What should the government do? It is now almost certain that 2009 will be the worst year for the Hong Kong economy since the severe acute respiratory syndrome crisis. It is likely that this recession, being a global event, will be longer if not deeper.
Let us not kid ourselves into believing that the government can do a great deal to alleviate the hardships. But there is not much use in waiting for the budget, still more than three months away, to use whatever fiscal tools are available.
Indeed, the quicker the remedial measures taken by this government, the more likely that the collapse of confidence - which is spreading outwards from the financial sector to the rest of the private sector - can be reversed.
Beijing has set a good example. Its announced package of spending may be overstated, but at least it demonstrates a sense of the gravity of the situation.
First, the Hong Kong government must assume that, under the circumstances, a deficit of at least HK$50 billion next year is tolerable.
That is only 3 per cent of gross domestic product, rather modest by the standards that most governments will be experiencing next year.