Jake's View | US dollar peg to blame for high private rentals in Hong Kong
Hong Kong is forced to follow as a negligent and scared Fed keeps interest rates at record low levels in a vain attempt to lift the economy
[French economist Thomas] Piketty states that unrestrained capitalism and free markets have caused great inequality ... In Hong Kong this can clearly be seen in rising property prices and rents - where property developers and landlords get rich at the expense of workers' stagnant wages.
I suppose I shall have to inflict that big Thomas Piketty book on myself now. What trials of tedium we must endure when defenders of righteousness pick up their pens. In the meantime, however, let's deal with this Hong Kong angle.
The first chart should set things straight. The blue line on top represents the nominal wage index, flat while the economy went through a severe bout of disinflation from 1998 to 2005 and rising since that time.
The lower red line represents average private housing rents, way down with the disinflation and only back last year where they were in 1998. It was not the wages that were stagnant here.
But, of course most workers do not live in private rental housing. Their landlord is the government's Housing Authority and its rents are on average now about 15 per cent less than they were in 1998.
The figure is, in fact, more like 30 per cent less when you take account of the rent concessions regularly given to public housing tenants.