their lives have been commodified and solid off by the banks, namely HSBC of which Hong Kong makes up 35% of their portfolio, by far their largest investment.

HSBC has been able to operate with impunity for years now and with that level of power theirs always going to be mismanagement and corruption and why wouldn't they? IF every other bank is doing the same, why not try to do it better or rather worse than the others.

So what is the current state of HSBC? Let's have a look, shall we?

Image source: - theguardian.com

The numbers

Hong Kong is a financial capital in the East, apart from that they don't do much else, Banking in the region is 850% more than the countries GDP to put into perspective how grossly unequal it is in Hong Kong. Due to this over financialisation and the fact that 30% of HSBC's investment is in Hong Kong, we've seen the country become the most expesnive real estate in the world.

However, HSBC's revenue has dropped by 6 billion dollars over the last 5 years which already puts them in a bit of a squeeze.

The protests

Naturally, that banking emphasis has had people pushing out the money in the form of credit at an insane rate and Hong Kongs private credit is now around 300% of their GDB. So if the country is so indebted and prices keep going up naturally you would see people suffering to maintain a living and this is where the protests sparked from and rightly so in my opinion.

But these protests have naturally had an effect on the economy as unrest would normally do, foreigners leave, tourists don't want to visit, businesses and investors pull out, locals invest their capital outside the country and all this capital flight has a knock-on effect, which is worse in Hong Kongs situation due to a dollar peg which I'll get to in a moment.

The coronavirus

We also have to account for the effect of the coronavirus, lots of capital and investment flowing into Hong Kong comes from mainland China and with them on lock and dealing with their own problems, that flow of money and trade has started to dry up putting more pressure on the other parts of their economy to keep the party going.

The dollar peg

Hong Kong has its own currency the Hong Kong dollar which like similar to mainland China, Hong Kong pegs to the US dollar. US dollar to Hong Kong Dollar is pegged $1 USD = HK$7.80 but the important part of it is that when you peg your currency you have to adopt that countries interest rates and yield curve which gives them less or rather no margin to move.

So to sum up more than 30% of HSBCs investment is in Hong Kong which has the most overpriced real estate in the world with people struggling to keep up with their mortgages and on top of that these are ARM or adjustable-rate mortgages and what makes this worse is the rates can be changed on a monthly basis which can really push the consumer further into financial difficulty.

HSB broke

HSBC's precarious position has seen it pull the trigger and cutting jobs, you know there are no friends in banking and 35 000 people are about to lose their jobs. This could be a signal of one of two things, the bank will collapse having widespread effects on the global economy or there will be a put by the Fed, PBOC or IMF to cover over the cracks and reward these crooks for mismanagement of funds and outright stealing.

When we add on the capital flight in the region I mentioned earlier this puts further pressure on Hong Kong to be able to maintain their USD peg as they would need to buy in more Hong Kong Dollars being dumped on the FX market and either way we look at it now, this is out of their control and the peg will break.

So the only option, in this case, would be to raise interest rates or wait for markets to force interest rates up, but because it been so low as pegged tot he US market and the consumer is so overleveraged this would mean more defaults and the banks would be stuck with millions of people not being able to pay back what they bonded.

The banks would have to repossess and sell those properties which would see housing prices free fall and it would be stiff drink time for all.

Will the crooks be bailed out?

When you realise this is the same bank that got pinched for laundering money for the Sinaloa cartel and got away with it so I won't be surprised if one of the major money printers come in a paper over the cracks while the rest of us don't see a dime.

Either way, it shows that we should not be trusting capital to the banks and we need to be hedging our bets on something we own, be it precious metals or cryptocurrency.

Have your say

What do you good people of steem think? Do you have any extra tips on how to use money other than spend it? How do you use your money?

Holla at me in the comments! All my commenters I will now refer to as Jessie. Jessie is a good friend of mine, but Jessies got a girl, and I want to make her mine.

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

Sources

• bbc.com
• cnn.com
• nytimes.com

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