what goes around ...

Hong Kong probably has the ultimate yo-yo economy. However, whenever economic problems occur, many in our city react as though hard times had never happened here before. Boom conditions have been almost entirely reliant, for much of Hong Kong's history, on unstable conditions elsewhere. When more settled times come, the local economy slumps.

During the West River disturbances in the 1850s - an overspill from the Taiping Rebellion - Hong Kong prospered as businessmen relocated to the safety of the British colony. In the early 1920s, as early Republican China descended into warlordism, Hong Kong was a main supplier of arms and ammunition - most of it first world war surplus - to various groups. During the Sino-Japanese war, numerous local businesses profited from selling strategic materials to both the Chinese and the Japanese.

Hong Kong experienced a further boom in the early 1950s, during the Korean war, as capital was withdrawn from disturbed conditions in China, Indonesia and Indochina.

In the colony's early years most commercial power rested with two firms, Dent and Jardine Matheson. Dent closed during the economic downturn in 1867 and few, other than the historically minded, have heard of it.

The Hongkong Bank - now virtually unsinkable - got into serious difficulties in the 1870s and a century later. Another slump occurred in Hong Kong in 1906-08, and in 1919, followed by one in 1930-31.

In 1965 the Ming Tak Bank closed its doors, sparking a general crisis of confidence in Chinese-owned banks, such as the Canton Trust and Commercial Bank. This led to massive queues of angry depositors who were desperate to withdraw their savings. Many of the banks that were almost ruined that year were completely sound until this unforeseen demand for cash withdrawals occurred.

Another boom occurred in 1971-72, punctured by the oil crisis in 1973.

In 1975, conglomerate Hutchison International almost went under and was baled out in a move by the Hongkong Bank still regarded as controversial.

With the exception of a short-lived property slump during the handover negotiations in 1982-84, Hong Kong knew little but steadily rising prosperity until 1997-98. So why, the flawed logic ran, should the boom years ever end? But as we all now know, they certainly did.